Foreign direct investment inflows of capital from

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Financial Accounting: The Impact on Decision Makers
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Chapter 3 / Exercise 1
Financial Accounting: The Impact on Decision Makers
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foreign direct investment - inflows of capital from abroad for investing in domestic plant and equipment for the production of goods and/or services as well as for buying domestic companies 4. outsourcing - the corporate practice of acquiring or producing quality goods or services abroad at a lower cost thereby eliminating domestic production 5. mercantilism - a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade surplus 6. factors of production - endowments used to produce goods and services: land (quantity, quality, and mineral resources beneath it), labor (quantity and skills), capital (cost), and technology (quality) 7. trade surplus - when the value of exports exceeds the value of imports; the opposite of a trade deficit
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Financial Accounting: The Impact on Decision Makers
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Chapter 3 / Exercise 1
Financial Accounting: The Impact on Decision Makers
Norton/Porter
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8. absolute advantage - the ability of one country to produce a good or service more efficiently than another 9. comparative advantage - the ability of one country that has an absolute advantage in the production of two or more goods (or services) to produce one of them relatively more efficiently than the other 10. trade policy - all government actions that seek to alter the size of merchandise and/or service flows from and to a country 11. tariffs - taxes on imports; also known as custom duties in some countries 12. custom duties - taxes on imports that are collected by a designated government agency responsible for regulating imports 13. specific tariff - an import tax that assigns a fixed dollar amount per physical unit 14. ad valorem tariff - a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good 15. preferential duties - an especially advantageous or low import tariff established by a nation for all or some goods of certain countries and not applied to the same goods of other countries 16. generalized system of preferences (GSP) - an agreement where a large number of developed countries permit duty-free imports of a selected list of products that originate from specific countries 17. export subsidy - a negative tariff or tax aimed at boosting exports
18. export taxes - taxes meant to raise export cost and divert production for home consumption 19. most favored nation (MFN) - an agreement among WTO countries in which any tariff concession granted by one member to any other country will automatically be extended to all other countries of WTO 20. import quotas - also known as Quantitative Restrictions (QRs are regulations that limit the amount or number of units of products that can be imported to a country 21. voluntary export restraint (VER) - a non-tariff barrier in which an efficient exporting nation agrees to limit exports of a product to another country for a temporary period 22. domestic content provisions - regulations requiring that a certain percentage of the value of import be sourced domestically 23. managed trade - agreements, sometimes temporary, between countries (or a group of countries) that aim at achieving certain trade outcomes 24. countertrade - agreement in which an exporter of goods or services to another country commits to

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