Professional Documents
Culture Documents
I. TRUE/FALSE QUESTIONS
false:
1. The purchase, sale, or exchange of goods and services across national borders is called domestic trade. international trade
2. The trade theory that nations should accumulate financial wealth, usually in the form of gold, by
encouraging imports and discouraging exports is called mercantilism. encourage export
3. A trade deficit is the condition that results when the value of a nation’s exports is greater than the value
of its imports. false: trade surplus
4. The ability of a nation to produce a good more efficiently than any other nation is called a comparative
advantage. absolute advantage
5. According to the comparative advantage theory, trade is still beneficial even if one country is less
efficient in the production of two goods, so long as it is less inefficient in the production of one of the
goods. false
6. The theories of comparative and absolute advantages assume that countries are driven only by the
true
maximization of production and consumption.
7. According to the factor proportions theory, factors in great supply relative to demand will be more
costly than factors in short supply relative to demand. false: less costly: cung nhieu thi gia re hon
8. In the maturing product stage, production facilities are introduced in the countries with the highest
demand. true
9. According to the new trade theory, as a company increases the extent to which it specializes in the
production of a particular good, output rises because of gains in efficiency. true
10. According to Porter, a nation’s competitiveness in an industry depends on the capacity of the industry
to innovate and upgrade true
2. The trade theory that nations should accumulate financial wealth, usually in the form of gold, by
encouraging exports and discouraging imports is called .
merchantilism
3. is the condition that results when the value of a nation’s exports is greater than the value
of imports. trade surplus
4. A condition that results when the value of a country’s imports is greater than the value of its exports is
called trade deficit .
5. When a nation can only increase its share of wealth at the expense of its neighbors, it is called a zero0sum game
6. is the ability of a nation to produce a good more efficiently than any other nation.
absolute advantage
comparative advantage theory
7. argues that trade is still beneficial even if one country is less efficient in the production
of two goods, so long as it is less inefficient in production of one of its goods.
8. states that countries produce and export goods that require resources that are abundant and
import goods that require resources in short supply. factor proportions theory
9. The states that (1) there are gains to be had from specialization and increasing economies
of scale, (2) those companies first to enter a market can create barriers to entry, and (3) government
may have a role to play in assisting its home-based companies. new trade theory
10. The economic and strategic advantage gained by being the first company to enter and industry is called
. first mover advantage
11. The theory states that a nation’s competitiveness in an industry depends on the capacity
of the industry to innovate and upgrade. national competitive advantage
Unit 1- Part 2
I. TRUE/FALSE QUESTIONS.
1. The main cultural motives behind government intervention in trade include protecting jobs and preserving
national security. FALSE
2. Financial assistance to domestic producers in the form of cash payments, low-interest loans, tax breaks,
product price supports or some other form is called export financing. FALSE
3. Tariffs can be classified as export tariff, import tariff and domestic tariff. FALSE
4. A tariff levied by the government of a country that a product is passing through on its way to its final
destination is called ad valorem tariff. FALSE
5. A compound tariff is levied on an imported product and calculated partly as a percentage of its stated price and
partly as a specific fee for each unit. TRUE
6. To protect domestic producers and to generate revenues are the two main reasons why countries levy tariffs.
TRUE
7. Restriction on the amount of a good that can enter or leave a nation during a certain period of time is called a
tariff. False
8. A reason why a country imposes export quotas is to protect its domestic producers from international
competition. False
9. VERs refers to a quota that a nation imposes on its exports usually at the request of another nation. TRUE
10. A hybrid form of trade restriction is called voluntary export restraints. FALSE
11. The three main goals of the WTO are to help the free flow of trade, to help negotiate further opening of
markets and to provide insurance against social unrest to companies investing in a member country. FALSE
12. When a company exports a product at a price higher than the price normally charged in its domestic market, it
is said to be dumping. FALSE
1. The pattern of imports and exports that would result in the absence of trade barriers is called
_______. Free trade
2. ______ advantages result because economies of scale limit the number of companies that an industry can
sustain. First mover
3. Financial assistance to domestic producers in the form of cash payments, low-interest loans, tax breaks,
product price supports, or some other form is called _______. Subsidy
4. When a government guarantees that it will repay the loan of a company if the company should default on
repayment, it is called a ______. Loan guarantee
5. A designated geographic region in which merchandise is allowed to pass through with lower customs duties
and/or fewer customs procedures is called a (n) _______. Foreign trade zone
6. A _________ is a government tax levied on a product as it enters or leaves a country. Tariff
7. A tariff levied by the government of a country that is exporting a product is called an ___export tariff___.
8. A _______ tariff is a tariff levied by the government of a country that a product is passing through on its
final destination. Transit
9. A tariff levied by the government in a country that is importing a product is called an __import tariff____.
10. A tariff levied as a percentage of the stated price of an imported product is called __ad valorem____ tariff.
11. A tariff levied as a specific fee for each unit (measured by number, weight, etc.) of an imported product is
called _______. Specific tariff
12. A tariff levied on an imported product and calculated partly as a percentage of its stated price, and partly as
a specific fee for each unit is referred to as a (n) ______. Compound tariff
13. Restriction on the amount of a good that can enter or leave a country during a certain period of time is called
a_______. quota
14. Countries normally self-impose a _______ in response to the threat of an import tariff or total ban on a
product by an importing nation. Voluntary export restraint
15. A lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota is
referred to as a (n) ______. Tariff-quota
16. A complete ban on trade (imports and exports) in one or more products with a particular country is called an
_______. embargo
17. Laws stipulating that a specified amount of a good or service be supplied by producers in the domestic
market are called ________. Local content requirements
18. Regulatory controls or bureaucratic rules designed to impair the rapid flow of imports into a country are
_______. Administrative delays
19. ___________ can reduce imports by stipulating an exchange rate that is unfavorable to potential importers.
Currency controls
20. The _______ is the only international body dealing with rules of trade between nations. WTO
21. A key component of the WTO that was carried over from the GATT is the principle of nondiscrimination
called _______. NORMAL TRADE RELATIONS
22. When a company exports a product at a price lower than the price normally charged in its domestic market,
it is said to be _______. DUMPING
23. _________ is an additional tariff placed on an imported product that a nation believes is receiving an unfair
subsidy. COUNTERVAILING DUTY
24. ____________ an additional tariff placed on an imported product that a nation believes is being dumped on
its market. ANTI-DUMPING DUTY
8. 4 phuong thuc + noi dung ngan gon
Subsidy: provide cash, low interest loan, tax rate, product price support.
Export financing: finance export activities (loan guarantee, below market interest loan)
Foreign trade join: fewer custom duty and procurement
Quota: limitation
6. intervene: 3 reasons: Political reasons, economic reasons and cultural motives
1. Abundance natural resources, cheap labour force, high technical expertise, …
UNIT 1: PRACTICE
I. Gap-filling
1. If a country can produce something more cheaply than anywhere else in the world, it has a
(an)___________ ABSOLUTE ADVANTAGE
2. A country exporting more than it imports has a ____________ TRADE SURPLUS
3. __________ is the (impossible) situation in which a country is completely self-sufficient and has no
foreign trade. AUTARKY
4. Countries that export a lot of oil or manufactured goods tend to have a positive ___________ BALANCE
OF TRADE
5. The ____ has established rules for trade between nations. WTO
6. __________ is the difference between what a country pays for all its imports and receives for all its
exports. BO PAYMENTS
7. Many economists encourage government to abolish import taxes and have complete ___________ FREE
TRADE
8. ________ and ________ are the two aspects of foreign trade: a country spends money on goods it ______
and gains money through it_________. (import and export)
9. Unlike quotas, _________ produce revenue for the government. TARIFFS
III. Replace the underlined words and expressions in the text with the words below
A, Balance of payments B. Balance of trade C. barter or counter-trade D. climate
E. commodites F. division of labour G. economies of scale H. factors of production
I. nations K. proctectionism L. quotas M. tariffs
(1) Countries import some goods and services from abroad, and export others to the rest of the world. Trade in (2)
raw materials and goods is called visible trade in Britain and merchanise trade in the US. Services, such as banking,
insurance, tourism and technical expertise, are invisble imports and exports. A country can have a surplus or a
deficit in its (3) differences between total earnings from visible exports and total expenditure on visible imports,
and in its (4) differences between total earnings from all exports and total expenditure on all imports. Most
countries have to pay their deficits with foreign currencies from their reserves, although of course the USA can
usually pay in dollars, the unofficial world trading currency. Countries without the currency reserves can attempt to
do international trade by the way of (5) direct exchange of goods without the use of money. The (imaginary)
situation which a country is completely self sufficient and has no foreign trade is called autarky.
The GATT, concluded in 1940, aims to maximize international trade and to minimize (6) the favouring of domestic
industries. GATT is based on the comparative cost principle, which is that all nations will raise their income if they
specialize in producing the commodities in which they have the highest relative productivity. Countries may have
an absolute or a comparative advantage in producing particular goods or services, because of (7) inputs (raw
materials, cheap or skilled labour, capital, etc), (8) weather conditions, (9) specialization of work into different
jobs, (10) savings in unit costs arising from large-scale production, and so forth. Yet most governments still pursue
protectionist policies, establishing trade barriers such as (11) taxes charged on imports, (12) restrictions on the
quantity of imports, administrative difficulities and so on.
1-I 2-E 3-B 4-A 5-C 6-K 7-H 8-D 9-F 10-G 11-M 12-I
I. TRUE/FALSE QUESTIONS
Unit 2: Exercises
1. Portfolio investment is the purchase of physical assets or a significant amount of ownership
of a company in another country to gain a degree of management control.
2. There are two main reasons for the rising tide of foreign direct investment flows over the past
decade
- globalization and diversity.
3. The eclectic paradigm theory states that a company will begin by exporting its products and later
under take FDI as a product moves through its life cycle.
4. In the standardized product stage, a good is produced in the home country because of
uncertain domestic demand and to keep the production close to the research department for new
development.
5. One common market imperfection in international business is trade barriers.
6. When a company's specialized knowledge is embodied in its employees, the only alternative to
exploit a market opportunity in another nation is to undertake FDI.
7. An ownership advantage is the advantage of locating a particular economic activity in a
specific location given its characteristics.
8. Vertical integration is the extension of company activities into stages of product ion that provides
a firm's inputs (forward integration) or absorbs its out puts (backward integration).
9. In foreign direct investment, a 100 percent ownership does not guarantee control for the company.
10. Benefits of investments by multinationals include increased unemployment, increased tax
revenues, highly skilled workforce training, and transfer of technology.
11. Building a subsidiary abroad from the ground up is called a greenfield investment.
12. Factors that reduce the appeal of purchasing existing facilities include obsolete equipment, poor
relations with workers, and an unsuitable location.
13. Rationalized production is a system of production in which each of a product's components is
produced in that location in which the cost of producing that component is lowest.
14. The practice of "following clients" can be expected in industries where many component parts are
obtained from suppliers with whom a manufacturer has a close working relationship.
15. Governments often intervene in international trade to protect their cultural heritages and jobs;
however, they never intervene in the flow of FDI since it brings jobs to the country.
16. A country's balance of payment s is a national account that records all payments to entities in
other countries and all receipts coming into the nation.
17. Any nation's balance of payments consists of two major components- the current account and the
past- due account.
18. The capital account is a national account that records transactions involving the import and
export of goods and services, income receipts on assets abroad, and income payments on foreign
assets inside the country.
19. A current account deficit occurs when a country exports more goods, services, and income than it
imports.
20. When a country imports more goods, services and income than it exports, it is called a trade deficit.
21. The two main reasons countries intervene in FDI flows are the balance of payments and to obtain
resources and benefits.
22. One method used by host countries to restrict incoming FDI is ownership restrictions.
23. Tax incentives and infrastructure improvements are financial incentives used by host countries to
encourage outflow of FDI.
24. To limit the effects of outbound FDI on the national economy, home governments may impose
differential tax rates that charge income from earnings abroad at a higher rate than domestic earnings.
Unit 2:
I. Gap-filling
1. __________ is a market in which currencies are bought and sold and in which currency prices are
determined. FOREIGN EXCHANGE MARKET
2. Dealers using two foreign exchange markets to benefit from rate differentials are said to engage in
__________. ARBITRAGE
3. __________ buy currencies when they expect their value to increase. SPECULATORS
4. Increasing currency ___________ is making exchange rates more volatile. SPECULATION
5. Hedging is the attempt to ___________; speculating is the opposite. REDUCE
6. The Bretton Woods Agreement stipulated that all members would express their currencies in
______________. US DOLLARS
7. __________ is an international monetary system in which nations linked the value of their paper currencies
to the specific amount of gold. GOLD STANDARD
8. ______________ was an accord among nations to create a new international monetary system based on the
value of the dollar. BRETTON WOODS AGREEMENT
9. __________ is the attempt to reduce risks, ____________ is the opposite. HEDGING / SPECULATING
10. Bartering is based on the exchange of ___________ for goods. GOODS
11. When central banks intervene in the foreign exchange markets at the intervention points, this is called the
system of __________ exchange rates. The opposite is called the system of __________ exchange rates.
FIXED / FLOATING
12. __________ of the member countries were required to intervene in the foreign exchange markets to keep
the value of their currencies within 1% of the par value. CENTRAL BANK
13. A _________ means that delivery of a currency is specified to take place at a future date. FORWARD
TRANSACTION
14. _________ is the practice of transferring funds from one currency to another to benefit from rate
differentials. ARBITRAGE
15. Another verb for fixing exchange rates against something else is to ______ them. PEG
16. A currency can appreciate if lots of __________ buy it. SPECULATORS
17. In fact, we have managed floating exchange rates, because governments and _________ banks sometimes
intervene on currency markets. CENTRAL
18. _______ are raw materials such as agricultural products and metals that are traded on special exchanges.
COMMODITIES
19. If you ______, you make transactions that are designed to reduce risks regarding a particular price, interest
rate or exchange rate. HEDGE
20. A _______ anticipates future changes in a market and makes risky transactions, hoping to make a gain.
SPECULATOR
21. The ________ is the mechanism through which foreign currencies are traded. FOREIGN TRADE
MARKET