Chapter 3-Business in a Borderless World Flashcards
International Business
the buying, selling, and trading of goods, services across national boundaries.
Absolute Advantage
a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
Comparative Advantage
the basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
Outsourcing
the transferring of manufacturing or other tasks-such as data processing-to countries where labor and supplies are less expensive.
Exporting
the sale of goods an services to foreign markets.
Importing
the purchase of goods and services from foreign sources.
Balance of Trade
the difference in value between a nation’s exports and its imports.
Trade Deficit
a nation’s negative balance of trade, which exists when that country imports more products than it exports.
Balance of Payments
the different between the flow of money into and out of a country.
Infrastructure
the physical facilities that support a country’s economic activities, such as railroads, highways, ports, airfields, utilities, and power plants, schools, hospitals, communication systems, and commercial distribution.
Exchange Rate
the ratio at which one nation’s currency can be exchanged for another nation’s currency.
Import Tariff
a tax levied by a nation on goods imported into the country.
Exchange Controls
Regulations that restrict the amount of currency that can be bought or sold.
Quota
a restriction on the number of units of a particular product that can be imported into a country.
Embargo
a prohibition on trade in a particular product.
Dumping
the act of a country or business selling products at less than what it costs to produce them.
Cartel
a group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.
General Agreement on Tariffs and Trade (GATT)
a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be resolved.
World Trade Organization (WTO)
international organization dealing with the rules of trade between nations.
North American Free Trade Agreement (NAFTA)
agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the United States, and Mexico.
European Union (EU)
a union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.
Asia-Pacific Economic Cooperation
an international trade alliance that promotes open trade and economic and technical cooperation among member nations.
World Bank
an organization established by the industrialized nations in 1946 to loan money to the underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development.
Countertrade Agreements
foreign trade agreements that involve bartering products for other products instead of for currency.
