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28 Cards in this Set
- Front
- Back
Importing |
Buying products from another country. |
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Exporting |
Selling products to another country. |
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Free Trade |
The movement of goods and services among nations without political or economic barriers. |
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Comparative Advantage Theory |
Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently. |
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Absolute Advantage |
The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries. |
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Balance of Trade |
The total value of a nation's exports compared to its imports measured over a particular period. |
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Trade Surplus |
A favorable balance of trade; occurs when the value of a country's exports exceeds that of it's imports. |
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Trade Deficit |
An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports. |
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Balance of Payments |
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment. |
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Dumping |
Selling products in a foreign country at lower prices than those charged in the producing economy. |
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Licencing |
A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty). |
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Contract Manufacturing |
A foreign company's production of a private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing. |
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Joint Venture |
A partnership in which two or more companies (often from different countries) join to undertake a major project. |
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Strategic Alliance |
A long-term partnership between two or more companies established to help each company build competitive market advantages. |
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Foreign Direct Investment (FDI) |
A company owned in a foreign country by another company, called the parent company. |
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Multinational Corporation |
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management. |
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Sovereign Wealth Funds (SWF's) |
Investment funds controlled by governments holding large stakes in foreign companies. |
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Exchange Rate |
The value of one nation's currency relative to the currencies of other countries. |
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Devaluation |
Lowering the value of a nation's currency relative to other currencies. |
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Countertrading |
A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services. |
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Trade Protectionism |
The use of government regulations to limit the import of goods and services. |
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Tariff |
A tax imposed on imports. |
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Import Quota |
A limit on the number of products in certain categories that a nation can import. |
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Embargo |
A complete ban on the import of export of a certain product, or the stopping of all trade with a particular country. |
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General Agreement on Tariffs and Trade (GATT) |
A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions. |
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World Trade Organization (WTO) |
The international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty to mediate trade disputes among nations. |
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Common Market |
A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union. |
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North American Free Trade Agreement (NAFTA) |
Agreement that created a free-trade area among the United States, Canada, and Mexico. |