Chapter 5: Business in a Global Economy

Globalization

• the connection made among nations when economies freely move goods, labor, and money across borders

• the shared beliefs, customs, practices, and social behavior of a particular group or nation

• the buying and selling of goods and services across national borders

• all the business activity involved in making, buying, and selling product within a nation’s borders

Culture

• the shared beliefs, customs, practices, and social behavior of a particular group or nation

• all the business activity involved in making, buying, and selling product within a nation’s borders

• the connection made among nations when economies freely move goods, labor, and money across borders

• the buying and selling of goods and services across national borders

International Trade

• the shared beliefs, customs, practices, and social behavior of a particular group or nation

• the buying and selling of goods and services across national borders

• the connection made among nations when economies freely move goods, labor, and money across borders

• all the business activity involved in making, buying, and selling product within a nation’s borders

Domestic Business

• the buying and selling of goods and services across national borders

• the shared beliefs, customs, practices, and social behavior of a particular group or nation

• all the business activity involved in making, buying, and selling product within a nation’s borders

• the connection made among nations when economies freely move goods, labor, and money across borders

Exports

• goods, services, and capital that are brought into a country from outside its borders

• when a country can produce goods more efficiently and at a lower cost than another country

• goods and services that are produced within a country’s borders and sold in another country

• when a country specializes in producing a product at which it is relatively more efficient

Imports

• goods, services, and capital that are brought into a country from outside its borders

• when a country specializes in producing a product at which it is relatively more efficient

• when a country can produce goods more efficiently and at a lower cost than another country

• are goods and services that are produced within a country’s borders and sold in another country

Absolute Advantage

• when a country can produce goods more efficiently and at a lower cost than another country

• are goods, services, and capital that are brought into a country from outside its borders

• are goods and services that are produced within a country’s borders and sold in another country

• when a country specializes in producing a product at which it is relatively more efficient

Comparative Advantage

• are goods, services, and capital that are brought into a country from outside its borders

• when a country specializes in producing a product at which it is relatively more efficient

• when a country can produce goods more efficiently and at a lower cost than another country

• are goods and services that are produced within a country’s borders and sold in another country

Balance of Trade

• the total amount of money that comes into a country, minus the total amount of money that goes out for a specific period of time

• the cost to convert one currency into another

• the difference between a nation’s exports and its imports

• exchange rate is set by the market forces of the supply and demand in the foreign exchange market

Balance of Payments

• the total amount of money that comes into a country, minus the total amount of money that goes out for a specific period of time

• the cost to convert one currency into another

• exchange rate is set by the market forces of the supply and demand in the foreign exchange market

• exchange rate is set by the market forces of the supply and demand in the foreign exchange market