14 - The International Economy Definitions

Question 1

Globalisation

Answer 1

The process of increasing economic integration of the world’s economies.

Question 2

World Trade Organisation

Answer 2

An organisation to promote free trade by persuading countries to abolish import tariffs and other barriers to trade.

Question 3

Multinational Corporations

Answer 3

Companies operating in several countries, with headquarters in one country.

Question 4

Less Developed Economies

Answer 4

Countries considered less well off, because of their economy, and human capital.

Question 5

More Developed Economies

Answer 5

Countries with a higher degree of the economic development of average income per head, high standards of living - service industries dominating the economy.

Question 6

European Union

Answer 6

Economic and political union which is the world’s largest free trade agreement.

Question 7

Absolute Advantage

Answer 7

A country has an absolute advantage if it can produce more of a good than other countries.

Question 8

Comparative Advantage

Answer 8

The country with the least opportunity cost when producing a good has a comparative advantage.

Question 9

Quota

Answer 9

Physical limits on quantities of imported goods allowed into a country.

Question 10

Tariffs

Answer 10

Import duties - Taxes imposed on imports from other countries entering a country.

Question 11

Export Subsidies

Answer 11

Money given to domestic abuse firms by the government to encourage firms to sell their products abroad.

Question 12

Free Trade Area

Answer 12

Member countries abolish tariffs on mutual trade, each partner determines its own tariffs on trade with non member countries.

Question 13

Customs Unions

Answer 13

Trading blocs in which member countries enjoy internal free trade in goods and services, all member states protected by a common external tariff barrier.