International Business TEST 3

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University of West Alabama *

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450

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Economics

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Apr 3, 2024

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The ____ is defined as the difference between the offer price and the bid price in a foreign exchange. Spread The post-Bretton Woods system is a system of flexible exchange rate regimes with _____. No official common denominator. No Fixed exchange rate The bandwagon effect is an example of the way _____ directly affects foreign exchange rates. Investor psychology The _____ suggests the price for identical products in different countries would be the same, if trade barriers are absent. The law of one price The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____. Fixed exchange rate Which of the following best describes a rate where selective government intervention works hand-in- hand, allowing markets the freedom to work themselves out? Dirty float rate The weight a member country carries within the IMF, which determines the amount of its financial contribution, its capacity to borrow from the IMF, and its voting power is referred to as a(n) _____. Quota A clean floating exchange rate policy is a government policy to _____. allow a currency's value to fluctuate according to the foreign exchange rate Capital flight is a phenomenon in which a large number of individuals and companies exchange _____. Domestic currency for a foreign currency A currency board is a monetary authority that issues notes and coins convertible into a key foreign currency at a _____ exchange rate. Fixed A manager arguing against currency hedging would most likely argue that _____. currency hedging eats into company profits A _____ is the price of one currency, such as the dollar, in terms of another, such as the euro . Foreign Exchange Rate In foreign exchange, a(n) _____ is said to have occurred when investors move in the same direction at the same time, like a herd. Bandwagon If the forward rate of the euro per dollar is higher than the spot rate, the euro has a _____. Forward Premium Between 1870 and 1914, the value of most major currencies was maintained by fixing their prices in terms of _____. Gold CAFTA refers to _____. Central America Free Trade Agreement. It is a regional trade agreement between the United States and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua

A(n) _____ refers to a group of countries that use a common currency. Currency (Monetary) Union Inspired by the EU’s success, ASEAN set up an FTA called _____ in 1992. AFTA The _____ is a free trade agreement among Canada, the United States, and Mexico. NAFTA In which of the following types of economic integration systems will the establishment of a common currency be possible? Economic Union In a(n) ____, members coordinate and harmonize monetary, fiscal, and taxation policies. Economic (Monetary) Union NAFTA is an example of a(n) _____. Free Trade Area The _____ was a multilateral agreement, created in 1948, governing the international trade of goods (merchandise). GATT The WTO differs from “GATT 1948” in that the WTO _____. has provisions that allows members to review other members' trade policies GATS is a WTO agreement governing _____. the international trade of services The General Agreement on Tariffs and Trade (GATT) expanded considerably into a multilateral trading system called _____. WTO A free trade area _____. economic integration where two or more countries agree to eliminate all trade barriers, such as tariffs and quota The European Union (EU) was established when the ____ went into effect in 1993. Maastricht Treaty The Euro is currently used in _____. 19 European Union Countries The EU is an example of a(n) ____. Regional economic integration agreement In the United States, small- and medium-sized enterprises (SMEs) are defined as firms with less than _____. 500 Employees Model of internationalization that portrays the slow step-by step process an SME must go through to internationalize its business is referred to as the_____. Stage Model In a service industry, _____ refers to firm A’s agreement to give Firm B the rights to use A’s proprietary assets for a royalty fee paid to A by B. Franchising Founders and/or owners of new businesses or managers of existing firms who identify and exploit new opportunities are called _____. Entrepreneurs In a manufacturing industry, _____ refers to firm A’s agreement to give firm B the rights to use A’s proprietary technology (such as a patent) or trademark (such as a corporate logo) for a royalty fee paid to A by B . Licensing In the European Union, small and medium-sized enterprises (SMEs) are defined as firms with less than _____. 250 employees

International new ventures are also referred to as _____. Born global firms Entrepreneurs selling an equity stake or the entire firm to foreign entrants are using a(n) ____ strategy to internationalize. Harvest and Exit Relative to licensing and franchising, _____ allow a firm to have better control of how its proprietary technology is used while entering foreign markets. Foreign direct investments A ____ is a financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise. Letter of credit Which of the following is a defining characteristic of entrepreneurship? Ability to exploit opportunity Among developed countries, _____ has the lowest rate of start-ups. Japan Which of the following is a part of the VRIO framework? Value Microfinance provides micro loans used to: Start small businesses The term for a global movement to help eradicate poverty by lending small sums used to start small businesses is referred to as _____. Microfinance

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