term 1

The global economy

where individual economies are linked to each other so that changes in a single economy can have ripple effects on others

Gross world product

the sum of total output of goods and services by all economies in the world over a period of time

Globalisation

refers to the process of increased integration between different countries and economies, and the increased impact of international influences on all aspects of life and economic activity.

Transnational Corporations (TNCs)

Global companies that dominate global product and factors markets and have production facilities in at least 2 countries. TNCs are owned by the residents of at least 2 countries. TNC are owned by the residents of at least 2 countries. 

Foreign Direct Investment

the purchase of a controlling interest in a foreign subsidiary (over 10%)

Business Cycle

fluctuations in the level of EG due to either domestic or international factors

International business cycle

fluctuations in the level of economic activity in the global economy over time

Regional Business cycles

fluctuations in the level of economic activity in a geographical region of the global economy over time.

Comparative advantage

Economic principle that nations should specialise in the areas of production in which they have the lowest opportunity cost and trade with other nations to maximise both nations standard of living. 

Protection

any type of government action that has the effect of giving domestic producers an artificial advantage over foreign competitors.

Dumping

Dumping is an act of selling large quantities of a good in another country at prices below its production costs.