DYNAMIC OF BUSINESS / Chapter 3 Flashcards
UNDERSTANDING GLOBALIZATION / VOCABULARY WORDS
global business
any activity that seeks to provide goods and services to others across national borders while operating at a profit
What is the largest importing and exporting nation in the world?
United States
exporting
selling products to another country
importing
buying products from another country
Why do countries trade with other countries
- No nation can produce all the products that it’s people want and need
- To meet the needs of it’s own people
- 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
free trade
the movement of goods and services among nations without political or economic trade barriers
global trade
the exchange of goods and services across the national borders
comparative advantage theory
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
absolute advantage
occurs when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries
balance trade
ratio of a country’s exports to imports
trade surplus / favorable
when a country exports more than it imports
trade deficit / unfavorable
occurs when a country imports more than it exports
balance of payments
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