Term
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Definition
| conflict of goals between a firms shareholders and its managers |
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Term
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Definition
| theory suggesting that specialization by countries can increase worldwide production |
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Term
| direct foreign investment (DFI) |
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Definition
| investment in real assets (such as land, buildings, or even existing plants) in foreign countries |
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Term
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Definition
| agreement by which a firm provides a specialized sale or service strategy, support assistance, and possibly an initial investment in the franchise in exchange for periodic fees |
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Term
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Definition
| the condition where, due to the costs to transfer labor and other resources used for produciton, firms may attempt to use foreign factors of production when they are less costly than local factors |
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Term
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Definition
| venture between two or more firms in which responsibilities and earnings are shared |
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Term
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Definition
| an arrangement in which a local firm in the host country produces goods in accordance with another firms (the licensing firms) specifications; as the goods are sold, the local firm can retain part of the earnings |
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Term
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Definition
| theory suggesting that a firm initially establish itself locally and expand into foreign makrets in response to foreign markets; after some point, its foreign business may decline unless it can differentiate its products form competitiors |
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Term
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Definition
| statement of inflow and outflow payments for a particular country |
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Term
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Definition
| difference between the value of merchandise exports and merchandise imports |
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Term
| bank for international settlements (BIS) |
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Definition
| institution that facilitates cooperation among countries involved in international transactions and provides assistance to countries experiencing international payment problems |
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Term
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Definition
| account reflecting changes in a countrys ownership of long term and short term financial assets |
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Term
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Definition
| arrangement in which the world bank participates along with other agencies or lenders in providing funds to developing countries |
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Term
| compernsatory financing facility (CFF) |
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Definition
| facility that attempts to reduce the impact of export instability on country economies |
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Term
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Definition
| Broad measure of a countrys innternational trade in goos and services |
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Term
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Definition
| selling products overseas at unfairly low prices (a practice percieved t oresult from subsidies provided to the firm by its government) |
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Term
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Definition
| income (interest and dividend payments) recieved by investors on foreign investments in financial assts (securities) |
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Term
| international bank for reconstruction and development (IBRD) |
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Definition
| bank established in 1944 to enhance economic development by providing loans to countries. Also referred to as the world bank |
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Term
| international development association (IDA) |
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Definition
| association established to stumulate country development; it is especially suited for less prosperous nations, since it provides loans at low interest rates |
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Term
| international financial corporation (IFC) |
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Definition
| firm established to promote private enterprise within countries; it can provide loans to and purchase stock of corporations |
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Term
| international monetary fund (IMF) |
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Definition
| agency established in 1944 to promote and facilitate international trade and financing |
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Term
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Definition
| internatinoal trade between subsidiaries that are under the same ownership |
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Term
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Definition
| effect of a weaker dollar on the U.S trade balance in which the trade balance initially deteriorates; it only improves once U.S and non-U.S importers respond to the change in purchasing power that is caused by the weaker dollar |
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Term
| Multilateral Investment Guarantee Agency (MIGA) |
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Definition
| agency established by the world bank that offers various forms of political risk insurance to corporations. |
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Term
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Definition
| sensitive to price changes |
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Term
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Definition
| conversion of government-owned businesses to ownership by shareholders or individuals |
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Term
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Definition
| maximum limit imposed by the government on goods allowed to be imported into a country |
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Term
| structural adjustment load (SAL) |
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Definition
| established in 1980 by the world bank t oenhance a countrys long term economic growth throuhg financing projects |
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Term
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Definition
| tax imposed by a governemnt on imported goods |
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Term
| world trade orginization (WTO) |
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Definition
| organization established to provide a forum for multilateral trade negotiations and to settle trade disputes felated to the GATT accord |
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Term
| american depository recipts (ADRs) |
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Definition
| certificates representing ownership of foreign stocks, wich are traded on stock exchanges in the United States |
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Term
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Definition
| market in Asia in which banks collect deposits and make loans denominated in U.S dollars |
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Term
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Definition
| price at which a trader of foreign exchange (typically a bank) is willing to sell a particular currency |
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Term
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Definition
| agreement among country represenstatives in 1988 to establish standardized risk based capital requirements for banks across countries |
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Term
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Definition
| price that a trader of foreign exchange (typically a bank) is willing to pay for a particular currency |
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Term
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Definition
| conference held in Bretton Woods New Hapshire in 1944 resulting in an agreement to maintain exchange rates of currencies within very narrow boundaries; this agreement lasted until 1971 |
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Term
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Definition
| exchange rate between currency A and currency B, given the values of curriencies A and B with respect to a third currency |
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Term
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Definition
| contract that grants the right to purchase a specific currency at a specific price (exchange rate) within a specific period of time |
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Term
| currency futures contract |
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Definition
| contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date |
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Term
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Definition
| contract granting the right to sell a particular currency at a specified price (exchange rate) within a specified time period |
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Term
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Definition
| exchange rate quotations representing the value measured by number of dollars per unit |
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Term
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Definition
| Telecommunications network that informs all traders about outstanding issues of Eurobonds for sale |
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Term
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Definition
| bonds sold in countries other than the country represented by the currency denominating them |
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Term
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Definition
| loans of one year or longer extended by Eurobanks |
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Term
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Definition
| collection of banks that accepts deposits and provides loans in large denominations and in a variety of currencies. The banks that comprise this market are the same banks that comprise the Eurocurrency market; the difference is that the Eurocredit loans are longer term than so called Eurocurrency loans |
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Term
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Definition
| collection of banks that accept deposits and provide loans in large denominations and in a variety of currency |
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Term
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Definition
| term used to describe U.S dollar deposits place in banks located in Europe |
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Term
| exercise price (strike price) |
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Definition
| Price (exchange rate) at which the owner of a currency call option is allowed to buy a specified currency; or the price (exchange rate) at which the owner of a currency put option is allowed to sell a specified currency |
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Term
| floating rate notes (FRNs) |
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Definition
| Provision of some Eurobonds in which the coupon rate is adjusted over time according to prevailing market rates |
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Term
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Definition
| bond issued by a foreign the country where the bond is placed |
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Term
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Definition
| dealers who serve as intermediaries in the foreign exchange market by exvhanging |
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Term
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Definition
| currencies desired by MNCs or individuals |
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Term
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Definition
| market composed primarily of banks, serving firms and consumers who wish to buy or sell various currencies |
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Term
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Definition
| agreement between a commercial bank and a client about an exchange of two currencies to be made at a future point in time at a specified exchange rate |
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Term
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Definition
| market that facilitates the trading of forward contracts;commercial banks serve as intermediaries in the market by matching up participants who wish to buy a currnecy forward with other participant who wish to sell the currency forward |
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Term
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Definition
| rate at which a bank is willing to exchange one currency for another at some specified date in the future |
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Term
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Definition
| the exchange rate at which one can purchase or sell a specified currency on the settlement date in accordance with the futures contract |
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Term
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Definition
| exchange rate quotations representing the value measured by number of units per dollar |
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Term
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Definition
| market that facilitates the exchange or currencies between banks |
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Term
| interest equalization tax (IET) |
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Definition
| tax imposed by the U.S government in 1963 to discourage U.S investors from investing in foreign securities |
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Term
| international mutual funds (IMFs) |
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Definition
| mutual funds containing securities of foreign firms |
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Term
| London intervank offer rate (LIBOR) |
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Definition
| interest rate commonly charged for loans between Eurobanks |
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Term
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Definition
| bonds placed in different counrties and denominated in the repective currencies of the countries where they are placed |
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Term
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Definition
| deposits of dollars by countries that receive dollar revenues due to the slae of petroleum to other countries; the term commonly refers to OPEC deposits of dollars in the Eurocurrency market |
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Term
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Definition
| act intended to remove numerous barriers imposed o ntrade and capial flows between european countries |
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Term
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Definition
| conference between nations in 1971 that resulted in a devaluation of the dollar against major currencies and a widening of boundaries (2 percent in either direction) around the newly established exchange rates |
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Term
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Definition
| market in which exchange transactions occur for immediate exchange |
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Term
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Definition
| current exchange rate of currency |
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Term
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Definition
| group of banks that participate in loans |
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Term
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Definition
| offering of stock by non U.S firms in the U.S markets |
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Term
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Definition
| increase in the value of a currency |
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Term
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Definition
| decrease in the value of a currency |
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Term
| equilibrium exchange rate |
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Definition
| Exchange rate at which demand for a currency is equal to the supply of the currency for sale |
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Term
| The J cureve effect describes |
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Definition
| the short run tendency for a countrys balance of trade to deteriorate even while its currency is depreciating |
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Term
| the commonly accepted goal of the MNC is to |
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Definition
| maximize shareholder wealth |
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Term
| the primary component of the current account is the |
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Definition
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Term
| which of the following is an example of direct foreign investment |
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Definition
| purchasing existing companies in a country |
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Term
| which of the following theories identifies specialization as a reason for international business |
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Definition
| theory of comparative advantage |
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Term
| which of the following theories identifies the non transferability of resources as a reason for international business |
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Definition
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Term
| which of the following would likely have the least direct influence on a countrys current account |
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Definition
| a tax on imcome earned from foreign stocks |
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Term
| ___ purchases more U.S exports than the other countries listed here |
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Definition
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Term
| theory of comparative advantage |
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Definition
| when a country specializes in some products, it may not produce other products, so trade between countries is essential. Comparative advantages allow firms to penetrate foreign markets |
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Term
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Definition
| conditions where factors or production are somewhat immobile costs and restrictions related to the transfer of labor and other resources used for production |
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Term
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Definition
| is a relatively conservative approach that can be used by firms to penetrate markets or to obtain supplies at a low cost |
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Term
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Definition
| government may increase taxes or impose barriers customers in foreign counrties may boycott the MNC |
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Term
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Definition
| if economic conditions weaken the income of consumer becomes relatively low and consumer purchases decline |
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Term
| centralized management style |
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Definition
| can reduce agency costs because it allows managers of the parent to control foreign subsidiaries and therfore reduces the power of subsidiary managers |
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Term
| decentralized management style |
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Definition
| more likely to result in higher agency costs because subsidiary managers may make decisions that do not focus on maximizing the value of the entire MNC |
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Term
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Definition
| canada, china, mexico, and japan |
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Term
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Definition
| 20 percent canada, 12 percent mexico |
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Term
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Definition
| the main components of the current account are payments for merchandise and services, factor income, and transfers |
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Term
| international trade issues |
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Definition
| removal of the berlin wall, single european act, NAFTA, GATT, inception of the Euro, Expansion of the european union, other trade agreements |
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Term
| factors effecting international trade flows |
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Definition
| impact of inflation, impact of national income, impact of the credit crisis on trade, impact of government policies, subsidies for exporters, restrictions on imports, lack of restricitons on piracy, impact of exchange rates, interaction of factors |
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Term
| factors that effect the bid ask spread |
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Definition
| order cost, inventory cost, competition, volume, currency risk |
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Term
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Definition
| real intrest rates=Nominal interest rate-inflation rate |
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