Chapter 3

Question 1

All business activities that involve exchanges across national boundaries

Answer 1

International trade

Question 2

The ability to produce more efficiently than any other NATION

Answer 2

Absolute advantage

Question 3

The ability to produce a specific product more efficiently than any other PEOPLE

Answer 3

Comparative advantage

Question 4

Selling or shipping raw materials or products to other countries

Answer 4

Exporting

Question 5

Purchasing raw materials or products in other countries and bringing them to one’s own country

Answer 5

Importing

Question 6

The total value of a nation’s exports minus total value of its imports over a specific period

Answer 6

Balance of trade

Question 7

A negative balance of trade

Answer 7

Trade deficit

Question 8

The total flow of money into a country minus the total flow of money out of that country over a specified product

Answer 8

Balance of payments

Question 9

A limit on the amount of a particular good that may be imported into a country during a given period of time

Answer 9

Import quota

Question 10

Provides a link between buyers and sellers in different countries

Answer 10

Trading company

Question 11

International barter transaction

Answer 11

Countertrade

Question 12

A contractual agreement in which one company allows another to produce and market its product using its brand name for compensation

Answer 12

Licensing

Question 13

A contractual agreement for an individual or organization to operate facilities, typically stores, on behalf of another

Answer 13

Franchising

Question 14

An arrangement between companies to manufacture products or components for its specifications

Answer 14

Contract manufacturing

Question 15

An arrangement between companies in different countries to supply products or services to its customers

Answer 15

Out sourcing

Question 16

A partnership for a specific time

Answer 16

Joint venture

Question 17

Partnership to create competitive advantage

Answer 17

Strategic advantage

Question 18

A tax level on particular foreign product entering a country

Answer 18

Tariff

Question 19

Exportation of large quantities of a product at a price lower than that of the same product in the home market

Answer 19

Dumping

Question 20

A nontax measure imposed by a government to favor domestic over foreign supplies

Answer 20

Nontariff barrier

Question 21

A complete halt to trading with a particular nation or of a particular product

Answer 21

Embargo

Question 22

A restriction on the amount of a particular foreign currency that can be purchased or sold

Answer 22

Exchange control

Question 23

The reduction of the value of a nation’s currency relative to the currencies of other countries

Answer 23

Currency devaluation

Question 24

An international organization of nations dedicated to reducing or eliminating tariffs and other barriers to world trade

Answer 24

General Agreement on Tariffs and Trade (GATT)

Question 25

Powerful successor to GATT that facilitates world trade among member nations by mediating disputes and fostering efforts to reduce trade barriers

Answer 25

World Trade Organization (WTO)

Question 26

An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies

Answer 26

Economic Community

Question 27

An independent agency of the U.S. government whose function is to assist in financing the exports of American firms

Answer 27

Export-Import Bank of the United States

Question 28

An internationally support bank that provides loans to developing countries to help them grow

Answer 28

Multilateral development bank (MDB)

Question 29

A cooperative banking institution with 189 member countries

Answer 29

World Bank

Question 30

An international bank that makes short term loans to developing countries experiencing balance of payment deficits

Answer 30

International Monetary Fund (IMF)