International Management module 7

A large international debt may result in

Decreased levels of foreign exchange available

Discretionary income

Disposable income available for spending and saving after an individual has purchased the basic necessities and taxes.

When measuring the value produced in an economy, most international organizations prefer to use

GNI

Low-income economies

GNI per capita of $995 or less

Middle-income economies

GNI per capita of over $995 but less than $12,056. upper or lower

Disposable income

Income remaining for a person to spend or save after all taxes have been paid

Population density

Number of individuals per unit area

Atlas Conversion Factor

The arithmetic average of the current exchange rate and the exchange rates in the two preceding years, adjusted by the ratio of domestic inflation to the combined inflation rates of the euro zone, Japan, the United Kingdom, and the United States

Population distribution

a description of how individuals are distributed with respect to one another

Purchasing Power Parity

a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries

Underground Economy

buying and selling of goods and services that is concealed from the government to avoid taxes or regulations or because the goods and services are illegal

The World Bank categorizes countries based on GNI per capita, using the following categories:

high-income economies, middle-income economies, low-income economies.

Currently, what percentage of the world's total population is found in developing countries?

more than 75 percent

Reductions in birthrates are occurring worldwide because

of an increased level of urbanization

Economic Growth Rate

the annual percentage change of real GDP

Because of the importance of economic information to the control and planning functions at headquarters, the collection of data and preparation of reports are usually the responsibility of

the home office.

what is the purpose of economic analyses?

to assess the overall outlook for the economy and the impact of economic changes on the firm

GINI Index

•A measure of the degree to which family income within a country is distributed equally.

High-income economies

•GNI per capita of $12,056 or more.

Economic Analyses for Multinationals

•Purpose is to assess the overall outlook for the economy and the impact of economic changes on the firm. •Should include economic data on actual and prospective markets.

Gross Domestic Product

•The total monetary value of all goods and services produced within a nation.

Gross National Income (GNI)

•The total value of all income generated by the residents of a nation, including both the domestic production of goods and services and income from abroad.

Unit Labor Costs

•Total direct labor costs divided by units produced.

Foreign Environment

All the uncontrollable forces originating outside the home country that surround and influence the firm