Global Business Chapter 5 Test with Verified Answers (Graded A+)

Global Business Chapter 5 Test with Verified Answers (Graded A+) Export - Answers selling abroad Import - Answers buying from abroad Merchandise - Answers tangible products being traded Services - Answers Intangible services being traded Trade deficit - Answers An economic condition in which a nation imports more than it exports Trade surplus - Answers An economic condition in which a nation exports more than it imports Balance of Trade - Answers The aggregation of importing and exporting that leads to the county-level trade surplus or deficit. Modern Trade Theories - Answers The major theories of international trade that were advanced in the 20th century, which consist of product life cycle, strategic trade, and national competitive advantage of industries. Classical Trade Theories - Answers The major theories of international trade that were advanced before the 20th century, which consists of mercantilism, absolute advantage, and comparative advantage. Theory of Mercantilism - Answers A theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer Protectionism - Answers The idea that governments should actively protects domestic industries from imports and vigorously promote exports. Free Trade - Answers The idea that free market forces should determine how much to trade with little ot no government intervention Theory of absolute advantage - Answers A theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage. Absolute Advantage - Answers The economic advantage one nation enjoys that is absolutely superior to other nations. Theory of Comparative Advantage - Answers A theory that focuses on the relative advantage in one economic activity that one nation enjoys in comparison with other nations. Comparative Advantage - Answers Relative advantage in one economic activity that one nation enjoys in comparison with other nations. Opportunity Cost - Answers Cost of pursing one activity at the expense of another activity, given that alternatives Factor endowment - Answers The extent to which different counties posses various factors of production such as labor, land, and technonoly Factory endowment theory - Answers A theory that suggests that nations will develop comparative advantages based on their locally abundant factors. Product life cycle theory - Answers A theory that accounts for changes in the patterns of trade over time by foreign on product life cycles. Strategic trade theory - Answers A theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success. First mover advantage - Answers Advantage that first movers enjoy and do not share with late entrants Strategic trade policy - Answers Government policy that provides companies a strategic advantage in international trade through subsidies and other supports Theory of national competitive advantage of industries - Answers A theory that suggests that the competitive advantage of certain industries in different nations depends on four aspects that form a diamond Resource mobility - Answers Assumption that a resource used in producting a product for one industry can be shifted and put to use in another industy Tariff barrier - Answers Trade barrier that relies on tariffs to discourage imports Import tariff - Answers A tax imposed on imports Deadweight costs - Answers Net losses that occur in an economy as a result of tariffs