Chapter 3 Flashcards
International business
The buying, selling, and trading of goods and services across national boundaries.
Absolute advantage
A monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
Comparative advantage
The basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
Outsourcing
The transferring of manufacturing or other tasks–such as data processing–to countries where labor and supplies are less expensive.
Exporting
The sale of goods and services to foreign markets
Importing
The purchase of goods and services from foreign sources.
Balance of trade
The difference in value between a nation’s exports and its imports
Trade deficit
A nation’s negative balance of trade, which exists when that country imports more products than it exports.
Balance of payments
The difference between the flow of money into and out of a country.
Infrastructure
The physical facilities that support a country’s economic activites, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems.
Exchange rate
The ratio at which one nation’s currency can be exchanged for another nation’s currency.
Import tariff
A tax levied by a nation on goods imported into a country.
Exchange controls
Regulations that restrict the amount of currency that can be bought or sold.
Quota
A restriction on the number of units of a particular product that can be imported into a country.
Embargo
A prohibition on trade in a particular product.
Dumping
The act of a country or business selling products at less than what it costs to produce them.
Cartel
A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.
General Agreement on Tariffs and Trade (GATT)
A trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved.
World Trade Organization (WTO)
International organization dealing with the rules of trade between nations.
North American Free Trade Agreement (NAFTA)
Agreement that eliminates most tariffs and trade restriction on agricultural and manufactured products to encourage trade among Canad, the United States, and Mexico.
European Union (EU)
A union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.
Asia-Pacific Economic Cooperation (AFEC)
An international trade alliance that promotes open trade and economic and technical cooperation among member nations.
Association of Southeast Asian Nations (ASEAN)
A trade alliance that promotes trade and economic integration among member nations in Southeast Asia.
World Bank
an organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally know as the International Bank for Reconstruction and Development.
