Topic 2 (Chapter 3) Flashcards

1
Q

Pros of free trade

A
  • keeps prices down
  • inspires innovations
  • access to foreign investments
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2
Q

Cons of free trade

A
  • domestic workers can lose their jobs
  • workers may have to accept pay cuts
  • loss of service jobs
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3
Q

Free trade

A

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

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4
Q

Comparative advantage theory

A

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

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5
Q

Absolute advantage

A

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

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6
Q

Balance of trade

A

The total value of a nations exports compared to a Imports over a particular.

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7
Q

Trade surplus

A

A favorable balance of trade: occurs when the value of a country exports exceeds that of its imports

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8
Q

Trade deficit

A

Unfavorable balance of trade: value of countries imports exceeds that of its exports

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9
Q

Balance of payments

A

The difference between money coming into a country and money leaving a country

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10
Q

Dumping

A

Selling products in a foreign country at lower prices than those charged in the producing country

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11
Q

Licensing

A

A global strategy in which a firm allows a foreign company (licensee) to produce its product in exchange for a fee

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12
Q

Contract manufacturing

A

A foreign companies, production of private label goods to which a domestic company then attaches it’s brand name or trademark

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13
Q

Joint venture

A

A partnership in which two or more companies join to undertake a major project

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14
Q

Strategic alliance

A

A long term partnership between two or more companies established to help each company build competitive market advantages

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15
Q

Foreign direct investment

A

The buying of permanent property and businesses in foreign nations

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16
Q

Foreign subsidiary

A

A company owned any foreign country by another company, called the parent company

17
Q

Multinational corporation

A

An organization that manufactures and markets products in many different countries and has multinational stock ownership

18
Q

Sovereign wealth funds

A

Investment funds controlled by governments holding large stakes in foreign companies

19
Q

Exchange rate

A

The value of one nations currency relative to the currencies of other countries

20
Q

Devaluation

A

Lowering the value of a nations currency relative to other currencies

21
Q

Name some corrupt business countries

A

Somalia, South Sudan, north Korea, Syria, Yemen etc

22
Q

Trade protectionism

A

The use of government regulations to limit the import of goods and services

23
Q

Tariff

A

A tax imposed on imports

24
Q

Import quota

A

A limit on the number of products in certain categories that a nation can import

25
Q

Embargo

A

A complete ban in the import or export of a certain product or the stopping of all trade with a particular country

26
Q

Common market

A

A group of countries that have a common external tariff no internal tariffs and a coordination of laws to facilitate exchange

27
Q

North American Free Trade Agreement

A

Created a free trade area among the States and Mexico

28
Q

WTO (world trade organization)

A

An international organization, that mediates the rules of trade among nations

29
Q

General agreement on tariffs and trades (GATT)

A

An agreement establishing a forum for discussion of international trade problems, and mutual reductions in trade restrictions and tariffs

30
Q

Countertrading agreement

A

Foreign trade agreements involving bartering, and which other products are exchanged, instead of currency may involve several nations