Globalization Affects Only Large Companies with Overseas Operations

question 79

True/False

Globalization affects only large companies with overseas operations.

Identify how differences in opportunity costs between countries lead to mutual benefits from trade.

Understand the concept of terms of trade and its importance in international exchanges.

Recognize the impact of human and physical capital in determining a country's comparative advantage in certain industries.

Understand why countries might import and export the same type of goods because of the simple comparative advantage theory.

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Definitions:

Nominal Cost

The cost expressed in current monetary terms without adjustment for inflation, often contrasted with real cost.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Internal Rate

Often referred to as the internal rate of return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project zero.

Net Present Value

A financial metric used to evaluate the profitability of an investment or project, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.