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Flashcards in Chapter 5 Deck (20):
1

trade surplus

a favourable balance of trade that occurs when a country exports more than it imports.

2

trade deficit

an unfavourable balance of trade that occurs when a country imports more than it exports.

3

floating exchange rates

a system in which prices of currencies move up and down based on the demand for and supply of the various currencies.

4

principle of comparative advantage

the concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.

5

free trade

the policy of permitting the people of a country to buy and sell where they please without restrictions.

6

Mercosur

Trade agreement between Brazil, Argentina, Uruguay, Paraguay and Venezuela.

7

Association of Southeast Asian Nations (ASEAN)

The Association of Southeast Asian Nations, which, as of 2012, included 10 member states.

8

licensing

The legal process whereby a company agrees to allow another company to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty.

9

contract manufacturing

the practice in which a foreign company manufactures private label goods under a domestic company's brand name.

10

countertrade

a form of international trade in which part or all of the payment for goods or services is in the form of other goods and services.

11

dumping

the practice of charging a lower price for a product in foreign markets than in the company's home market.

12

World Trade Organization (WTO)

An organization established by the Uruguay Round in 1994 to oversee international trade, reduce trade barriers, and resolve disputes among member nations. A trade agreement covering services, intellectual property rights, and exchange controls.

13

World Bank

An international bank that offers low-interest loans, as well as advice and information, to developing nations to help build infrastructures.

14

International Monetary Fund (IMF)

An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender to last resort for troubled nations.

15

infrastructure

the basic institutions and public facilities on which an economy's development depends.

16

embargo

A total ban on imports or exports of a product

17

exchange controls

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.

18

The best known economic communities

Are NAFTA, European Union, ASEAN, and Mercosur.

19

Non-tariff barriers to trade are

import quotas, embargoes, customs regulations, and exchange controls.

20

BRIC economic power

Brazil, Russia, India and China are the fastest growing and largest emerging market economies. Potentially, China will lead in manufacturing, India in services and Brazil and Russia in natural resources.