International Trade and Globalization Overview
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Questions and Answers

What is the primary goal of expansionary fiscal policy?

  • To increase taxes
  • To increase consumption (correct)
  • To maintain current levels of spending
  • To reduce government spending

    • Monetary policy involves taxation and government spending decisions.

    False (B)

    What is the definition of absolute advantage?

    A country has an absolute advantage if it can produce a product or service more efficiently than another country.

    A country benefits from international trade when it specializes in products for which it has a comparative advantage and __________ from other countries.

    <p>imports</p> Signup and view all the answers

    Match the type of policy with its description:

    <p>Monetary Policy = Adjusting interest rates and the money supply Fiscal Policy = Government spending and taxation decisions Absolute Advantage = Producing more with the same resources Comparative Advantage = Producing at a lower opportunity cost</p> Signup and view all the answers

    What is one of the advantages of international trade for Canadian consumers?

    <p>Wider variety of products (C)</p> Signup and view all the answers

    Lower production costs abroad lead to higher prices for Canadian consumers.

    <p>False (B)</p> Signup and view all the answers

    Name one negative impact of foreign ownership on Canadian jobs.

    <p>Job loss due to prioritization of home country executives.</p> Signup and view all the answers

    International trade can promote ______ and ideas between countries.

    <p>culture</p> Signup and view all the answers

    Which of the following is NOT a positive effect of globalization?

    <p>Job creation in foreign countries (D)</p> Signup and view all the answers

    Match the following aspects of globalization with their effects:

    <p>Outsourcing = Access to cheaper raw materials Lower prices = Increased competition Economic destabilization = Global events affect local operations Better jobs = Higher education and skill level required</p> Signup and view all the answers

    Globalization leads to a negative impact on innovation.

    <p>False (B)</p> Signup and view all the answers

    What allows countries to improve productivity through international trade?

    <p>Comparative advantage</p> Signup and view all the answers

    Which factor requires the greatest cultural awareness for a business operating internationally?

    <p>Number of foreign operations (A)</p> Signup and view all the answers

    A Canadian business exporting oil has the same level of cultural awareness as one operating a restaurant abroad.

    <p>False (B)</p> Signup and view all the answers

    What are the three types of economic indicators that help in analyzing the business cycle?

    <p>Leading indicators, lagging indicators, coincident indicators</p> Signup and view all the answers

    The __________ measures the economic freedom of individuals in a country, considering factors like property rights and government integrity.

    <p>Index of Economic Freedom</p> Signup and view all the answers

    Match the following types of economic indicators with their descriptions:

    <p>Leading Indicators = Indicators that predict future economic changes Lagging Indicators = Indicators that adjust after the economy has changed Coincident Indicators = Indicators that move at the same time with the business cycle</p> Signup and view all the answers

    Which of Hofstede’s cultural dimensions is essential for understanding the differences between Canadian culture and other cultures?

    <p>All of the above (D)</p> Signup and view all the answers

    Economic indicators are only useful during the expansion phase of the business cycle.

    <p>False (B)</p> Signup and view all the answers

    What is the initial stage of the business cycle called?

    <p>Expansion</p> Signup and view all the answers

    What is a trade embargo?

    <p>A ban on trade between countries (D)</p> Signup and view all the answers

    High interest rates in a country typically lead to a depreciation of its currency.

    <p>False (B)</p> Signup and view all the answers

    List two factors that can improve productivity in an economy.

    <p>Improved technology and a more educated workforce</p> Signup and view all the answers

    Countries with _____ rate of inflation tend to have stronger currency.

    <p>low</p> Signup and view all the answers

    Match the following factors with their impact on the exchange rate:

    <p>High employment levels = Supports currency Trade deficits = Weakens currency Strong economy = Leads to stable currency Political stability = Increases business confidence</p> Signup and view all the answers

    Which of the following is NOT a reason Canada attracts foreign investment?

    <p>High unemployment (A)</p> Signup and view all the answers

    Canadian companies always benefit from trade sanctions imposed on their products.

    <p>False (B)</p> Signup and view all the answers

    What is the relationship between productivity and disposable income for individuals?

    <p>Higher productivity leads to higher disposable income.</p> Signup and view all the answers

    What is one of the negative effects of globalization related to employment?

    <p>Lost jobs due to outsourcing (B)</p> Signup and view all the answers

    Increased pollution is one of the positive effects of globalization.

    <p>False (B)</p> Signup and view all the answers

    What is a trade quota?

    <p>A government-imposed limit on the amount of product that can be imported in a certain period of time.</p> Signup and view all the answers

    Tariffs raise the cost of imported goods so that consumers will purchase ________ manufactured products instead.

    <p>locally</p> Signup and view all the answers

    Match the following trade measures with their definitions:

    <p>Tariffs = Taxes on imported products Trade Quotas = Limits on the amount of imports Trade Sanctions = Restricting trade with specific countries or products Outsourcing = Shifting jobs overseas to lower labor costs</p> Signup and view all the answers

    Which group of individuals is primarily affected by the exploitation of cheap labor?

    <p>Children and prisoners (D)</p> Signup and view all the answers

    The income gap is decreasing as a result of globalization.

    <p>False (B)</p> Signup and view all the answers

    What is one safety concern associated with products sold by international businesses?

    <p>Products may have an adverse effect on citizens’ health.</p> Signup and view all the answers

    What is one of the benefits of Corporate Social Responsibility (CSR)?

    <p>Attracting and retaining excellent employees (D)</p> Signup and view all the answers

    Using CSR can distract customers from a company's problems, a practice known as greenwashing.

    <p>True (A)</p> Signup and view all the answers

    What method can companies use to evaluate the ethics of their decisions?

    <p>test of disclosure</p> Signup and view all the answers

    Ethical _______________ refers to the belief that certain values are universal across all cultures.

    <p>imperialism</p> Signup and view all the answers

    What is a common criticism of Corporate Social Responsibility?

    <p>It decreases profit due to increased expenses. (D)</p> Signup and view all the answers

    Cultural relativism suggests that the ethics of one culture are superior to those of another.

    <p>False (B)</p> Signup and view all the answers

    What can companies do to ensure their CSR efforts are effective?

    <p>Align with consumer values</p> Signup and view all the answers

    Match the following concepts with their descriptions:

    <p>Ethical imperialism = Belief in universal ethical standards Cultural relativism = Respecting the ethics of different cultures CSR = Corporate actions aimed at social responsibility Greenwashing = Disguising negative practices with good publicity</p> Signup and view all the answers

    Study Notes

    Advantages of International Trade

    • Canadians have access to a wider variety of products.
    • Lower wages and production costs in other countries lead to lower prices for consumers.
    • Canadian businesses can enter new markets, access resources, attract investment, and share in new discoveries.
    • International trade promotes cultural exchange and diversity.

    Disadvantages of International Trade

    • Loss of Canadian culture and identity.
    • Foreign ownership issues can lead to job losses in Canada.
    • Revenue drains from Canada due to expenses for home-country administration.
    • Reduced exports to other markets.
    • Economic instability due to global economic conditions.

    Positive Effects of Globalization

    • Outsourcing allows access to cheaper raw materials and labor, making companies more competitive, and offering lower prices to consumers.
    • Increased competition from foreign firms forces domestic companies to become more competitive and lower their prices.
    • Reduction in global poverty.
    • Technological exchange fosters innovation.
    • Optimal resource utilization increases productivity and improves living standards.
    • Export jobs often require a high skill level and pay higher wages.
    • Increased capital flow for countries with limited resources.

    Negative Effects of Globalization

    • Job losses due to outsourcing, potentially with lower-paying replacement jobs
    • Fear of job loss due to competition from countries with lower labor costs.
    • Loss of Canadian productivity due to competition from countries with cheaper labor.
    • Exploitation of workers (children, prisoners, uneducated) in substandard conditions.
    • Increased pollution due to companies relocating factories to countries with lax environmental regulations.
    • Safety concerns due to lack of regulated manufacturing and products.
    • Spread of diseases between countries (e.g., Ebola, Zika).
    • Increased income gap and erosion of the middle class.
    • Influence of multinational corporations on governments.

    Tariffs

    • Taxes or duties imposed on imported goods or services.
    • Tariffs increase the cost of imports, potentially encouraging consumers to buy domestically produced goods.
    • Winners of tariffs include domestic governments (increased tax revenue) and domestic producers (more competitive prices).
    • Losers of tariffs include foreign producers (higher prices) and consumers (higher prices).

    Trade Quotas

    • Government-imposed limits on the amount of a specific product that can be imported within a certain timeframe.
    • Trade quotas protect domestic producers by limiting imports.
    • Trade quotas decrease foreign competition.

    Trade Sanctions and Embargoes

    • Trade sanctions are partial restrictions on trade, while embargoes completely ban trade between countries.
    • Trade sanctions and embargoes are used to pressure foreign governments to change policies or improve human rights records.
    • Domestic countries experiencing sanctions or embargoes see increased domestic supply and may need to find new markets for their products, which impacts the level of production and operations within those countries.

    Factors Affecting Exchange Rates

    • Inflation rates (lower inflation leads to a stronger currency).
    • Employment levels (high employment generally supports a stronger currency).
    • Gross Domestic Product (Higher GDP attracts investment, strengthening the currency).
    • Stable economy (A stable economy generally leads to a stronger currency).
    • Interest rates (high interest rates attract investment, increasing demand for the currency).

    Reasons Canada Attracts Foreign Investment

    • Supportive business environment.
    • Geographic location.
    • Infrastructure advantages.
    • Quality of life.
    • Cultural diversity.

    Productivity

    • Productivity measures how efficiently an economy converts inputs (labor, raw materials, capital, and innovation) into outputs (goods and services).
    • Factors that increase productivity include improved technology, skilled workforce, entrepreneurship, and innovation.
    • Higher productivity can lead to better living standards and higher tax revenue for governments.

    Market Economies, Centrally Planned Economies and Mixed Economies

    • Market economies prioritize efficient resource allocation, new products, economic growth, and potentially increased gaps between rich and poor.
    • Centrally planned economies ensure basic necessities for all citizens but might have lower innovation and motivation to work hard.
    • Mixed economies combine aspects of both market and centrally planned economies, balancing individual incentives with social programs.

    Economic Freedom

    • Measures the degree of economic freedom experienced by individuals within a country.
    • Factors like property rights, government integrity, judicial effectiveness, labor freedom, and investment freedom are considered.

    Stages of Business Cycle

    • Understanding economic indicators (leading, lagging, coincident) can predict future economic performance and help businesses, investors, and governments prepare for potential changes.
    • Governments use monetary and fiscal policies to regulate the economy (affecting interest rates and money supply, and taxes and government spending, respectively).

    Absolute and Comparative Advantage

    • Absolute advantage occurs when one country produces a good or service more efficiently than another.
    • Comparative advantage occurs when a country produces a good or service at a lower opportunity cost than another.

    Ways Governments Influence Trade

    • Establish import/export laws.
    • Set tariffs.
    • Maintain memberships in trade organizations.
    • Negotiate trade agreements.
    • Establish immigration laws.
    • Determine monetary and fiscal policies (interest rates, exchange rates, taxes, and government spending).
    • Create infrastructure.
    • Establish environmental policies.
    • Enact orders for trade restrictions (e.g., embargoes).

    Globalization Strategies

    • Global strategy: Centralized decision-making at headquarters, focused on creating efficiency through economies of scale and homogenous product offerings.
    • Multidomestic strategy: Decentralized decision-making to adapt strategies locally to meet specific needs and preferences.
    • Transnational strategy: Tries to balance the advantages of global and multidomestic strategies by allowing flexibility and responsiveness to local needs without sacrificing global efficiencies.

    Market Research

    • Market research is used to understand customers' preferences and competition's strategies.
    • It can be used to identify profit opportunities, detect changes in markets, observe competitions, and analyze culture, language, government regulations, and economics.
    • Primary and secondary research are used to gather information about the target market.

    Primary and Secondary Research

    • Primary research involves collecting data directly from the market, such as through surveys or interviews.
    • Secondary research involves using existing data from other sources, such as government reports or research companies.
    • Primary research provides control and relevance, while secondary research provides immediacy and cost efficiency.

    Marketing Strategies

    • Companies can pursue different marketing strategies based on their particular need and approach to the market.
    • Centralized marketing applies the same marketing strategies everywhere.
    • Decentralized marketing tailors them separately to each country.
    • Acquisition marketing purchases an existing company in a specific country.

    Ethical Dilemmas in International Business

    • Ethical dilemmas occur when there's no easy answer in a business context.
    • Tools like the "test of disclosure" can help avoid ethical issues.
    • Recognizing and respecting different cultures' viewpoints leads to better ethical decision making.

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    Description

    Explore the advantages and disadvantages of international trade and the positive effects of globalization. This quiz will help you understand the impact of global market dynamics on culture, economy, and competition in Canada.

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