Econ: Unit 6 (International Economics)

Term
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comparative advantage
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Terms in this set (21)
comparative advantage
The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers. Trade ONLY TAKES PLACE when there is this.
Image: comparative advantage
absolute advantage
the ability to produce more of a given product using a given amount of resources
Image: absolute advantage
balance of trade
the difference between a country's total exports and total imports
Image: balance of trade
trade surplus
when a country's exports exceeed its imports
Image: trade surplus
trade deficit
when a country's imports exceed its exports
trade barrier
a means of preventing a foreign product or service from freely entering a nation's territory; people like them because they protect domestic jobs
Image: trade barrier
free trade
the removal of trade barriers so that goods can flow freely between countries; people like it because it increases competition
Image: free trade
protectionism
the theory or practice of shielding a country's domestic industries from foreign competition by supporting trade barriers. Donald Trump would be seen as someone who supports these ideas.
Image: protectionism
trading bloc
group of neighboring countries that promote trade with each other; they promote free trade with no or limited trade barriers (Think BLOC PARTY! Everyone shares, no trade barriers!)
Image: trading bloc
NAFTA
North American Free Trade Agreement - Canada, Mexico, and the US have free trade
Image: NAFTA
European Union (EU)International organization comprised of Western European countries to promote free trade among members.ASEANAssociation of Southeast Asian Nations - trading bloc that promotes free tradestandarda trade barrier that is used to promote the safety of goods imported into a country (ex: no lead paint can be used on toys brought to the US)embargoA government ban on trade with other countries (ex: US with North Korea) , a type of trade barriertariffA tax on imported goods; a type of trade barrierquotaA limit placed on the quantities of a product that can be imported; a type of trade barriersubsidyA government payment that supports a business or market; a type of trade barrier that makes domestic industries more competitive with cheaper goods imported from foreign countriesexchange rateThe measure of how much one currency is worth in relation to another.appreciatewhen a currency increases in value; when a country's currency appreciates in value, its exports decline because its goods become too expensive for other countriesdepreciatewhen a currency decreases in value; when a country's currency depreciates, its exports increase because its goods become cheaper to foreign countriesbalance of paymentsthe record of a country's trade with other countries in goods, services, and assets

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