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