Unit 1 Test Review

Question 1

Mercantilism, Protectionism, and Free Trade – Which One Is Different?

Answer 1

Free trade – it promotes open markets, unlike mercantilism and protectionism, which restrict trade.

Question 2

What makes our dollar more attractive?

Answer 2

A strong economy, high interest rates, and low inflation make the dollar more attractive to investors.

Question 3

What was the point of the Banana Game?

Answer 3

It was about Fair Trade (Equity) – showing how conditions, wages, and supply chains impact workers and businesses.

Question 4

What is Ethnocentrism?

Answer 4

The belief that one’s own culture or nation is superior to others.

Question 5

What is a Supply Chain?

Answer 5

The network of businesses involved in producing and delivering a product, from raw materials to the customer

Question 6

Four Types of International Business (IB) – Connect to Starbucks

Answer 6

Domestic – Starbucks started in Seattle.
International – Exported coffee to other countries.
MNC (Multinational) – Opened stores and sourced beans from multiple countries.
Global – Customizes products for different cultures (e.g., matcha lattes in Japan).

Question 7

Pros and Cons of Trade

Answer 7

Pros:
✅ Economic growth
✅ Lower prices & variety
✅ Increased efficiency

Cons:
❌ Job losses
❌ Trade imbalances
❌ Dependence on other countries

Question 8

WHO, NATO, and the Paris Agreement

Answer 8

WHO (World Health Organization) – Global health cooperation. NATO (North Atlantic Treaty Organization) – Military alliance for collective defense. Paris Agreement – Global climate deal to reduce carbon emissions.

Question 9

Basics of Left vs. Right (Three Points Each)

Answer 9

Left (Liberal, Socialist, Democrat)
✔️ Supports government programs (healthcare, education)
✔️ Higher taxes on the wealthy
✔️ Focus on social equality & environmental policies

Right (Conservative, Capitalist, Republican)
✔️ Supports lower taxes & free markets
✔️ Less government intervention
✔️ Traditional values & strong national defense

Question 10

Are Subsidies Good?

Answer 10

Pros: ✅ Help industries grow ✅ Lower prices for consumers Cons: ❌ Can create market inefficiencies ❌ Expensive for governments

Question 11

Capitalism vs. Socialism

Answer 11

Capitalism – Private businesses drive the economy, minimal government control.
Socialism – Government provides essential services, wealth redistribution.

Question 12

Liberal vs. Conservative | Democrat vs. Republican

Answer 12

Liberals/Democrats = Left-leaning (social programs, higher taxes on wealthy). Conservatives/Republicans = Right-leaning (lower taxes, free market policies).

Question 13

What was the point of Tylazon?

Answer 13

Understanding corporate power and how businesses compete, And react to Union’s in their company.

Question 14

Four Stakeholders and Their Needs

Answer 14

Customers – Quality products at fair prices.
Employees – Job security and fair wages. Shareholders – Profitability and growth. Community – Ethical business practices.

Question 15

Impact of High or Low Dollar (Use ‘Attractiveness’)

Answer 15

High Dollar → Makes imports cheaper, exports more expensive (less attractive for foreign buyers).
Low Dollar → Makes exports cheaper, attracting foreign buyers, but raises import prices.

Question 16

What Do the Leafs Want If They Pay Players in US$?

Answer 16

A strong Canadian dollar so that paying salaries in US$ costs them less in CAD.

Question 17

Nationalism vs. Internationalism

Answer 17

Nationalism – Prioritizing one’s own country (protectionism, self-reliance).
Internationalism – Global cooperation and free trade.

Question 18

Smoot-Hawley Tariff & Treaty Significance

Answer 18

Smoot-Hawley (1930) – U.S. increased tariffs, worsening the Great Depression. Trade Treaties – Reduce tariffs, encourage global commerce.

Question 19

Consequences of Protectionism

Answer 19

Higher prices for consumers.
Retaliation from other countries.

Question 20

Two Advantages & Two Disadvantages of Protectionism

Answer 20

✅ Advantages:

Protects domestic jobs.
Supports local industries.
❌ Disadvantages:

Higher prices for consumers.
Can lead to trade wars.

Question 21

Banana Game & Fair Trade (3 Marks Answer)

Answer 21

Fair Wages & Equity – Farmers need fair compensation.
Working Conditions – Ethical sourcing matters.
Supply Chain Transparency – Consumers should know where products come from.

Question 22

Significance of Prospective Activity

Answer 22

Thinking ahead in business helps with planning, competition, and adapting to economic changes.

Question 23

What is FDI & Why It Matters?

Answer 23

Foreign Direct Investment (FDI) – When a company invests in another country (factories, businesses).

🔗 Connection to Competition: More FDI brings in competition, forcing local businesses to innovate and improve.

Question 24

GDP Per Capita

Answer 24

A country’s total economic output divided by its population – measures standard of living.

Question 25

Connection Between Inflation & Interest Rates

Answer 25

High Inflation → Higher Interest Rates (to slow spending). Low Inflation → Lower Interest Rates (to encourage borrowing).

Question 26

Who Sets Interest Rates?

Answer 26

Central banks (e.g., U.S. Federal Reserve, Bank of Canada).

Question 27

Typical Inflation Over the Last 100 Years vs. Now

Answer 27

Historical Average: ~2-3% per year. Recent Inflation (2020s): Higher due to supply chain issues and economic recovery (~5-8%).

Question 28

Who Cares If You Haven’t Had a Pay Increase or Your Money Sits in a Bank?

Answer 28

Inflation decreases purchasing power – If wages don’t rise, you can afford less over time. Savings lose value if interest rates are too low.

Question 29

Why Buy an ETF?

Answer 29

ETF (Exchange-Traded Fund) – A collection of stocks in one investment. Reason: You need to earn more than inflation to grow wealth.

Question 30

Why Invest Instead of Keeping Money in a Bank?

Answer 30

Bank Interest Rates are often lower than inflation. Investments (stocks, ETFs) grow wealth over time.

Question 31

The "Market"

Answer 31

Refers to the stock market – where people buy and sell shares of companies.

Question 32

What is the Couch Potato Strategy?

Answer 32

A simple, low-effort investment strategy using ETFs to build long-term wealth.

Question 33

Debt-to-Income Ratio

Answer 33

Measures how much debt you have compared to your income – a key indicator of financial health.

Question 34

Why Do Savings Rates Matter?

Answer 34

Higher savings rates = More money growing over time. Low rates = Harder to keep up with inflation.

Question 35

What does it matter if the prime rate goes up?

Answer 35

Borrowing becomes more expensive – higher interest rates on loans, mortgages, and credit cards. Slower economic growth – people and businesses borrow less, reducing spending. Good for savers – higher interest on savings accounts.

Question 36

Susie studies Marine Biology but works as an Uber driver. What is this an example of?

Answer 36

Underemployment – when someone is working a job below their skill level or outside their field of study.

Question 37

During a recession, what would likely happen?

Answer 37

Higher unemployment – businesses cut jobs. Lower consumer spending – people save more and buy less. Government stimulus – lower interest rates or relief programs to boost the economy.

Question 38

Jimbo sells to the US. What does he want to happen to the CDN currency?

Answer 38

He wants a weaker Canadian dollar so that his products are cheaper for US buyers, making them more attractive.

Question 39

Mercantilism, Protectionism, and Free Trade – Which One Is Different?

Answer 39

: Free trade – it promotes open markets, unlike mercantilism and protectionism, which restrict trade.