Business in a Global Economy

They are two opposing points of view involved in trade
disputes.

protectionism is the practice of the government putting limits on foreign trade to protect businesses at home.

To limit competition from other countries countries resort to protectionism.

Foreign competition can lower the demand of products made at home leading to domestic companies.

Countries have to pay for products and services with currency.

Examples of currencies: Mexican Pesos, Japanese Yen, United states dollar, Canadian dollar, and Australian dollar.

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.

Balance of trade

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

(Country's exports-imports)

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

Global economy is the interconnected economies of the world.

International trade is the exchange of goods and services between nations.

Globalization is the development of the global economy,

A multinational corporation is a company that does business in many countries and has the facilities and offices around the world.

EX: Apple, Samsung, and Google

It occurs when there is few or no limits on trade between countries.

Free trade supporters see that all countries should be free to compete anywhere in the world without restrictions.

It has some benefits.

Opens new market in other countries.

It creates new jobs mostly in areas related to global trade.

To limit competition from other countries, governments develop trade barriers; which include:

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

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

An embargo is a ban on the import or export of a product. They are usually used against another country for political or military reasons.

In a trade alliances several countries merge their economies into one huge market.

For example the European union.

Trade alliances reduces limits on trade.