6.3 Business & The International Economy Quiz 1

What is globalisation?

• The process of reducing trade between countries

• The increase in worldwide trade and movement of people and capital between countries

• The elimination of all international businesses

• The focus on domestic markets only

Which of the following is a reason for globalisation?

• Increased import tariffs

• Improved and cheaper travel links and communications

• Reduced free trade agreements

• Decreased mobility of labour

What is a free trade agreement?

• An agreement to limit trade between countries

• An agreement to trade imports/exports with no barriers such as tariffs and quotas

• A tax on imported goods

• A restriction on the quantity of goods that can be imported

Which of the following is an opportunity for businesses due to globalisation?

• Increased competition from foreign businesses

• Ability to sell exports to other countries

• Higher import tariffs

• Reduced market share

What is a potential threat of globalisation for local businesses?

• Increased sales due to foreign competition

• Reduced competition from foreign businesses

• Increased imports from foreign competitors

• Lower prices for consumers

Which of the following is a potential risk for a business when importing materials from other countries?

• Lower transport costs

• Increased reliability of suppliers

• Greater distance adding to transport costs

• Reduced competition

What is an import tariff?

• A restriction on the quantity of a product that can be imported

• A tax placed on imported goods when they arrive into the country

• A subsidy given to local businesses

• A free trade agreement between countries

Why might a government introduce an import quota?

• To increase the quantity of imported goods

• To protect domestic industries from foreign competition

• To encourage free trade

• To reduce the price of imported goods

What is the main purpose of protectionism?

• To encourage foreign competition

• To protect domestic businesses from foreign competition using tariffs and quotas

• To increase the price of locally produced goods

• To reduce the number of jobs in the country

Which of the following is a benefit of becoming a multinational business?

• Higher production costs

• Ability to produce goods in countries with low wages

• Reduced market share

• Increased trade barriers