| Term | Definition |
|---|
| Exports | goods sold to other countries |
| Imports | goods purchased from other countries |
| Comparative advantage | the ability of a country to produce a good at a lower cost than another country can |
| Free trade | convincing countries not to pass laws that limit or block trade |
| Tariff | tax on imported goods |
| Quotas | limits on the amount of goods imported into a country |
| Exchange rate | the price of your nation’s currency in terms of another’s |
| Balance of trade | difference between a nation’s imports and exports |
| Trade deficit | when the value of imports exceeds the value of exports |
| Trade surplus | when the value of exports exceeds the value of imports |
| Market economy | system in which individuals own the factors of production and make economic decisions through free interaction |
| Capitalism | another name for a pure market economy |
| Command economy | a system in which the economic decisions are made by the central government |
| Socialism | the belief that the means of production should be owned by society, either directly or through the government |
| Mixed economy | a mix of the basic elements of a pure market economy and a command economy |
| Traditional economies | decisions are made by habit, or by “the way they have always been done” |
| Developing countries | countries whose average per capita income is only a fraction of that in more industrialized countries |
| communism | economic system in which the central government directs all major economic decisions |
| Gosplan | part of government that made decisions in Russia that made many mistakes |
| Gosplan's mistakes | supplies did not arrive on time, too much or too little of a good was produced, goods not always delivered to the places that needed them the most |
| World Bank | international agency that makes loans to developing nations |
| WTO | an international body that oversees trade among nations |
| NAFTA | trade agreement designed to reduce trade barriers between Mexico, Canda,and the United States |
| EU | organization of European nations whose goal is to ecourage economic integration into a single market in Europe |
| IMF | agency that offers monetary advice and provides loans to developing nations |
Combine with other sets
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