opportunity cost trade deficit
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absolute advantage balance of payments
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comparative advantage balance of payments surplus
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balance of trade balance of payments deficit
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trade surplus exchange rates
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Shortfall that occurs when the total value of a nation’s The opportunity of giving up the second‐best choice imports is higher than the total value of its exports. when making a decision.
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The benefit a country has in a given industry when it A measure of the total flow of money into or out of a can produce more of a product than other nations country. using the same amount of resources.
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The benefit a country has in a given industry if it can Overage that occurs when more money flows into a make products at a lower opportunity cost than other nation than out of that nation. countries.
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A basic measure of the difference in value between a Shortfall that occurs when more money flows out of a nation’s exports and imports, including both goods and nation than into that nation. services.
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A measurement of the value of one nation’s currency Overage that occurs when the total value of a nation’s relative to the currency of other nations. exports is higher than the total value of its imports.
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countertrade foreign franchising
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foreign outsourcing direct investment (also contract manufacturing) (or foreign direct investment)
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importing joint ventures
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exporting partnership
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foreign licensing strategic alliance
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A specialized type of foreign licensing in which a firm expands by offering businesses in other countries the International trade that involves the barter of products right to produce and market its products according to for products rather than for currency. specific operating requirements.
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When firms either acquire foreign firms or develop Contracting with foreign suppliers to produce new facilities from the ground up in foreign countries. products, usually at a fraction of the cost of domestic production.
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When two or more companies join forces—sharing resources, risks, and profits, but not actually merging Buying products domestically that have been produced companies—to pursue specific opportunities. or grown in foreign nations.
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A formal, typically long‐term agreement between two or more firms to jointly pursue a specific opportunity Selling products in foreign nations that have been without actually merging their businesses. produced or grown domestically.
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An agreement between two or more firms to jointly Authority granted by a domestic firm to a foreign firm pursue a specific opportunity without actually merging for the rights to produce and market its product or to their businesses. Strategic alliances typically involve use its trademark/patent rights in a defined less formal, less encompassing agreements than geographical area. partnerships.
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sociocultural differences voluntary export restraints (VERs)
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infrastructure embargo
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tariffs GATT General Agreement on Tariffs and Trade
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quotas World Trade Organization (WTO)
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Limitations on the amount of specific products that one Differences among cultures in language, attitudes, and nation will export to another nation. values.
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A complete ban on international trade of a certain item, A country’s physical facilities that support economic or a total halt in trade with a particular nation. activity.
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National policies designed to restrict international The unrestricted movement of goods and services trade, usually with the goal of protecting domestic across international borders. businesses.
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An international trade treaty designed to encourage Taxes levied against imports. worldwide trade among its members.
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A permanent global institution to promote Limitations on the amount of specific products that international trade and to settle international trade may be imported from certain countries during a given disputes. time period.
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World Bank European Union (EU)
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International Monetary Fund (IMF)
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trading bloc
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common market
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NAFTA North American Free Trade Agreement
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The world’s largest common market, composed of 27 An international cooperative of 184 member countries, European nations. working together to reduce poverty in the developing world.
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An international organization of 184 member nations that promote international economic cooperation and stable growth.
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Group of countries that has reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations.
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Group of countries that has eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations.
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The treaty among the United States, Mexico, and Canada that eliminated trade barriers and investment restrictions over a 15‐year period starting in 1994.
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