DECA International Business Flashcards

What is a 'tariff' in international trade?

Answer: A tax imposed by a government on imported or exported goods

A tariff is a government-imposed tax on imported or exported goods, often used to protect domestic industries or generate government revenue.

Which organization oversees the rules governing international trade between nations?

Answer: World Trade Organization (WTO)

The World Trade Organization (WTO) establishes and enforces the rules of international trade and provides a forum for negotiating trade agreements between member nations.

What is the term for a situation where a country can produce a good at a lower opportunity cost than another country?

Answer: Comparative advantage

Comparative advantage means a country can produce a good at a lower opportunity cost relative to another country, forming the basis for mutually beneficial trade.

What is 'foreign direct investment' (FDI)?

Answer: A company investing in business operations or assets in another country

FDI occurs when a company establishes business operations, builds facilities, or acquires companies in a foreign country, giving it a lasting ownership interest.

Which entry strategy requires the LEAST financial risk when entering a foreign market?

Answer: Exporting

Exporting requires the least financial commitment because the company sells domestically produced goods abroad without establishing foreign operations or significant capital investment.

What does the term 'balance of trade' refer to?

Answer: The difference between a country's total exports and imports

Balance of trade measures the difference between a country's exports and imports; a surplus occurs when exports exceed imports, and a deficit when imports exceed exports.