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Economics
Econ Chapter 17
| Term | Definition |
|---|---|
| absolute advantage | the ability to produce more of a given product using a given amount of resources |
| comparative advantage | the ability to produce a product most efficiently given all the other products that could be produced |
| law of comparative advantage | the idea that a nation is better off when it produces goods and services for which it has a comparative advantage |
| export | a good that is sent to another counrty for sale |
| import | a good that is brought in from another counrty for sale |
| trade barrier | a means of preventing a foreign product or service from freely entering a nations territory |
| import quota | a limit on the amount of a good that can be imported |
| voluntary export restraint | a self-imposed limitation on the number of products shipped to a particular country |
| customs duty | a tax on certain items purchased abroad |
| tariff | a tax on imported goods |
| trade war | a cycle of increasing trade restrictions |
| protectionism | the use of trade barriers to protect a nations industries from foreign competition |
| infant industry | a new industry |
| international free trade agreement | agreement that results from cooperation between at least two countries to reduce trade barriers and tariffs and to trade with each other |
| World Trade Organization | a worldwide organization whose goal is freer global trade and lower tariffs |
| European Union | a regional trade organization made up of European nations |
| euro | a single currency that replaces individual currencies among members of the European Union |
| free-trade zone | a region where a group of countries agrees to reduce or eliminate trade barriers |
| NAFTA | agreement that will eliminate all tariffs and other trade barriers between Canada, Mexico, and the United States |
| exchange rate | the value of a foreign nations currency in terms of the home nations currency |
| appreciation | an increase in the value of a currency |
| depreciation | a decrease in the value of a currency |
| foreign exchange market | the banks and other financial institutions that facilitate the buying and selling of foreign currencies |
| fixed exchange-rate system | a currency system in which governments try to keep the values of their currencies constant against one another |
| flexible exchange-rate system | a currency system that allows the exchange rate to be determined by supply and demand |
| trade surplus | the result of a nation exporting more than it imports |
| balance of trade | the relationship between a nations imports and its exports |
| the result of a nation importing more than it exports |
Created by:
halvy
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