BBA 411 Spring 2024 Exam 1 Questions With
Answers
Globalization
the shift toward a more integrated and interdependent world economy
Globalization of markets
the merging of historically distinct and separate national markets into one huge global marketplace
Globalization of production
refers to the sourcing of goods and services from locations around the globe to take advantage of
national differences in the cost an quality of factors of production.
What are the factors of production?
Labor, energy, land, and capital.
WTO
Polices the world trading system and making sure nation-states adhere to the rules laid down in trade
treaties signed by WTO member states.
World Bank
Promotes economic development via low interest loans for infrastructure projects (not bailouts)
International Monetary Fund (IMF)
Maintains order and is the lender of last resort to failing countries
Role of the united nations:
Establish peace through international cooperation and collective security.
Group of twenty
Represents 90 percent of global GDP and 80 percent of international trade. Consists of the 19 largest
Banks in the world.
Factors that drive Globalization
Decline in trade barriers and changes in technology.
The changing global demographics in trade
We have seen a severe decrease inn world output from developed countries since 1960
Complexity of managing international business versus a purely domestic business
It differs because countries differ in cultural aspects as well as having to use different currencies.
Problems faced by managers are larger internationally.
The foreign exchange market
Used to convert the currency of one country into another.
, Exchange rate
Rate at which one currency is converted to another.
Foreign exchange risk
The adverse consequences of unpredictable changes in exchange rate.
Who uses the foreign exchange market for currency conversion?
Tourists and international companies
Hedging
Insure against losses from foreign exchange rate
Spot exchange
Specific to the days date, uses that days price
Forward exchange
A specific date in the futures rate is used for the exchange (usually 30,90,180 days)
The foreign exchange market:
Not located in any one place and never closes.
Exchange rate determination
Determined by supply and demand of one currency relative to another.
Freely convertible currencies
No restrictions, can purchase unlimited foreign currency
Externally convertible currencies
Residents are limited but no rules for non-residents
Nonconvertible currencies
Not allowed to convert currencies at all
Capital Flight
Countries limit convertibility to preserve foreign exchange rates
Countertrade
When something other than money is used to make an international trade
Transaction exposure
the extent to which the income from individual transactions is affected by fluctuations in foreign
exchange values
Answers
Globalization
the shift toward a more integrated and interdependent world economy
Globalization of markets
the merging of historically distinct and separate national markets into one huge global marketplace
Globalization of production
refers to the sourcing of goods and services from locations around the globe to take advantage of
national differences in the cost an quality of factors of production.
What are the factors of production?
Labor, energy, land, and capital.
WTO
Polices the world trading system and making sure nation-states adhere to the rules laid down in trade
treaties signed by WTO member states.
World Bank
Promotes economic development via low interest loans for infrastructure projects (not bailouts)
International Monetary Fund (IMF)
Maintains order and is the lender of last resort to failing countries
Role of the united nations:
Establish peace through international cooperation and collective security.
Group of twenty
Represents 90 percent of global GDP and 80 percent of international trade. Consists of the 19 largest
Banks in the world.
Factors that drive Globalization
Decline in trade barriers and changes in technology.
The changing global demographics in trade
We have seen a severe decrease inn world output from developed countries since 1960
Complexity of managing international business versus a purely domestic business
It differs because countries differ in cultural aspects as well as having to use different currencies.
Problems faced by managers are larger internationally.
The foreign exchange market
Used to convert the currency of one country into another.
, Exchange rate
Rate at which one currency is converted to another.
Foreign exchange risk
The adverse consequences of unpredictable changes in exchange rate.
Who uses the foreign exchange market for currency conversion?
Tourists and international companies
Hedging
Insure against losses from foreign exchange rate
Spot exchange
Specific to the days date, uses that days price
Forward exchange
A specific date in the futures rate is used for the exchange (usually 30,90,180 days)
The foreign exchange market:
Not located in any one place and never closes.
Exchange rate determination
Determined by supply and demand of one currency relative to another.
Freely convertible currencies
No restrictions, can purchase unlimited foreign currency
Externally convertible currencies
Residents are limited but no rules for non-residents
Nonconvertible currencies
Not allowed to convert currencies at all
Capital Flight
Countries limit convertibility to preserve foreign exchange rates
Countertrade
When something other than money is used to make an international trade
Transaction exposure
the extent to which the income from individual transactions is affected by fluctuations in foreign
exchange values
