Ch3

Question 1

Absolute advantage

Answer 1

Country has a monopoly on producing a certain product or is able to produce it more efficiently

Question 2

Balance of payments

Answer 2

Difference between imports and exports of a country plus money that flows from other sources like tourism

Question 3

Licensing

Answer 3

Allows a foreign company to produce their product for a fee

Question 4

Contract manufacturing

Answer 4

Foreign company produces private label goods and company attaches it’s label to those goods

Question 5

Joint venture

Answer 5

Multiple businesses work together on a major project

Question 6

Foreign investment

Answer 6

The buying of permanent land and businesses in a foreign country

Question 7

Foreign subsidiary

Answer 7

Company owned by another parent company from another country

Question 8

Sovereign wealth funds

Answer 8

Investments controlled by governments holding large stakes in foreign companies

Question 9

Exchange rate

Answer 9

Value of one countries money to another’s

Question 10

Devaluation

Answer 10

Lowering value of nations currency relative to others

Question 11

Counter trading

Answer 11

Complex form of bartering between companies

Question 12

Trade protectionism

Answer 12

The use of gov regulations to limit import of goods and services

Question 13

Embargo

Answer 13

Ban

Question 14

General Agreement on Tariffs and Trade

Answer 14

1948- mutual reductions in trade restrictions

Question 15

Common market

Answer 15

trade bloc

Question 16

Comparative advantage

Answer 16

Countries should sell to other countries the products that they produce the most effectively and buy the products that other countries cannot produce as efficiently