chapter 25


Terms in this set (...)

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.