AFM131 Lecture Notes - Canadian Dollar, Absolute Advantage, North American Free Trade Agreement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: Robert Sproule

Document Summary

Comparative advantage theory states that a country should sell to other countries those products that it produces most efficiently and buy from countries the products it cannot. (pg 5) Absolute advantage is when a country has the ability to produce a particular good or service using fewer resources than another country. (pg 5) Balance of trade is the ratio of exports to imports. A trade deficit occurs when imports are greater than exports. Joint ventures: it is a partnership in which two or more companies (often from different countries) join to undertake a major project or form a new company. Strategic alliance: a long-term partnership between two or more companies established to help each company build competitive market advantages. (pg 14) A high canadian dollar value makes it cheaper to buy foreign goods but makes. Canadian products more expensive for foreign nations to buy. (pg 18)