Chapter 3: Global Business

International business includes all business activities that involve exchanges across state boundaries.

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Absolute advantage is the ability to produce a specific product more efficiently than any other nation.

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By definition, every country has a comparative advantage in some product.

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Comparative advantage is the ability to produce a specific product more efficiently than any other nation.

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Purchasing raw materials or products in other nations and bringing them into one's own country is known as importing.

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A country has a favorable balance of trade if it imports more than it exports.

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The total flow of money into a country minus the total flow of money out of the country over some period of time is called the nation's balance of trade.

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The total value of a nation's exports minus the total value of its imports is known as the balance of payments.

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A tariff is a tax levied on a particular foreign product entering a country.

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A limit on the amount of a particular good that may be imported into a country during a given period of time is called an import quota.

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