Exam 1: Introduction

The euro is the currency of ____________________ of the twenty-seven countries of the European Union.

The Bretton Woods Conference triggered the creation of the World Trade Organization in 1944.

Russia can produce 25 tons of steel or 5 automobiles using the same amount of resources.Using the exact same amount of resources,India can produce 18 tons of steel and 3 automobiles.According to the theory of comparative advantage,at what price will Russia and India trade chairs?

When a large retailer asks a company to manufacture a product so that it can be sold at a low(er)price point,the company is often constrained to outsource its production overseas.Such a phenomenon is called the ____________________.

Russia can produce 25 tons of steel or 5 automobiles using the same amount of resources.Using the exact same amount of resources,India can produce 18 tons of steel and 3 automobiles.According to the theory of comparative advantage,the countries will trade with each other.What will Russia produce?

World trade in services representf a higher percentage of total world trade than does world trade in merchandise.

The euro has replaced the currencies of all of the countries of the European Union.

The term "outsourcing" refers to a strategy whereby a company purchases plants overseas.

The ____________________ succeeded the General Agreement on Tariffs and Trade created by the Bretton Woods Conference.

World trade has grown about 10 percent per year since 1950.

Which of the following entities was created at the Bretton Woods Conference of 1944?

The common currency of most of the countries of the European Union is called

A company that has to make large capital outlays before starting production will want to export in order to spread its costs over a large number of units produced.

The International Product Life Cycle Theory was developed by ____________________.

International trade is still mostly concentrated among the developed countries of the Northern Hemisphere.Which country is the largest importer of the world?

Porter's Cluster Theory holds that geographical areas with a large concentration of a certain type of companies allow that area to obtain an absolute or comparative advantage.How do those companies benefit from the presence of other companies like them in the same area?

According to Adam Smith,countries trade when they enjoy a comparative advantage over other countries in the production of a given product.

The Factor Endowment Theory was developed by Raymond Vernon.

Until the 1950s,most of the area rugs in the world were manufactured in Persia (Iran)and Pakistan.Artisans in these countries had developed techniques (dyes and knots)that were unique and that other production areas were not capable of reproducing.These areas enjoyed what Michael Porter would call an "absolute advantage."

A firm can respond to one of its competitors' introduction of a lower-priced product by starting to produce its own lower-cost product abroad and importing it.Such a strategy is called