EDEXCEL A LEVEL BUSINESS - PAPER 1
Economic growth - (ANSWER)An increase in a country's productive capacity
Emerging economies - (ANSWER)The economies of developing countries where there is rapid
growth, but also significant risk
Human Development Index (HDI) - (ANSWER)A collection of statistics that are combined into
an index, ranking countries according to their human development
Literacy rate - (ANSWER)The percentage of adults (over 15) that can read and write
Purchasing Power Parity (PPP) - (ANSWER)A measure of real growth the uses the price of
purchasing a standardised basket of goods and services in order to compare prices across
economies
Comparative advantage - (ANSWER)The theory that a country should specialise in products and
services that is can produce more efficiently than other countries
Competitive advantage - (ANSWER)The idea that a business should specialise in any area
(products, services, management, research etc.) where it can perform better than its competitors
Division of labour - (ANSWER)Different workers specialising in different productive activities
Exports - (ANSWER)Goods or services that a firm produces in its home market, but sells in a
foreign market
Foreign Direct Investment (FDI) - (ANSWER)Investing by setting up operations or buying
assets in businesses in other country
,Imports - (ANSWER)Goods and services that are bought into one country from another
International trade - (ANSWER)Exporting (selling abroad) and importing (buying from abroad)
Specialisation - (ANSWER)A production strategy where a business focuses on a limited scope of
products or services. This results in greater efficiency, allowing for goods and services to be
produced at a lower cost per unit.
Tariffs - (ANSWER)Taxes that are imposed on imports
Foreign Direct Investment (FDI) - (ANSWER)Business investment undertaken by a firm in
another country; building a factory, for example
Globalisation - (ANSWER)The growing integration of the world's economies
Transnational or multinational companies - (ANSWER)Companies that own or control
production or service facilities outside the country in which they are based
World Trade Organisation (WTO) - (ANSWER)An international organisation that promotes free
trade by persuading countries to abolish tariffs and other barriers. It policies free trade
agreements, settles trade disputes between governments and organises trade negotiations.
Administrative barriers - (ANSWER)Rules and regulations (such as trading standards and strict
specifications) that make it difficult for importers to penetrate an overseas market
Dumping - (ANSWER)Where an overseas firm sells large quantities of a product below cost in
the domestic market
Embargo - (ANSWER)A complete ban on international trade - usually for political reasons
, Import quota - (ANSWER)A physical limit on the quantity of imports allows into a country
Infant industries - (ANSWER)New industries that have yet to establish themselves
Protectionism - (ANSWER)An approach used by a government to protect domestic producers
Subsidy - (ANSWER)Financial support given to a domestic producer to help compete with
overseas firms
Tariffs or customs duties - (ANSWER)A tax on imports to make them more expensive
Trade barriers - (ANSWER)Measures designed to restrict trade
Common market - (ANSWER)A market where goods, labour and capital can move freely across
the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least
reduced
Customs union - (ANSWER)A union where member states remove all trade barriers between
themselves and members adopt a common set of barriers against non-members
Economic and monetary union - (ANSWER)An economic union that uses a common currency
Economic union - (ANSWER)A type of trade bloc involving both a customs union and a
common market
Free trade area (FTA) - (ANSWER)A region where member states remove all trade barriers
between themselves, but each member state nevertheless keeps different barriers against non-
member states
Preferential trading area (PTA) - (ANSWER)A type of trading block where certain types of
products from participating countries receive a reduced tariff rate
Economic growth - (ANSWER)An increase in a country's productive capacity
Emerging economies - (ANSWER)The economies of developing countries where there is rapid
growth, but also significant risk
Human Development Index (HDI) - (ANSWER)A collection of statistics that are combined into
an index, ranking countries according to their human development
Literacy rate - (ANSWER)The percentage of adults (over 15) that can read and write
Purchasing Power Parity (PPP) - (ANSWER)A measure of real growth the uses the price of
purchasing a standardised basket of goods and services in order to compare prices across
economies
Comparative advantage - (ANSWER)The theory that a country should specialise in products and
services that is can produce more efficiently than other countries
Competitive advantage - (ANSWER)The idea that a business should specialise in any area
(products, services, management, research etc.) where it can perform better than its competitors
Division of labour - (ANSWER)Different workers specialising in different productive activities
Exports - (ANSWER)Goods or services that a firm produces in its home market, but sells in a
foreign market
Foreign Direct Investment (FDI) - (ANSWER)Investing by setting up operations or buying
assets in businesses in other country
,Imports - (ANSWER)Goods and services that are bought into one country from another
International trade - (ANSWER)Exporting (selling abroad) and importing (buying from abroad)
Specialisation - (ANSWER)A production strategy where a business focuses on a limited scope of
products or services. This results in greater efficiency, allowing for goods and services to be
produced at a lower cost per unit.
Tariffs - (ANSWER)Taxes that are imposed on imports
Foreign Direct Investment (FDI) - (ANSWER)Business investment undertaken by a firm in
another country; building a factory, for example
Globalisation - (ANSWER)The growing integration of the world's economies
Transnational or multinational companies - (ANSWER)Companies that own or control
production or service facilities outside the country in which they are based
World Trade Organisation (WTO) - (ANSWER)An international organisation that promotes free
trade by persuading countries to abolish tariffs and other barriers. It policies free trade
agreements, settles trade disputes between governments and organises trade negotiations.
Administrative barriers - (ANSWER)Rules and regulations (such as trading standards and strict
specifications) that make it difficult for importers to penetrate an overseas market
Dumping - (ANSWER)Where an overseas firm sells large quantities of a product below cost in
the domestic market
Embargo - (ANSWER)A complete ban on international trade - usually for political reasons
, Import quota - (ANSWER)A physical limit on the quantity of imports allows into a country
Infant industries - (ANSWER)New industries that have yet to establish themselves
Protectionism - (ANSWER)An approach used by a government to protect domestic producers
Subsidy - (ANSWER)Financial support given to a domestic producer to help compete with
overseas firms
Tariffs or customs duties - (ANSWER)A tax on imports to make them more expensive
Trade barriers - (ANSWER)Measures designed to restrict trade
Common market - (ANSWER)A market where goods, labour and capital can move freely across
the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least
reduced
Customs union - (ANSWER)A union where member states remove all trade barriers between
themselves and members adopt a common set of barriers against non-members
Economic and monetary union - (ANSWER)An economic union that uses a common currency
Economic union - (ANSWER)A type of trade bloc involving both a customs union and a
common market
Free trade area (FTA) - (ANSWER)A region where member states remove all trade barriers
between themselves, but each member state nevertheless keeps different barriers against non-
member states
Preferential trading area (PTA) - (ANSWER)A type of trading block where certain types of
products from participating countries receive a reduced tariff rate
