BUS250 Ch. 1-2 Terms & Definitions

Question 1

Globalization

Answer 1

Trend away from distinct national economic units and toward one huge global market.

Question 2

Globalization of Markets

Answer 2

Moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

Question 3

Globalization of Production

Answer 3

Trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production.

Question 4

Factors of Production

Answer 4

Inputs into the productive process of a firm, including labor, management, land, capital, and technological know-how (knowledge).

• land
• labor
• capital (financial resources available for use)
• management
• knowledge

Question 5

General Agreement on Tariffs and Trade (GATT)

Answer 5

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the WTO. (Signed in Geneva on October 30, 1947 and took effect on January 1, 1948)

Question 6

World Trade Organization (WTO)

Answer 6

The organization that succeeded the General Agreement on Tariffs and Trade (GATT) as a result of the successful completion of the Uruguay Round of GATT negotiations. (Signed on 15 April 1994, officially commenced on January 1, 1995)

Question 7

International Monetary Fund (IMF)

Answer 7

International institution set up to maintain order in the international monetary system.

Question 8

World Bank

Answer 8

International institution set up to promote general economic development in the world’s poorer nations.

Question 9

United Nations

Answer 9

An international organization made up of 193 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation.

Question 10

G20

Answer 10

Established in 1999, the G20 comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.

Question 11

International Trade

Answer 11

Occurs when a firm exports goods or services to consumers in another country.

Question 12

Foreign Direct Investment (FDI)

Answer 12

Direct investment in business operations in a foreign country.

Question 13

Moore’s Law

Answer 13

The power of microprocessor technology doubles and its costs of production fall in half every 18 months.

Question 14

Stock of Foreign Direct Investment

Answer 14

The total accumulated value of foreign-owned assets at a given time.

Question 15

Multinational Enterprise (MNE)

Answer 15

A firm that owns business operations in more than one country.

Question 16

International Business

Answer 16

Any firm that engages in international trade or investment.

Question 17

Political Economy

Answer 17

The political, economic, and legal systems of a country.

Question 18

Political System

Answer 18

System of government in a nation.

Question 19

Collectivism

Answer 19

A political system that emphasizes collective goals as opposed to individual goals.

Question 20

A Socialist

Answer 20

Someone who believes in public ownership of the means of production for the common good of society.

Question 21

Communists

Answer 21

Those who believe socialism can be achieved only through revolution and totalitarian dictatorship.

Question 22

Social Democrats

Answer 22

Those committed to achieving socialism by democratic means.

Question 23

Privatization

Answer 23

The sale of state-owned enterprises to private investors.

Question 24

Individualism

Answer 24

An emphasis on the importance of guaranteeing individual freedom and self-expression.

Question 25

Democracy

Answer 25

Political system in which government is by the people, exercised either directly or through elected representatives.

Question 26

Totalitarianism

Answer 26

Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

Question 27

Representative Democracy

Answer 27

A political system in which citizens periodically elect individuals to represent them in government.

Question 28

Communist Totalitarianism

Answer 28

A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.

Question 29

Theocratic Totalitarianism

Answer 29

A political system in which political power is monopolized by a party, group, or individual that governs according to religious principles.

Question 30

Tribal Totalitarianism

Answer 30

A political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power.

Question 31

Right-Wing Totalitarianism

Answer 31

A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism.

Question 32

Market Economy

Answer 32

An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

Question 33

Command Economy

Answer 33

An economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government.

Question 34

Legal System

Answer 34

System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained.

Question 35

Common Law

Answer 35

A system of law based on tradition, precedent, and custom; when law courts interpret common law, they do so with regard to these characteristics.

Question 36

United Nations Convention on Contracts for the International Sale of Goods (CIGS)

Answer 36

A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of businesses in different nations.

Question 37

Property Rights

Answer 37

Bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

Question 38

Private Action

Answer 38

The theft, piracy, blackmail, and the like by private individuals or groups.

Question 39

Public Action

Answer 39

The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats.

Question 40

Foreign Corrupt Practices Act

Answer 40

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

Question 41

Intellectual Property

Answer 41

Products of the mind, ideas (e.g., books, music, computer software, designs, technological know-how); intellectual property can be protected by patents, copyrights, and trademarks.

Question 42

Patent

Answer 42

Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention.

Question 43

Copyrights

Answer 43

The exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

Question 44

Trademarks

Answer 44

The designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

Question 45

World Intellectual Property Organization

Answer 45

An international organization whose members sign treaties to agree to protect intellectual property.

Question 46

Paris Convention for the Protection of Industrial Property

Answer 46

International agreement to protect intellectual property.

Question 47

Product Safety Laws

Answer 47

Set certain safety standards to which a product must adhere.

Question 48

Product Liability

Answer 48

Involves holding a firm and its officers responsible when a product causes injury, death, or damage.