DYNAMIC OF BUSINESS / Chapter 3

Question 1

global business

Answer 1

any activity that seeks to provide goods and services to others across national borders while operating at a profit

Question 2

What is the largest importing and exporting nation in the world?

Answer 2

United States

Question 3

exporting

Answer 3

selling products to another country

Question 4

importing

Answer 4

buying products from another country

Question 5

Why do countries trade with other countries

Answer 5

1. No nation can produce all the products that it’s people want and need
2. To meet the needs of it’s own people
3. Some nations have an abundance of natural resources and a lack of technological know- how while others have a sophisticated technology few but natural resources

Question 6

free trade

Answer 6

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

Question 7

global trade

Answer 7

the exchange of goods and services across the national borders

Question 8

comparative advantage theory

Answer 8

states that a country should sell to others countries those products that it produces most effectively and efficiently and buy from other countries those products it cannot produce as effectively and efficiently

Question 9

absolute advantage

Answer 9

occurs when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries

Question 10

balance trade

Answer 10

ratio of a country’s exports to imports

Question 11

trade surplus / favorable

Answer 11

when a country exports more than it imports

Question 12

trade deficit / unfavorable

Answer 12

occurs when a country imports more than it exports

Question 13

balance of payments

Answer 13

difference between money coming into a country and money leaving the country plus money flows coming into or leaving a country from other factors such as tourism , foreign aid, military expenditures, and foreign investment