Key Words

Question 1

Globalisation

Answer 1

The process by which businesses or other organisations develop international influence or start operating on an international scale

Question 2

MNC

Answer 2

Multinational Company

Question 3

Transfer Pricing

Answer 3

Technique used my MNC

Shift profits out of the countries where they operate and into tax havens.

Question 4

Specialisation

Answer 4

Becoming expert in a particular subject or skill.

Question 5

Absolute Advantage

Answer 5

Ability for an individual/group to carry out a particular thing more efficiently than another individual/group.

Question 6

Comparative Advantage

Answer 6

Ability for an individual/group to carry out a particular activity better than another activity.

Question 7

Terms of Trade

Answer 7

Ratio of an index of a country’s exports to an index of its imports.

Question 8

Trading Bloc

Answer 8

Groups of countries in specific regions that manage and promote trade activities between eachother

Question 9

FTA

Answer 9

Free Trade Agreement

Question 10

Customs Union

Answer 10

Group of countries that have agreed to charge the same import duties as each other and usually to allow free trade between themselves.

Question 11

Common Market

Answer 11

A group of countries imposing few or no duties on trade with one another and a common tariff on trade with other countries.

Question 12

Economic Union

Answer 12

Agreement between 2+ nations to allow goods, services, money and workers to move over borders freely.

Question 13

Bilateral Agreement

Answer 13

Agreement to cover agreements between 2 parties.

E.g. giving the right amount of money for imports purchased.

Question 14

NAFTA

Answer 14

North American Free Trade Agreement

Question 15

EU

Answer 15

European Union

Question 16

Common External Tariff

Answer 16

An import tariff applied equally by each country in the customs Union.

Question 17

Trade Creation

Answer 17

When countries agree a trade deal that lowers tariffs between them

Question 18

Trade Diversion

Answer 18

Tariff agreements cause imports to shift from lower-cost countries to higher-cost countries causing customers to pay higher prices.

Question 19

Monetary Union

Answer 19

A zone where single monetary policy prevails and inside which a single currency circulated freely.

Question 20

Optimum Currency Area

Answer 20

The geographical area that would maximise economic benefits by keeping the exchange rate fixed within an area

Question 21

WTO

Answer 21

World Trade Organisation

Question 22

Trade Liberalisation

Answer 22

The removal of tariff and non-tariff barriers in trade, basically international.

Question 23

Protectionism

Answer 23

Government policies that restrict international trade to help domestic industries.

Question 24

Trade Barrier

Answer 24

Obstacles that are put in place by governments to limit free trade between National countries.

Question 25

Quota

Answer 25

The time-bound restrictions governments impose on trade.

Question 26

Tariff

Answer 26

A tax imposed by a government on goods and services imported from other countries that serves to make imports less desirable/less competitive in comparison to domestic goods.

Question 27

Subsidy

Answer 27

Direct or indirect payment to individuals or firms usually in the form of a cash payment from the government.

Question 28

Expenditure Switching

Answer 28

Aim to switch consumer spending towards domestic goods, and away from imports.

Question 29

Expenditure Reducing

Answer 29

Reduce demand in the economy, so spending on imports fall.

Question 30

Nominal Exchange rate

Answer 30

The rate at which one currency can be exchanged for another.

Question 31

Real Exchange rate

Answer 31

The product of the exchange rate and the ratio of prices between the two countries.

Question 32

Effective exchange rate

Answer 32

The nominal exchange rate divided by a price deflator or index of costs.

Question 33

Fixed rate

Answer 33

The cost of borrowing money stays constant throughout the life of the loan and won’t change with fluctuations.