Year 2 Anderton Flashcards
(31 cards)
Globalisation
The ever-increasing economic integration of the world’s local, regional, and national economies into a single international market.
MNC (Multinational company)
A company with significant product operations in at least two countries
Transfer pricing
An account technique used by MNCs for reducing taxes on profits by selling goods at a low price internally from a high-tax country to another part of the company in a low-tax country.
Absolute advantage
Exists when a country is able to produce a good more cheaply relative to other goods produced domestically than another country.
Comparative advantage
Exists when a country is able to produce a good more cheaply relative to other goods produced domestically than another country.
Theory of comparative advantage
Countries will find it mutually advantageous to trade if the opportunity cost of production of goods differs.
terms of trade
the ratio of export prices to import prices
index of terms of trade
index of export prices / index of import prices x100
bilateral trade agreement
a regional trade agreement between 2 countries
common market
a customs union wherein both labour and capital have freedom of movement within the area and where product standards and laws concerning free movement of goods and services are common between countries
customs union
a group of countries between which there is free trade on products and which imposes a common external tariff on imported goods from outside the market.
economic union
a group of countries where the economies of member countries are as fully intergrated economically as different regions within a single country i.e. a common market with some degree of fiscal and monetary union
monetary union
a group of countries which share a common currency
fiscal union
a group of countries where a central body has some powers over government borrowing, spending, and setting uniform rates of taxation in member countries
free trade area
a group of countries between which there is free trade in goods and services but where member countries are allowed to set their own level of tariffs against non-member countries
multilateral trade agreement
a regional trade agreement between three or more countries or trading blocs
preferential trade agreement
a treaty between two or more countries to lower or abolish some protectionist barriers on trade between members
regional trade agreement
an agreement between at least two countries to reduce or eliminate protectionist barriers between themselves
trading bloc
a group of countries that have signed an agreement to reduce or eliminate tariffs, quotas, and other protectionist barriers between themselves
optimum currency area
a group of countries where efficiency would be maximised by sharing a common currency like the euro
trade creation
the switch from purchasing products from a high cost producer to a low cost producer
trade diversion
the switch from purchasing products from a low-cost producer to a higher cost producer
trade liberalisation
the move towards greater free trade through the removal of protectionist barriers to trade
dumping
the sale of goods at less than cost price by foreign producers in the domestic market
