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product sold to other countries


products bought from other countries

comparative advantage

ability of one country to produce a good at a lower cost, allows nations to specialize


tax on imported goods (also called a customs duty)


minimum/maximum limit

free trade

no laws to limit or block trade (sanctions/embargo)

EU Eurepean Union

15 countries with free trade, most use common currency (the Euro)

NAFTA North America Free Trade Agreement

trade barriers loosened between US, Canada, Mexico, many opponents in US

WTO World Trade Organization

international group that oversees trade between nations

exchange rate

value of a nation's currency compared to another

balance of trade

difference between value of a nation's exports and imports, often based on exchange rate.

trade dificit

value of imports exceeds value of exports

trade surplus

value of exports exceeds value of imports

Pure Market economy

100% capitalism & free enterprise no gov't interference, (laissez-faire)

Per capita GDP=

GdP / populatopm

command economy

economic decisions made by central gov't (gov't owns factors of production... including labor)


society as a whole owns factors of production..eaither directly OR through government control


one common class in society, no class struggle

Karl Marx

German writer, socialist/communists, wrote the communist Manifiesto, other works in favor of command economy

Mixed economy

combines basic elements of a pure market economy & pure comand economy, most countries have a mixed economy including the US .. combined private ownership of property/factors of production with some government regulation.

Developing countries

Third World Countries=nations where the average per capita income is only a fraction of that in more industrialized develped countries

traditional economy

system where things are done "the way they have always been done"...based on custom or habit, all people are farmers fishermen artisans etc. (NO INDUSTRY)


International Monetary Fund


World Bank


lend $ to developing countries to help them become more developed, countries often wind up in debt, unable to pay

Global Interpendence

people & nations all over the world depend on each other for many goods & services

Global economy

can be good and bad: lower prices, more selection BUT some companies out of business, nations hurt, workers lose jobs


a nation using traffits, quotas, etc, to "protect" its own industries (hoping tarriffs will cause citizens to buy domestic products)

Developing countries

most have food shortage, not much manufacturing high unemployment disease poverty few facilities for health care & education.

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