D311 Global Management Test 1 – Questions &
Complete Answers
Absolute advantage Right Ans - theory originally presented by Adam Smith,
which holds that because certain countries can produce some goods more
efficiently than other countries, they should specialize in and export those
things they can produce more efficiently and trade for other things they need
Acquired advantage Right Ans - a form of trade advantage due to
technology rather than due to the availability of natural resources, climate,
etc.
Brain drain Right Ans - a condition whereby countries lose potentially
productive resources when its bright people migrate to other countries
Comparative advantage Right Ans - the theory that there is global
efficiency gains from trade if a country specializes in those products that it can
produce more efficiently than other products regardless of whether other
countries can produce those products even more efficiently
Country-similarity theory Right Ans - the theory that a company will seek
to exploit opportunities in those countries most similar to its home country
because of the perceived need to make fewer operating adjustments
Diamond of national competitive advantage theory Right Ans - a theory
that says countries usually need four conditions (demand; factors; related and
supporting industries; and strategy, structure, and rivalry) to develop and
sustain a product's competitive advantage
Factor-mobility theory Right Ans - the movement of factors of production
such as labor and capital from one location to another
Factor-proportions theory Right Ans - the theory that differences in a
country's proportionate holdings of factors of production (land, labor, capital)
explain differences in the costs of the factors and that export advantages lie in
the production of goods that use the most abundant factors
, Favorable balance of trade Right Ans - an indication that a country is
exporting more than it imports
import substitution Right Ans - an industrialization policy whereby new
industrial development emphasizes products that would otherwise be
imported
mercantilism Right Ans - an economic philosophy based on the beliefs that
a country's wealth is dependent on its holdings of treasure, usually in the form
of gold, and that countries should export more than they import in order to
increase wealth
natural advantage Right Ans - climatic conditions, access to certain natural
resources, or availability of labor, which gives a country an advantage in
producing some product
neomercantilism Right Ans - the approach of countries that apparently try
to run favorable balances of trade in an attempt to achieve some social or
political objective
nontradable goods Right Ans - products or services that are seldom
practical to export, primarily because of high transport costs
product life cycle theory Right Ans - the theory that certain kinds of
products go through a cycle consisting of four stages (introduction, growth,
maturity, decline) and that they location of production will shift
internationally depending on the stage of the cycle
strategic trade policy Right Ans - the identification and development of
target industries to be competitive internationally
theory of country size Right Ans - a theory holding that large countries
usually depend less on trade than small ones
trade deficit Right Ans - a situation in which a country imports more than it
exports
trade surplus Right Ans - a situation in which a country exports more than
it imports
Complete Answers
Absolute advantage Right Ans - theory originally presented by Adam Smith,
which holds that because certain countries can produce some goods more
efficiently than other countries, they should specialize in and export those
things they can produce more efficiently and trade for other things they need
Acquired advantage Right Ans - a form of trade advantage due to
technology rather than due to the availability of natural resources, climate,
etc.
Brain drain Right Ans - a condition whereby countries lose potentially
productive resources when its bright people migrate to other countries
Comparative advantage Right Ans - the theory that there is global
efficiency gains from trade if a country specializes in those products that it can
produce more efficiently than other products regardless of whether other
countries can produce those products even more efficiently
Country-similarity theory Right Ans - the theory that a company will seek
to exploit opportunities in those countries most similar to its home country
because of the perceived need to make fewer operating adjustments
Diamond of national competitive advantage theory Right Ans - a theory
that says countries usually need four conditions (demand; factors; related and
supporting industries; and strategy, structure, and rivalry) to develop and
sustain a product's competitive advantage
Factor-mobility theory Right Ans - the movement of factors of production
such as labor and capital from one location to another
Factor-proportions theory Right Ans - the theory that differences in a
country's proportionate holdings of factors of production (land, labor, capital)
explain differences in the costs of the factors and that export advantages lie in
the production of goods that use the most abundant factors
, Favorable balance of trade Right Ans - an indication that a country is
exporting more than it imports
import substitution Right Ans - an industrialization policy whereby new
industrial development emphasizes products that would otherwise be
imported
mercantilism Right Ans - an economic philosophy based on the beliefs that
a country's wealth is dependent on its holdings of treasure, usually in the form
of gold, and that countries should export more than they import in order to
increase wealth
natural advantage Right Ans - climatic conditions, access to certain natural
resources, or availability of labor, which gives a country an advantage in
producing some product
neomercantilism Right Ans - the approach of countries that apparently try
to run favorable balances of trade in an attempt to achieve some social or
political objective
nontradable goods Right Ans - products or services that are seldom
practical to export, primarily because of high transport costs
product life cycle theory Right Ans - the theory that certain kinds of
products go through a cycle consisting of four stages (introduction, growth,
maturity, decline) and that they location of production will shift
internationally depending on the stage of the cycle
strategic trade policy Right Ans - the identification and development of
target industries to be competitive internationally
theory of country size Right Ans - a theory holding that large countries
usually depend less on trade than small ones
trade deficit Right Ans - a situation in which a country imports more than it
exports
trade surplus Right Ans - a situation in which a country exports more than
it imports
