Global Market

Globalization involves:

• Trade across two or more countries

• A shift towards a more integrated world economy

• Trade in services as well as goods

• A standardization of culture and beliefs

Absolute advantage is based on:

• Resource abundance

• Resource exclusivity or factor productivity

• Natural resources

• Military power

Comparative advantage is based on:

• Technical expertise

• Relative opportunity cost

• Management expertise

• Political power

When countries engage in trade, they specialize in goods where they have a

_______ advantage:

• Competitive

• Absolute

• Comparative

• Exclusive

The balance of trade is the difference between a country's:

• Exports and imports

• Production and consumption

• Export contracts and import contracts

• Domestic trade and international trade

A trade deficit occurs when a nation:

• Exports more than it imports

• Imports more than it exports

• Has more foreign direct investment outflow than inflow

• Has more private foreign investors than public ones

Balance of payments includes all external transactions except:

• Exports and imports

• Foreign investments

• Domestic consumption

• Financial transfers

Countertrade is common among countries that:

• Have strong currencies

• Engage mainly in services trade

• Lack sufficient hard currency

• Have limited natural resources

Which is NOT a type of countertrade:

• Barter

• Outsourcing

• Switch trading

• Counter purchase

Exporting doesn't require a company to:

• Comply with the importing country's regulations

• Establish manufacturing facilities in the target country

• Export through an intermediary

• File appropriate export documentation