Business In a Global Global Economy

Definition: The interconnected economies of the nations of the world.

Globalization: It is the development of the global economy

Multinational corporation: it is a company that does business in many countries and has the facilities and offices around the world

Definition: Imports are the products that enter the country to be sold but exports are the products that leave the country to be sold somewhere else

Balance of trade: it is the difference in value between a country’s imports and exports over a period of time.

Comparative advantage: it is the ability of a country to produce a particular good more efficiently than another country.

Countries have to pay for products and services with currency. To trade with another country, businesses and countries must convert their money into that nation's currency. To do that, their currency is exchanged on the foreign exchange market.

Definition: The governments practice of putting limits
on foreign trade to protect businesses at home.

Protectionism is used by countries to limit competition from other countries.

Protectionism and free trade are two opposing points of view in trade disputes.

Free trade happens when there are few or no limits on trade between countries.

Economic and foreign policy determine which countries trade with each other.

Free trade benefits:

opens up new markets

creates new jobs

competition, making businesses
more productive

consumers have more choices
in prices and quality of goods

Trade barriers are used by governments to limit competition from other countries.

Trade barriers include:

Tariff

A tax placed on imports to increase
their price in the domestic market.

Quota

A limit placed on the quantities on a
product that can be imported.

Embargo

A ban on the import or export of a product.