Chapter 3 Flashcards
All business activities that involve exchanges across national boundaries
International trade
The ability to produce more efficiently than any other NATION
Absolute advantage
The ability to produce a specific product more efficiently than any other PEOPLE
Comparative advantage
Selling or shipping raw materials or products to other countries
Exporting
Purchasing raw materials or products in other countries and bringing them to one’s own country
Importing
The total value of a nation’s exports minus total value of its imports over a specific period
Balance of trade
A negative balance of trade
Trade deficit
The total flow of money into a country minus the total flow of money out of that country over a specified product
Balance of payments
A limit on the amount of a particular good that may be imported into a country during a given period of time
Import quota
Provides a link between buyers and sellers in different countries
Trading company
International barter transaction
Countertrade
A contractual agreement in which one company allows another to produce and market its product using its brand name for compensation
Licensing
A contractual agreement for an individual or organization to operate facilities, typically stores, on behalf of another
Franchising
An arrangement between companies to manufacture products or components for its specifications
Contract manufacturing
An arrangement between companies in different countries to supply products or services to its customers
Out sourcing
A partnership for a specific time
Joint venture
Partnership to create competitive advantage
Strategic advantage
A tax level on particular foreign product entering a country
Tariff
Exportation of large quantities of a product at a price lower than that of the same product in the home market
Dumping
A nontax measure imposed by a government to favor domestic over foreign supplies
Nontariff barrier
A complete halt to trading with a particular nation or of a particular product
Embargo
A restriction on the amount of a particular foreign currency that can be purchased or sold
Exchange control
The reduction of the value of a nation’s currency relative to the currencies of other countries
Currency devaluation
An international organization of nations dedicated to reducing or eliminating tariffs and other barriers to world trade
General Agreement on Tariffs and Trade (GATT)
Powerful successor to GATT that facilitates world trade among member nations by mediating disputes and fostering efforts to reduce trade barriers
World Trade Organization (WTO)
An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies
Economic Community
An independent agency of the U.S. government whose function is to assist in financing the exports of American firms
Export-Import Bank of the United States
An internationally support bank that provides loans to developing countries to help them grow
Multilateral development bank (MDB)
A cooperative banking institution with 189 member countries
World Bank
An international bank that makes short term loans to developing countries experiencing balance of payment deficits
International Monetary Fund (IMF)
