business chapter 3

Question Answer
Absolute advantage a situation where a country can produce a good or service at a lower cost than other countries.
Balance of payments the difference between the amount of money that comes into a country and the amount that goes out of a country.
Balance of trade the difference between a country's total exports and total imports.
Common market a market in which members do away with duties and other trade barriers.
Comparative advantage a situation in which a country specializes in the production of a good or service at which it is relatively more efficient.
Culture the accepted behaviors, customs, and values of a society.
Domestic business the making, buying, and selling of goods and services within a country.
Embargo an action imposed by the government to stop the export or import of a product completely.
Exchange rate the value of a currency in one country compared with the value in another.
Exports goods and services sold to other countries.
Foreign debt the amount a country owes to other countries.
Foreign exchange market banks that buy and sell different currencies.
Franchise a written contract granting permission to operate a business to sell products and services in a set way.
Free-trade agreement an agreement between member countries to remove duties and trade barriers on products traded among them.
Free-trade zone a selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing.
Global strategy a strategy that uses the same product and marketing strategy worldwide.
Host country the country in which the multinational company (MNC) places business activities.
Imports goods and services bought from other countries.
Infrastructure a factor that supports international trade in industrialized countries, including a nation's transportation, communication, and utility systems.
Interest rates the cost of using someone else's money.
International business business activities needed for creating, shipping, and selling goods and services across national borders.
Joint venture a unique business organized by two or more other businesses to operate for a limited time and for a specific project. It is a type of partnership.
Licensing selling the right to use some intangible property (production process, trademark, or brand name) for a fee or royalty.
Multinational company (MNC) an organization that does business in several countries. It usually consists of a home country and divisions or separate companies in one or more host countries.
Multinational strategy a strategy that treats each country market differently. Firms develop products and marketing strategies that adapt to the customs, tastes, and buying habits of a distinct national market.
Negative or unfavorable balance of payments the result of a country sending more money out than it brings in.
Positive or favorable balance of payments occurs when a nation receives more money in a year than it pays out.
Quota a government-set limit on the quantity of a product that may be imported or exported within a given period.
Tariff a tax that a government places on certain imported products.
Trade barriers restrictions to free trade.
Trade deficit a situation in which a country imports (buys) more than it exports (sells).
Trade surplus a situation in which a country exports (sells) more than it imports (buys).

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