IT 104 - Chapter 3

IT 104 - Chapter 3 - Chapter 3 1 Importance of...

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Chapter 3 1. Importance of International Trade is that there are six (6) billion potential customers in the world . 2. Largest exporter in the world is the United States . 3. Why must U.S. trade? A. No nation can produce all the products they need . B. Needs for people can’t fulfilled . C. Lacks in the technology know how . 4. Free trade is the movement of goods and services among nations without political or economical barriers . 5. Comparative Advantage (Sell) produce most efficient (excess) & (Buy) cannot be produced effectively or efficiently 6. Absolute Advantage is the advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries . 7. Small businesses generate ½ private sector commerce , but only 30% of the export. 8. Balance of trade is the total value of a nation’s exports compared to its imports measured over a particular period (ratio of exports to imports) . 9. Trade deficit is an unfavorable balance of trade; occurs when the value of a country’s imports exceeds that of its exports . 10. Balance of payments is the difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment .
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