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50 Cards in this Set
- Front
- Back
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Comparative Advantage
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Ability to produce a product most efficiently given all the other products it could produce
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The Law of Comparative Advantage
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A nation is better off producing goods and services for which it has a comparative advantage
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Export
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A good sent to another country
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Import
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A good brought in from another country
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Trade Balance
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The relationship between a nation's imports and its exports
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Trade Surplus
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When a nation's exports are mode than its imports
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Favorable Balance of Trade
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A country with a trade surplus
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Trade Deficit
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A nations imports more than it exports
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Tariff
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A tax on a imported good
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Improt Quota
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A trade barrier that limits the amount of a good that can be imported
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Embargo
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A complete trade barrier with a country - no trade (ex. Cuba)
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Exchange Rates
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Allow one to convert prices in one currency to prices in another currency
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World Trade Organization (WTO)
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Founded in 1995 to ensure countries were reducting tariffs and expanding world trade, also to negotiate new trade argreements and resolve trade disputes
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European Union (EU)
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Formed in 1993 a union of countries that agreed to abolish tariffs and trade restriction among members and adopt uniform tariff for non-members. Uniform monetary unit: the euro.
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North American Free Trade Agreement (NAFTA)
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A trade region that will eliminate tariff and trade barriers between Canada, Mexico, and the United States of America by 2009 creating the worlds largest free trade zone
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Gross Domestic Product (GDP)
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The dollar value of all final goods and services produced withing a countries borders
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Per Capita GDP
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A countries GDP divided by population
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Gross National Product (GNP)
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The value of goods and services produced within and country in one year, plus income earned by citizens abroad, minus income earned by foreigners in the country
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Consumer Price Index (CPI)
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An average of a specific set of goods and services; Measures the purchasing power of the dollar
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Business Cycle
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A period of macroecomic expansion followed by a period of macroeconomic contraction
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Expansion
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A period of economic growth, real GDP rises
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Peak
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When GDP stops rising
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Contraction
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A period of economic decline, real DGP falls
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Trough
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When FDP stops falling
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Recession
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Prolonged economic contraction, real GDP decreases and unemployment increases
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Depression
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Long and severe recession
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Deregulation
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The removal of some government controls over the market
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1st World Countries
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the wealthiest countries (industralized)
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2nd World Countries
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Communist countries
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3rd World Countries
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The poorest countries (primarily agricultural)
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Most Developed Countries (MDC)
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The wealthiest countries (The United States, Canada, western European countries, New Zealand, Japan, etc.)
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Least Developed Countries (LDC)
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Developing countries / poorer countries (Includes the poorest countries in the world, and other countries like Mexico, Saudia Arabia, and former Soviet countries that haven't reached a high Standard of Living for most citizens)
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The primary measure of determing the category a country economicly falls under is ___ ______ ___
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Per Capita GDP (A nation's GDP divided by population).
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Some other measures of determining the category a country economicly falls under are:
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Energy consumption, labor force, consumer goods, literacy, life expectancy, infant mortality rate, and infrastructure
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World Bank
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An international organization devoted to assisting the development of countries. It uses per capita GNP to categorize countries
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International Monterary Fund (IMF)
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An international organization (almost all U.N. nations belong) that monitors exchange rates and balance of payments, and provudes technical and financial assistance
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Outsourcing
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Transferring work to another country (esp. of concern in the computer industry)
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Migrant Workers
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People move around in one country to follow work
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Immigrants
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These people come to a country to find work. Many __________ work in low paying jobs that are unwanted by the countries citizens
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Trade
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The exchange of goods and/or services for money or other goods and/or services
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Bartering
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Exchanging goods for other goods
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Enviromental Converns (A companys profit motive often leads to this)
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The government must set regulations so that the enviroment is protected (Primarily the EPA). The clean Air and Water act that limits the amound of pollution companies are allowed to generate
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NIMBY debate (Not In My Back Yard) - Enviromental Concerns
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No one wants toxic waste dumped in their state
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Political Concerns (A companys profit motive often leads to this)
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The US and other nations use economic measures to put pressure on countries for a variety of reasons. (Countries that violate human rights, deny democracy, engage in nuclear weapon proliferation) Examples: the Cuban Economic Embargo and the OPEC oil embargo.
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Concerns that protect the public (A companys profit motive often leads to this)
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Examples: Zoning laws and Building codes
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Contractionary Policy (tight money)
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During Inflation. The following actions are taking: Decrease, government spending, Increase taxes, Increase reserve requirements, Increase interest rates, and Increase the discount rate
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Expanisonary Policy (easy money)
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During recession and depression. The following actions are taking: Increase govenment spending, Decrease taxes, Decrease reserver requirements, Decrease interest rates, and Decrease the discount rate
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Ways to measure trade
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Exchange rate, appreciation v. depreciation of the dollar, etc.
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Nations must trade with one another because resources are distributed worldwide and nations _______
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SPECIALIZE
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Types of trade barriers
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Import quotas, tariffs, and embargos
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