Ba 125 Quiz 4

Published by James Muriuki on

1. The link between labor costs in China and the price of MP3 music players in the United States is an example of ________.

Answer; Globalization

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2. The growing demand for biofuels in the United States that has led to a growing supply of soybeans from Brazil is an example of all of the following EXCEPT ________ economies.

Answer; Localized

3. An example of globalization of ________ is Toyota opening a factory in Kentucky.

Answer; Production

4. A term that describes the movement of production away from a domestic production site to a foreign location is ___ outsourcing.


5. The developing country of Alpha had a rule that none of its factories could be owned by companies from the developed country of Beta. If Alpha drops this rule, this would be an example of


6. Which of the following is contributing to the acceleration of globalization?

A) a rise in the number of non-U.S. small, local businesses
B) the dominance of the U.S. economic system
C) a shrinking role for developing nations
D) increasing democratization
E) restricting the amount of foreign direct investments

Answer; D) increasing democratization

7. All of the following contribute to accelerating globalization EXCEPT _____


8.Brazil has experienced rapid economic growth and increased sales of its products to other countries. This is an example of a(n) _____


9. The nation of Baa-Baa raises sheep relatively more efficiently than the nation of Snuggle. Snuggle weaves woolen blankets relatively more efficiently than Baa-Baa. Baa-Baa decides to specialize in raising sheep, to sell wool to Snuggle, and to buy blankets from Snuggle. Snuggle decides to specialize in blanket weaving, to sell blankets to Baa-Baa, and to buy wool from Baa-Baa. This international trade illustrates ________ advantage.


10. If the United States has the ability to produce more steel than any other country in the world, the United States has a(n) ________ advantage in steel production.


11. A country’s launching of a government-owned telecommunications satellite is an example of investing in ________.

Answer; Infrastructure

Explanation: Governments spend money on infrastructure, often known as public capital, to give their countries a competitive edge. Roads, bridges, dams, electric grid lines, and communications satellites are examples of infrastructure that boosts production. Additionally, governments work to enhance technology.

12. A U.S. consumer electronics company has to shut down because it cannot compete against foreign manufacturers. For the United States, this is an example of a(n) _______ of international trade.

Answer; Cost

Explanation: Those companies and their employees whose jobs are threatened by foreign competition are responsible for bearing the expenses of international commerce. Some domestic companies would have their market share stolen by foreign rivals, which would hurt their profitability and capacity to add jobs. Other businesses can suffer such severe blows from overseas rivals that they go out of business altogether.

13. U.S. farmers export canned sweet corn to Germany, which lowers the price to a German consumer by a few cents. The benefits to Germany of this international trade deal are __SPREAD OUT MILLIONS OF GERMAN ______.

Answer; Spread out millions to Germans

Explanation: Due to the fact that they are shared across millions of customers, the advantages of international trade are not always obvious. Even if price reductions may only save consumers a few pennies, they nevertheless benefit from cheaper products. But the cumulative effect of these lower prices for the general population can be quite significant, especially over time.

14. If the nation of Epsilon places a tax on all grapes imported from the nation of Zeta, Epsilon has imposed a(n) ________.

Answer; Tarrif

15. As a result of their influence on the quantity, variety, and quality of products, trade barriers ________ domestic consumers.

Answer; Hurt

Explanation: Trade barriers harm consumers because they reduce domestic competition, which lowers total product quantity, variety, and quality.

16. The country of Theta restricts the activities of foreign insurance companies in order to give Theta’s insurance industry a chance to grow and develop. Theta’s actions are an example of the ________ argument in favor of protectionism.

Answer, infant industry

Explanation: According to the infant-industry thesis, a domestic industry that is still in its infancy requires time to expand and develop in order to gain a competitive advantage in the global economy. The sector will have its of chances to make the investments necessary to become innovative thanks to the protected period to grow.

17. The cheap foreign labor argument for protectionism refers to ________.

Answer; a lower wage earned by many foreign workers

18. The oldest and largest free trade area in the world is ________.

Answer; The European Union

19. Disadvantages of ________ include losing control over a company because compromise with the partner is inevitable and the risk of losing proprietary technology in the event of dissolution of the partnership.

Answer; joint ventures

20. Cooperative arrangements between actual or potential competitors in which each partner retains its business independence are known as ________.

Answer; strategic alliance

21. The ratio at which Australian dollars are converted into Indonesian rupiah is known as the ________ rate.

Answer; exchange rate

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