international business unit 4

Economic System

the way a country organizes its resources and distributes its goods and services to its citizens

Market Economy

an economic system determined by free competition, in which business, consumers, and government act independently of one another, and market forces and self-interest determine what goods are created and sold. (switzerland)

Centrally Planned Economy

an economic system in which the government controls all elements of the economy, including prices, wages, and production (north korea)

Mixed Economy:

an economic system that sits between a market and economy and a centrally planned economy, combining government intervention and private enterprise

Political System

the type of goverment by which a country is run

Democracy

a state governed by all eligible members of the po[pution through elected representatives

Autocracy

a state governed by a single individual or a small group of people with unlimited power

Underdeveloped Countries

also referred to as the least-developed countries, nations that are at the lowest level of the world's economies

Developing Countries

also known as emerging countries, nations in transition from a poor economy to a more prosperous one

Developed Countries

also known as industrialized countries, nations that are characterized by higher per capita income or strong gross domestic product

GDP

the tidal dollar value of goods and services produced in one country a year

Business Cycle

recurring periods of increased and decreased economic activity, or expansions and contractions

rescission

two consecutive quarters of negative GDP, 6 months) the economy slows down and there is a decline in consumer purchasing, an increase in unemployment and business contract or close

trough

production and unemployment reach their lowest levels, the economy completes the recession and turns towards prosperity

expansion

the economy begins to grow again, employment, wages, production, and profits expand

peak

the top of the business cycle, the economy stops expanding and begins contracting

Absolute Advantage

if a country makes a product or service more productively than other counties

Opportunity Cost

the value of what is foregone, or the cost of giving up something to get something else

Comparative Advantage

the ability of a country to produce a good at lower opportunity cost than another country

Trade Office

governments establish a presence in foreign countries to help their business operate in those countries

Consular Services

provide services for travelling living, studying, and working abroad

Trade Missions

canadian government promotes international business through trade mission to other countries

Lobbying

the process through which companies, special interest groups, or individuals attempt to influence government officials and persuade them to endorse public policy