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free trade

answer

The movement of goods and services among nations without political or economic barriers.

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exporting

answer

Selling products to another country.

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devaluation

answer

Lowering the value of a nation's currency relative to other currencies.

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trade deficit

answer

An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports.

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trade surplus

answer

A favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports.

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licensing

answer

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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importing

answer

Buying products from another country.

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trade protectionism

answer

The use of government regulations to limit the import of goods and services.

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balance of trade

answer

The total value of a nation's exports compared to its imports over a particular period.

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comparative advantage theory

answer

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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strategic alliance

answer

A long-term partnership between two or more companies established to help each company build competitive market advantages.

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absolute advantage

answer

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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tariff

answer

A tax imposed on imports.

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import quota

answer

A limit on the number of products in certain categories that a nation can import.

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countertrading

answer

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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contract manufacturing

answer

A foreign country's production of 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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sovereign wealth funds (SWFs)

answer

Investment funds controlled by governments holding large stakes in foreign companies.

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embargo

answer

A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.

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World Trade Organization (WTO)

answer

The international organization that replaced the General Agreement on Tariffs and Trade (GATT), and was assigned the duty to mediate trade disputes among nations.

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common market

answer

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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Productivity

answer

The amount of output you generate given the amount of input (ex: hours you work)

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exchange rate

answer

The value of one nation's currency relative to the currencies of other countries.

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Goods

answer

Tangible products such as computers, food, clothing, cars, and appliances

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Services

answer

Intangible products (i.e., products that can't be held in your hand) such as education, healthcare, insurance, recreation and travel and tourism.

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joint venture

answer

A partnership in which two or more companies (often from different countries) join to undertake a major project.

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Entrepreneur

answer

A person who risks time and money to start and manage a business

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North American Free Trade Agreement (NAFTA)

answer

Agreement that created a free-trade area among the United States, Canada, and Mexico.

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Mixed Economies

answer

Economic systems in which some allocation of resources is made by the market and some by the government

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foreign direct investment (FDI)

answer

The buying of permanent property and businesses in foreign nations.

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Revenue

answer

The total amount of money a business takes in during a given period by selling goods and services

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Profit

answer

The amount of money a business earns above and beyond what it spends for salaries and other expenses

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Loss

answer

When a business's expenses are more than its revenues

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Outsourcing

answer

Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.

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Nonprofit Organization

answer

An organization whose goals are for the betterment of the community, not financial gains.

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dumping

answer

Selling products in a foreign country at lower prices than those charged in the producing country.

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Risk

answer

The chance an entrepreneur takes of losing time and money on a business that may not prove profitable

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Standard of Living

answer

The amount of goods and services people can buy with the money they have.

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Quality of life

answer

The general well-being of a society in terms of its natural environment, education, healthcare, safety, amount of leisure and rewards that add to the satisfaction and joy that other goods and services provide.

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Business

answer

Any activity that seeks to provide goods and services to others while operating at a profit

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Identity theft

answer

The obtaining of individuals' personal information, such as Social Security and credit card numbers, for illegal purposes

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Partnership

answer

A legal form of business with two or more owners.

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Technology

answer

Everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive.

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Greening

answer

The trend toward saving energy and producing products that cause less harm to the environment

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Stakeholders

answer

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business need to address

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General Agreement on Tariffs and Trade (GATT)

answer

A1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.

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Resource Development

answer

The study of how to increase resources and to create the conditions that will make better use of those resources.

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Factors of production

answer

The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.

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Perfect Competition

answer

The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product

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Economics

answer

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals

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Business Environment

answer

The surrounding factors that either help of hinder the development of businesses.

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E-Commerce

answer

The buying and selling of goods on the internet

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Supply

answer

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

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Cooperatives

answer

Businesses owned and controlled by the people who use it - producers, consumers, or workers with similar needs who pool their resources for mutual gain.

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Empowerment

answer

Giving front-line workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

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Demography

answer

The statistical study of the human population with regard to its size, density and characteristics like age, race, gender and income.

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Climate Change

answer

The movement of the temperature of the planet up or down over time

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Macroeconomics

answer

The part of economics study that looks at the operation of a nation's economy as a whole

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Microeconomics

answer

The part of economics study that looks at the behavior of people and organizations in particular markets

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Invisible Hand Theory

answer

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all

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Fiscal Policy

answer

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

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foreign subsidiary

answer

A company owned in a foreign country by another company, called the parent company.

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Market Price

answer

The price determined by supply and demand

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Monopolistic Competition

answer

The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different

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Database

answer

An electronic storage file for information.

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balance of payments

answer

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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Oligopoly

answer

A degree of competition in which just a few sellers dominate the market

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Monopoly

answer

A degree of competition in which only one seller controls the total supply of a product or service, and sets the price

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Free-Market Economies

answer

Economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows

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Inflation

answer

A general rise in the prices of goods and services over time

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Demand

answer

The quantity of products that people are willing to buy at different prices at a specific time

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Deflation

answer

A situation in which prices are declining

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Gross Domestic Product (GDP)

answer

The total value of final goods and services produced in a country in a given year

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Unemployment Rate

answer

Number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks

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Disinflation

answer

A situation in which price increases are slowing (the inflation rate is declining)

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Consumer Price Index (CPI)

answer

Monthly statistics that measure the pace of inflation or deflation

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Business Cycles

answer

The periodic rises and falls that occur in economies over time

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Recession

answer

Two or more consecutive quarters of decline in the GDP

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Limited Liability

answer

The responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.

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Command Economies

answer

Economic system in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow

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Corporation

answer

A legal entity with authority to act and have liability apart from its owners.

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Franchise Agreement

answer

An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.

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Producer Price Index (PPI)

answer

An index that measures prices at the wholesale level

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National Debt

answer

The sum of government deficits over time

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Keynesian Economic Theory

answer

The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.

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Master Limited Partnership (MLP)

answer

A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.

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Monetary Policy

answer

The management of the money supply and interest rates by the Federal Reserve Bank

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Sole Proprietorship

answer

A business that is owned, and usually managed, by one person.

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Franchise

answer

The right to use a specific business's name and sell its products or services in a given territory.

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Depression

answer

A severe recession, usually accompanied by deflation

question

multinational corporation

answer

An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.

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Stagflation

answer

A situation when the economy is slowing but prices are going up anyhow

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General Partner

answer

An owner (partner) who has unlimited liability and is active in managing the firm.

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S Corporation

answer

A unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships.

question

General Partnership

answer

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

question

Limited Liability Partnership (LLP)

answer

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

question

Limited Partner

answer

An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.

question

Limited Partnership

answer

A partnership with one or more general partners and one or more limited partners.

question

Horizontal Merger

answer

The joining of two firms in the same industry

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Acquisition

answer

One company's purchase of the property and obligations of another company.

question

Franchisee

answer

A person who buys a franchise.

question

Unlimited Liability

answer

The responsibility of business owners for all of the debts of a business.

question

Conventional (C) Corporation

answer

A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).

question

Franchisor

answer

A company that develops a product concept and sells others the rights to make and sell the products.

question

Limited Liability Company (LLC)

answer

A company similar to an S corporation but without the special eligibility requirements.

question

Merger

answer

The result of two firms joining to form one company.

question

Vertical Merger

answer

The joining of two companies involved in different stages of related business.

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Conglomerate Merger

answer

The joining of firms in completely unrelated industries.

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Leveraged Buyout (LBO)

answer

An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

SWUFE-Understanding Business 9th Edition-Review for Mid-Term Chapter 1-5 – Flashcards

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