Chapter 3 Flashcards

1
Q

Importing

A

Buying products from another country

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2
Q

Exporting

A

Selling products from another country

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3
Q

Free Trade

A

The movement of goods and services among nations without political or economic barriers

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4
Q

Comparative Advantage Theory

A

A country should sell to other countries those products it produces most effectively and efficiently. It should also buy from other countries the products that it cannot produce effectively.

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5
Q

Absolute Advantage

A

When a country can produce a specific product more efficiently than all other countries.

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6
Q

Balance of trade

A

The total value of a nations exports compared to its imports measured over a particular period.

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7
Q

Trade Surplus

A

Occurs when the value of a country’s exports exceeds that of its imports

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8
Q

Trade Deficit

A

When the value of a country’s exports is less than that of its imports.

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9
Q

Balance of payments

A

The Difference between money coming into a country anf money leaving the country plus money flows from other factors such as tourism, foreign aid, military expenditures and foreign investment.

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10
Q

Dumping

A

Selling products in a foreign country at lower pirces than those charged in the producing country

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11
Q

Licensing

A

A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee.

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12
Q

Franchising

A

A contractual agreement whereby someone with a good idea for a business sells others the right to use the business name and sell a product or service in a given territory in a specified manner.

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13
Q

Contract Manufacturing

A

A foreign company produces private label goods to which a domestic company then attaches its own brand name or trademark.

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14
Q

Joint Venture

A

A partnership where two or more companies join to undertake a major project

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15
Q

Strategic allianmce

A

A long-term partnership between two or more companies established to help each company build competitive market advantages.

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16
Q

Foreign Direct invenstement

A

The buying of permanent property and businesses in foreign natinos.

17
Q

Foreign subsidiary

A

A copmpany owned in a foreign country by another company, called the parent company.

18
Q

Multinatinoal Corporation

A

One that manufactures and markets products in many different countries and has multinational stock ownership and management.

19
Q

Sovereign Wealth Funds

A

Investment fuinds controlled by governements holding large stakes in foreign companies, real estate and other investments

20
Q

Exchange Rate

A

The Value of one nation’s currency relative to the currencies of other countries

21
Q

Devaluation

A

Lowers the value of a nation’s currency relative to other currencies.

22
Q

Countertrading

A

A complex form of bartering in which several countries each trade goods or services for other goods or services.

23
Q

Trade Protectionism

A

The Use of government regluations to limit the import of goods and services.

24
Q

Tariffs

A

Taxes on imports

25
Q

Import Quota

A

Limits the number of products in certain categories a nation can import.

26
Q

Embargo

A

A complete ban on the import or export of a certain product, or the stopping of all trade with a particular county.

27
Q

General Agreement on Tariffs and Trade (GATT)

A

A global forum for reducing trade restrictions on goods, services, ideas, and cultural programs.

28
Q

World Trade Organization (WTO)

A

Mediates Trade Disputes among nations.

29
Q

Common market

A

A regional group of countries with a common external tariff, no internal tariffs, and coordinated laws to facilitate exchange among members/

30
Q

North American Free Trade Agreement (NAFTA)

A

Created a free trade area among the united states, canada, and mexico

31
Q

United States-mexico-canada agreement (USMCA)

A

New agreement replacing NAFTA

32
Q

Offshore Outsourcing

A

The process whereby one firm contracts with other companies abrouad to do some or all of its functions.