AFM 131 Final Exam Questions & Answers 2023/2024
Free trade - ANSWER-moving goods/services between countries without political or economic obstruction
Exporting - ANSWER-selling products to another country
Importing - ANSWER-buying products from another country
Balance of trade - ANSW...
Free trade - ANSWER-moving goods/services between countries without political or economic
obstruction
Exporting - ANSWER-selling products to another country
Importing - ANSWER-buying products from another country
Balance of trade - ANSWER-relationship between exports & imports
Trade surplus - ANSWER-favourable balance of trade (exports > imports)
Trade deficit - ANSWER-unfavourable balance of trade (imports > exports)
Balance of payments - ANSWER-difference between money coming into a country (from exports) and
money leaving the country (for imports), PLUS money flows from tourism, foreign aid, military
expenditures and foreign investment
Theory of comparative advantage - ANSWER-- Countries export goods/services that they produce most
effectively and efficiently
- Countries import goods/services that they cannot produce as effectively or efficiently
Theory of absolute advantage - ANSWER-monopoly on producing or can produce more efficiently than
all other countries
Canada Border Services Agency - ANSWER-- Protect Canadian citizens and the economy
- Enforcement of goods coming into Canada
,Licensing - ANSWER-a company (licensor) allows a foreign company (licensee) to produce its product for
a fee (a royalty)
Franchising - ANSWER-selling the rights to use an established business name and sell a product/service
to others in a given territory in a specified manner
Contract manufacturing - ANSWER-foreign company manufactures goods to which a domestic company
then attaches its own brand name or trademark
Joint venture - ANSWER-a partnership where two or more companies join to undertake a major project
Strategic alliance - ANSWER-A long-term partnership between two or more companies established to
help each company build competitive market advantages.
Foreign direct investment - ANSWER-buying permanent property in a foreign market
Trade protectionism - ANSWER-the use of government regulations to limit the import of goods and
services
Tariffs - ANSWER-taxes on imports
Import quotas - ANSWER-limit number of products a nation can import
Embargo - ANSWER-complete ban on the import/export of a product (or all trade) with a country
Non-tariff barriers - ANSWER-include restrictive standards that detail how a product must be sold in the
country
The World Bank - ANSWER-- Autonomous United Nations agency concerned with developing
infrastructure in less-developed countries
, - Borrows money from prosperous countries to lend to less-developed countries
International Monetary Fund - ANSWER-- International bank, supported by its 189 member countries
- Makes short term loans to countries experiencing problems with their balance of trade
North American Free Trade Agreement - ANSWER-Free trade area among Canada, Mexico, and the
United States
National policy - ANSWER-- High tariffs
- Encourage east to west trade
Canada's mixed economy - ANSWER-- Economic system in which some allocation of resources is made by
the market and some by the government
- Mix of capitalism and socialism
Crown corporations - ANSWER-companies owned by the federal or provincial government
Deregulation - ANSWER-withdrawal of laws and regulations that hinder competition
Competition Bureau - ANSWER-responsible for the administration and enforcement of a number of acts
designed to protect consumers and promote fair competition
Competition Act - ANSWER-- Ensures mergers of large corporations will not restrict competition
- Fair competition exists among businesses
- Provides consumers with competitive prices and product choices
Health Canada - ANSWER-Responsible for:
- Establishing standards for the safety and nutritional quality of all foods sold in Canada
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