The movement of goods and services among nations without political or economic barriers.
Selling products to another country.
Lowering the value of a nation’s currency relative to other currencies.
An unfavorable balance of trade; occurs when the value of a country’s imports exceeds that of its exports.
A favorable balance of trade; occurs when the value of a country’s exports exceeds that of its imports.
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).
Buying products from another country.
The use of government regulations to limit the import of goods and services.
balance of trade
The total value of a nation’s exports compared to its imports over a particular period.
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.
A long-term partnership between two or more companies established to help each company build competitive market advantages.
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.
A tax imposed on imports.
A limit on the number of products in certain categories that a nation can import.
A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
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.
sovereign wealth funds (SWFs)
Investment funds controlled by governments holding large stakes in foreign companies.
A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
World Trade Organization (WTO)
The international organization that replaced the General Agreement on Tariffs and Trade (GATT), and was assigned the duty to mediate trade disputes among nations.
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.
The amount of output you generate given the amount of input (ex: hours you work)
The value of one nation’s currency relative to the currencies of other countries.
Tangible products such as computers, food, clothing, cars, and appliances
Intangible products (i.e., products that can’t be held in your hand) such as education, healthcare, insurance, recreation and travel and tourism.
A partnership in which two or more companies (often from different countries) join to undertake a major project.
A person who risks time and money to start and manage a business
North American Free Trade Agreement (NAFTA)
Agreement that created a free-trade area among the United States, Canada, and Mexico.
Economic systems in which some allocation of resources is made by the market and some by the government
foreign direct investment (FDI)
The buying of permanent property and businesses in foreign nations.
The total amount of money a business takes in during a given period by selling goods and services
The amount of money a business earns above and beyond what it spends for salaries and other expenses
When a business’s expenses are more than its revenues
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.
An organization whose goals are for the betterment of the community, not financial gains.
Selling products in a foreign country at lower prices than those charged in the producing country.
The chance an entrepreneur takes of losing time and money on a business that may not prove profitable
Standard of Living
The amount of goods and services people can buy with the money they have.
Quality of life
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.
Any activity that seeks to provide goods and services to others while operating at a profit
The obtaining of individuals’ personal information, such as Social Security and credit card numbers, for illegal purposes
A legal form of business with two or more owners.
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.
The trend toward saving energy and producing products that cause less harm to the environment
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
General Agreement on Tariffs and Trade (GATT)
A1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.
The study of how to increase resources and to create the conditions that will make better use of those resources.
Factors of production
The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.
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
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
The surrounding factors that either help of hinder the development of businesses.
The buying and selling of goods on the internet
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
Businesses owned and controlled by the people who use it – producers, consumers, or workers with similar needs who pool their resources for mutual gain.
Giving front-line workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests
The statistical study of the human population with regard to its size, density and characteristics like age, race, gender and income.
The movement of the temperature of the planet up or down over time
The part of economics study that looks at the operation of a nation’s economy as a whole
The part of economics study that looks at the behavior of people and organizations in particular markets
Invisible Hand Theory
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending
A company owned in a foreign country by another company, called the parent company.
The price determined by supply and demand
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
An electronic storage file for information.
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.
A degree of competition in which just a few sellers dominate the market
A degree of competition in which only one seller controls the total supply of a product or service, and sets the price
Economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
A general rise in the prices of goods and services over time
The quantity of products that people are willing to buy at different prices at a specific time
A situation in which prices are declining
Gross Domestic Product (GDP)
The total value of final goods and services produced in a country in a given year
Number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
A situation in which price increases are slowing (the inflation rate is declining)
Consumer Price Index (CPI)
Monthly statistics that measure the pace of inflation or deflation
The periodic rises and falls that occur in economies over time
Two or more consecutive quarters of decline in the GDP
The responsibility of a business’s owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.
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
A legal entity with authority to act and have liability apart from its owners.
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.
Producer Price Index (PPI)
An index that measures prices at the wholesale level
The sum of government deficits over time
Keynesian Economic Theory
The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
Master Limited Partnership (MLP)
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.
The management of the money supply and interest rates by the Federal Reserve Bank
A business that is owned, and usually managed, by one person.
The right to use a specific business’s name and sell its products or services in a given territory.
A severe recession, usually accompanied by deflation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
A situation when the economy is slowing but prices are going up anyhow
An owner (partner) who has unlimited liability and is active in managing the firm.
A unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships.
A partnership in which all owners share in operating the business and in assuming liability for the business’s debts.
Limited Liability Partnership (LLP)
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.
An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.
A partnership with one or more general partners and one or more limited partners.
The joining of two firms in the same industry
One company’s purchase of the property and obligations of another company.
A person who buys a franchise.
The responsibility of business owners for all of the debts of a business.
Conventional (C) Corporation
A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).
A company that develops a product concept and sells others the rights to make and sell the products.
Limited Liability Company (LLC)
A company similar to an S corporation but without the special eligibility requirements.
The result of two firms joining to form one company.
The joining of two companies involved in different stages of related business.
The joining of firms in completely unrelated industries.
Leveraged Buyout (LBO)
An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.