Exam Review Flashcards
International Business
Countries are dependent on each other to produce certain goods
Global Dependency
When items that consumers need and want are created in other countries. Ex. Drought and crops in Africa
Trade Barriers
Restrictions that reduce free trade among countries
Gross Domestic Product (GDP)
measures the output of goods that a country produces within its borders. It includes items produced with foreign resources
Gross National Product (GNP)
measures the total value of all goods and services produced by the resources of a country
Balance of Trade
is the difference between a country’s exports and imports. A trade surplus occurs when a nation exports more than it imports. Trade deficit is vice versa
Absolute Advantage
exists when a country can produce a good or service at a lower cost than other countries. Ex. Saudi has absolute advantage in oil
Comparative Advantage
A country specializes in the production of a good or service at which it is relatively more efficient
Economic System
is the method a country uses to answer the basic economic questions
Command Economy
the government or a central - planning committee regulates the amount, distribution, and price of everything produced. The government also owns the productive resources of that country
Market Economies
are those in which individual companies and consumers make the decision about what, how, and for whom items will be produced. It is also called capitalism
Private property
Individuals have the right to buy and sell productive re-sources and to own business enterprises
Profit motive
Individuals are inspired by the opportunity to be rewarding for taking business risks and for working hard
Free, competitive marketplace
Consumers have the power to use their choices to determine what is to be produced and to influence the prices to be changed
Mixed Economy
Economies are a blend between government involvement in business and private ownership
Privatization
The process of changing an industry from publicly to private
World Bank
is a bank whose major function is to provide economic assistance to less developed countries
International Monetary Fund (IMF)
is an agency that helps promote economic cooperation by maintain an orderly system of world trade and exchange rates
WTO (World Trade Organization)
Helps form relations and trade agreements with other nations
Trade Surplus
Occurs when a country exports more than it imports
Trade Deficit
Occurs when a country imports more than it exports
Monopoly
One seller controls the entire market for a product or service
Oligopoly
Has few sellers with slightly different product like car tires
What is the economy?
It is the means by which people organize the production of needed goods and services using the resources they have available
Demand
Two criteria must exist for there to be a demand for a product. Desire/want for the product/sense, Ability to pay
Supply
Is the amount businesses are willing to supply at different prices
Law of Demand
Price (up)-Demand (down), Price (Down)-Demand (up)
Law of Supply
Price (up) - Supply (up), Price (down) - Supply (down)
What is the economic problem ?
Scarcity vs. Unlimited wants and needs
What does scarcity mean?
The definition of scarcity in economics is the situation where limited resources cannot satisfy unlimited wants. What to produce?, How to produce it?, For whom to produce it?
Opportunity Cost
The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action
Market Price
The point at which demand and supply cross
Equilibrium price
is when there is no inflation on a sale
Industrialized Country
a country with strong business activity that is usually the result of advanced technology and a highly educated population
Infrastructure
refers to a nation’s transport, communication, and utility systems
Less-Developed Country (LDC)
a country with little economic wealth and an emphasis on agriculture or mining. Sometimes these countries have abundant resources but no technology to make use of them