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Mercantilism
An economic philosophy based on the belief that a nation's wealth depends on accumulated treasure, in precious metals like gold and silver
Absolute Advantage
Theory that a nation has absolute advantage when it can produce a larger amount of good or service for the same amount of inputs as can another country
Comparative Advantage
Theory that a nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative or relative advantage in the production of the good in which its absolute disadvantage is less
Offshoring
Locating activities in another nation
International Product Life Cycle
A theory explaining why a product that begins as a nation's export eventually becomes its import
Economies of Scale
Situation where the average cost of producing each unit of output decreases as a plant gets larger and output increases
Portfolio Investment (Foreign)
The purchase of stocks and bonds to obtain a return on the funds invested
Direct Investment (Foreign )
The purchase of sufficient stock in a firm to obtain significant management control
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