Reason for Inter. Trade
What is the benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources called?
Absolute Advantage
Which organization monitors the provisions of the General Agreement on Tariffs and Trade?
World Trade Organization
The _______is a basic measure of the difference between a nation’s exports and imports.
Balance of trade
What is the act of selling products in foreign nations that have been produced or grown domestically?
Exporting
What are national policies designed to restrict international trade, usually with the goal of protecting domestic businesses?
Protectionism
What is the opportunity of giving up the second best choice when making a decision called?
Opportunity Cost
A group of countries that have eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations
Common Market
A __________________means that more money flows in than out.
Balance of payment surplus
What are differences among cultures in language, attitudes, and values?
Sociocultural differences
What are limitations on the amount of specific products that may be imported from certain countries during a given time period?
Quotas
What is the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries?
Comparative Advantage
Which organization supports stable exchange rates, facilitates a smooth system of international payments, encourages member nations to adopt sound economic policies, promotes international trade, and lends money to member nations to address economic problems?
International Monetary Fund (IMF)
________measure the value of one nation’s currency relative to the currency of other nations.
Exchange rate
What is it called when two or more companies join forces-sharing resources, risks, and profits, but not actually merging companies- to pursue specific opportunities.
Joint Ventures
What are the three categories that most barriers to trade fall into?
Sociocultural, Economic, and Political/Legal differences
As a team, come up with your own example of an opportunity cost.
Answers will vary
What trading block exists between the United States, Mexico, and Canada?
North American Free Trade Agreement (NAFTA)
Shortfall that occurs when more money flows out of a nation than into that nation.
Balance of payment deficit
What involves a domestic firm granting a foreign firm the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area
Foreign Licensing
The political climate of the country that companies are interested in investing in is deeply influential when deciding to invest. Why is this such an important consideration?
The stability of a country is crucial to the company because if a country is not stable, it leads to risk. Companies do not want to invest in an area where their assets are at constant risk.
Assume France and Italy have enough resources to produce either wine or cheese, but not both. For France, the opportunity cost for producing one unit of wine is 0.5 units of cheese. Their opportunity cost for producing one unit of cheese is 2 units of wine. For Italy, the opportunity cost for producing one unit of wine is 0.73 units of cheese. Their opportunity cost for producing cheese is 1.36 units of wine. What country has comparative advantage for wine and which one has the comparative advantage for cheese?
France has comparative advantage for wine and Italy has comparative advantage for cheese.
This major common market has one form of currency.
European Union
After a decade of robust growth, global trade began slowing in 2007, due largely to _______________.
Turbulence in the world-wide financial markets.
A German and Japanese train company form a joint venture to assemble high speed trains in Japan. The German portion of this investment can be viewed as ___________from Germany to Japan.
Foreign direct investment
Andrews Corporation is debating on investing in the state of Olympus, a country that has a large amount of concerning issues. Andrew’s executives are concerned with their average per capita income and their crumbling infrastructure. What type of barrier to international trade is this an example of?
Economic differences