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BUSMHR 2000 Exam 1 Questions And Answers Latest Updates
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Mercantilism - ️️1st theory of international trade- an economic policy under which nations sought to increase their wealth and power by obtaining large amounts of gold and silver and by maximizing exports and minimizing imports Economic Motives - ️️the motivation to increase return throu...

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  • September 19, 2024
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  • 2024/2025
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BUSMHR 2000 Exam 1
Mercantilism - ✔️✔️1st theory of international trade- an economic policy under which
nations sought to increase their wealth and power by obtaining large amounts of gold
and silver and by maximizing exports and minimizing imports

Economic Motives - ✔️✔️the motivation to increase return through higher revenues or
lower costs through international raw materials, natural resources, a cheap labor supply
for manufacturing goods

Global Institutions - ✔️✔️(1) -Help manage, regulate, and police the global
marketplace.
-Promote the establishment of multinational treaties to govern the global business
system.
- General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO),
International Monetary Fund (IMF), World Bank, United Nations (UN).

WTO - ✔️✔️The World Trade Organization - an international body that enforces
agreements that reduce barriers to international trade; successor to the GATT

IMF - ✔️✔️International Monetary Fund//a United Nations agency to promote trade by
increasing the exchange stability of the major currencies

International Business - ✔️✔️The business activites necessary for creating, shipping,
and selling goods and services across national borders.

International firm - ✔️✔️Any firm, regardless of size, that is engaged in international
business

MNE - ✔️✔️Multinational Enterprise. a global firm that has corporate units located in
foreign countries.

Market motives - ✔️✔️the motivation of a company to seize through trade and/or
investment or stand it's ground in the face of competitive international business


Strategic Motives - ✔️✔️the motivations leading firms overseas to capitalize on
distinctive resources and capabilities developed at home. These can include
technologies and Economies of Scale.

Economies of Scale - ✔️✔️as a company produces larger numbers of a particular
product, the cost of each of these products goes down

, International versus Domestic Business - ✔️✔️the variations in business seen locally
versus overseas including environmental dynamics and operational nature

Environmental Dynamics - ✔️✔️Currency, inflation, interest rates, accounting
practices, cultures, social customs, laws, political stability of another country

Operational Nature - ✔️✔️communication, coordination, motivation, differences in
organizational principles and management philosophies, made increasingly more
difficult in an international setting

• Globalization - ✔️✔️The trend toward increased cultural and economic
connectedness between people, businesses, and organizations throughout the world.



risk - ✔️✔️the unpredictability of operational and financial outcomes

uncertainty - ✔️✔️the unpredictability of environmental or organizational conditions that
affect firm performance


Mercantilism as a "zero sum" game - ✔️✔️the value of your currency goes up,
consumers import cheaper goods, and the currency goes back down

Neo-Mercantilism - ✔️✔️countries with large trade surplus - trade poicy under whic a
country relentlessly tries to maximize its trade surplus even at the sacrifice of its trading
partners welfare
Ex. CHINA

Comparative Advantage Theory - ✔️✔️David Ricardo (1817): against the corn laws,
Gains from trade will occur even when a country has absolute advantage in all products.
Trade is a positive-sum game

Heckscher-Ohlin Theory - ✔️✔️The theory that a country will export goods that make
intensive use of the factors of production in which it is well endowed. Thus, a labor-rich
country will export goods that make intensive use of labor.

Leontief Paradox - ✔️✔️the inconsistency that Wassily Leontief found between the
data on U.S. trade and the Heckscher-Ohlin model, showing even a labor intensive
business in the US can be more productive than a more labor-enriched country like
china

Leontief Paradox differences - ✔️✔️Heckscher-Ohlin Theory was too simple? Demand
bias for capital-intensive goods, Existence of trade barriers, and Additional factors that
vary by country like Human skills and Technology

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