Test #1 Flashcards
Chapter 1-3
What’s globalization?
Trend away from distinct national economic units and toward one huge global market.
Define globalization of markets?
Shifting from isolated national markets to a unified global market.
What is globalization of production?
Firms spreading production globally to optimize cost and quality.
Define factors of production? (5)
Factors of production: labor, management, land, capital, technology.
General Agreement on Tariffs and Trade (GATT)
Treaty reducing trade barriers, leading to the WTO.
World Trade Organization (WTO)
WTO, successor to GATT after the Uruguay Round.
International Monetary Fund (IMF)
International institution set up to maintain order in the international monetary system.
What is the World Bank?
International institution set up to promote general economic development in the world’s poorer nations.
Define United Nations (UN)?
UN, a 193-nation organization founded in 1945 for peace and cooperation.
Group of Twenty (G20)
G20, formed in 1999, includes finance leaders from 19 major economies, the EU, and the ECB.
What’s an international trade?
A firm exports goods or services to consumers in another country.
Define foreign direct investment (FDI)
Direct investment in business operations in a foreign country.
What is the Moore’s law?
The power of microprocessor technology doubles and its costs of production fall in half every 18 months.
Define outward stock of FDI.
Foreign assets held by firms outside their home country.
What are multinational enterprise (MNE)?
A firm that owns business operations in more than one country.
What’s international business?
Any firm that engages in international trade or investment.
Define the term political economy?
The political, economic, and legal systems of a country.
What are political system?
System of government in a nation.
Define the term collectivism.
A political system that emphasizes collective goals as opposed to individual goals.
Who are the socialists?
Those who believe in public ownership of the means of production for the common good of society. (Karl Marx)
Who are the communists?
Those who believe socialism can be achieved only through revolution and totalitarian dictatorship.
What are the social democrats?
Those committed to achieving socialism by democratic means.
What is privatization?
The sale of state-owned enterprises to private investors.
What is the belief of individualism?
An emphasis on the importance of guaranteeing individual freedom and self-expression.
What is a democracy?
Democracy, where government is by the people or elected representatives.
Tell me about totalitarianism.
Totalitarianism, where one party or leader has absolute control, and opposition is banned.
What is a representative democracy?
Political system in which citizens periodically elect individuals to represent them in government.
Define the communist totalitarianism.
A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.
What is theocratic totalitarianism?
Theocracy, where power is held by religious leaders or governed by religious principles.
Define tribal totalitarianism.
Ethnocracy, where political power is controlled by a group representing a specific ethnic group.
What is right-wing totalitarianism?
Authoritarianism, where economic freedom exists but political freedoms, like free speech, are restricted to prevent communism.
What is a market economy?
Market economy, where supply and demand dictate production levels.
Define command economy.
Planned economy, where the government determines resource allocation and production.
What is a legal system?
Legal system, which regulates behavior and enforces laws for grievance resolution.
Define the common law.
Common law, based on tradition, precedent, and custom.
What is a civil law system?
A system of law based on a very detailed set of written laws and codes.
Define theocratic law system.
A system of law based on religious teachings.
Define a contract.
Contract, outlining the terms, rights, and obligations of an exchange.
What is a contract law?
The body of law that governs contract enforcement.
United Nations Convention on Contracts for the International Saleof Goods (CISG)
International commercial law, governing cross-border contracts between sellers and buyers.
Define property rights.
Property rights, governing the use and income from a resource.
What are private actions?
Property crime, involving theft, piracy, blackmail, and similar acts.
What is a public action?
Corruption, where public officials extort resources or income from property holders.
Foreign Corrupt Practices Act (FCPA)
Foreign Corrupt Practices Act (FCPA), regulating bribery and unethical conduct in international business.
Define intellectual property.
Intellectual property, including ideas like books, music, and designs, protected by patents, copyrights, and trademarks.
What is a patent?
Patent, granting exclusive rights to an inventor for their new product or process.
Define copyrights.
Copyright, granting exclusive rights to authors, artists, and creators to control the distribution of their work.
What are trademarks?
Trademarks, used to distinguish and identify products or services.
World Intellectual Property Organization (WIPO)
International organization whose members sign treaties to agree to protect intellectual property.
Paris Convention for the Protection of Industrial Property
International agreement to protect intellectual property.
Define product safety laws.
Set certain safety standards to which a product must adhere.
Define product liability.
Involves holding a firm and its officers responsible when a product causes injury, death, or damage.
