BUAD110Chpt15 - Chapter15:GlobalMarkets Unitedstates:,...

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Chapter 15: Global Markets United states: largest importing nation, third largest exporting nation behind China and Germany Free trade: movement of goods and services among nations without political or economic barri- ers  Comparative advantage theory: states a country should sell to other countries those products it  produces most effectively and efficiently and buy from other countries those products it cannot  produce as efficiently  Absolute advantage: if a country has a monopoly on producing a specific product or it is able to  produce it more efficiently than any other country  >global competition also causes absolute advantages to fade  Small business importance  >In US only 1% of 29M small businesses export yet they account for 30% of US exports  Measuring trade Balance of trade: total value of a nation s exports compared to its imports over a period of time  Trade surplus: favorable balance of trade- value of country s exports exceeds that of its imports  Trade deficit: unfavorable balance of trade- value of country s exports is less than imports  Balance of payments: difference between money coming into a country and money leaving  Favorable balance: more money coming into the country  Dumping: selling products in a foreign country at lower prices than those charged in the produc- ing country (prohibited) 
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