4.1 A2 Business key terms Flashcards Preview

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Flashcards in 4.1 A2 Business key terms Deck (37)
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1

economic growth

increase in a country's productive capacity

2

emerging economies

economies of developing countries where there is rapid growth, but also significant risk

3

human development index (HDI)

collection/mix of statistics that includes: 1) life expectancy 2) standard of living (GDP per capita) 3) literacy rate
ranking countries according to their human development

4

literacy rate

percentage of adults (over the age of 15) that can read and write

5

purchasing power parity (PPP)

a measure that uses the price of purchasing a standardised basket of goods and services in order to compare prices across economies
gives a more realistic comparison of GDP

6

gross domestic product (GDP)

the total value of output (goods and services) produced in a particular time period
used to measure economic activity

7

gross domestic product (GDP) per capita

total value of output (goods and services) produced in a given time period (year) divided by the number of people in the population

8

comparative advantage

the theory that a country should specialise in products and services that it can produce more efficiently than other countries
e.g. (coffee from Brazil or tea from China)

9

competitive advantage

an advantage a business has over its competitors gained by specialisation (research, product development, management) - or by offering consumers greater value - either by lowering prices or providing benefits, services and quality that justifies the high prices

10

devision of labour

when production is broken down into many separate tasks, and each task is done by specialised workers
by each worker focusing on a particular operation, this leads to an increase in output

11

imports

foreign goods and services bought by residents of a country
(apples from Mexico purchased by UK consumers in a UK based supermarket)

12

exports

goods and services produced in one country and purchased by residents of another country
(Chinese steel sent to the UK by Chinese companies)

13

foreign direct investment

an investment made by a firm or individual in one country into business interests located in another country
FDI takes place when an investor establishes foreign business operations (factories) or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company (global mergers)

14

international trade

exporting (selling abroad) and importing (buying from abroad)

15

specialisation

when each individual employee focuses on a given task
leading to an increase in output

16

import tariffs

taxes that are imposed on imports - increasing the cost of traded goods
it is a form of protectionism

17

globalisation

growing integration and interdependence of the world's economies

18

transnational or multinational companies
(TNCs) / (MNCs)

companies that own or control production or services facilities outside the country they are based in
note: it's more about having business operations and activities in more than one country rather than selling goods

19

world trade organisation (WTO)

an international organisation that promotes free trade by persuading countries to abolish protectionism barriers (e.g. tariffs, embargoes, import quotas etc)
it polices free trade agreements, settles trade disputes between governments and organises trade negotiations

20

administrative barriers

rules and regulations that make it difficult for importers to penetrate an overseas market

21

dumping

when a firm in one country exports a product to another country at a price below the price it charges in its home market or below the costs of supply

22

embargo

a complete ban on international trade
usually for political reasons

23

import quota

a physical limit on the quantity of imports allowed in a country

24

infant industries

new industries that have yet to establish themselves

25

protectionism

any attempt by a government, trade bloc or region to impose restrictions on the import of goods and services and protect domestic producers

26

subsidy

financial support from government given to a domestic producer to help compete with overseas firms
these include: - grants
- interest free loans
- tax breaks
this leads to a decrease in costs, increase in supply

27

trade barriers

inclusion of all costs present when getting a good to the final consumer - excluding production costs
- transport costs
- import tariffs

28

common market

a market where goods, labour and capital can move freely across the member states; trade barriers usually eliminated - or at least reduced

29

customs union

a union where member states remove all trade barriers between themselves and members adopt a common set of barriers against non members

30

economic union

a type of trade bloc involving both a customs union and a common market