Global Economics terms Flashcards

1
Q

free trade

A

absence of government intervention of any kind in international trade

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2
Q

absolute advantage

A

the ability of one country to produce a good using fewer resources than another country

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3
Q

comparative advantage

A

a situation where one country has a lower opportunity cost in the production of a good than another country

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4
Q

theory of comparative advantage

A

as long as an opportunity costs in two or more countries differ, it is possible for all countries to benefit from specialisation and trade according to their comparative advantage

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5
Q

trade protection

A

government intervention in international trade through the imposition of trade restrictions to prevent free entry of imports into a country

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6
Q

tariff

A

tax on imported goods

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7
Q

import quota

A

a legal limit to the quantity of a good that can be imported over a particular time period

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8
Q

export subsidy

A

subsidy paid for each unit of the good that is exported

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9
Q

administravite barriers

A

administrative procedures that countries may use to prevent the free flow of imports into a country

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10
Q

anti-dumping

A

argument that justifies trade protection if a trading partner sells a good in international markets at price below the cost of producing it

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11
Q

unfair competition

A

unfair increase in country’s exports at the expense of other countries

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12
Q

preferential trade agreement

A

agreement between two countries to lower trade barriers on given products in trade between them

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13
Q

trading bloc

A

group of countries that agreed to reduce trade barriers to encourage free trade and cooperation between them

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14
Q

free trade area

A

group of countries that agreed to remove trade barriers between themselves

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15
Q

custom union

A

free trade area than in addition adopts a common policy towards all non-member countries

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16
Q

common market

A

custom union without restrictions on movements of any factors of production between member countries

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17
Q

trade creation

A

replacement of higher cost products by lower cost imports

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18
Q

traded diversion

A

replacement of lower cost products by higher cost imports

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19
Q

monetary union

A

economic integration involving the adoption of a single currency, common monetary policy and single central bank by group of countries

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20
Q

exchange rate

A

value of one currency expressed in terms of another

21
Q

floating exchange rate system

A

exchange rates are determined by market forces of demand and supply with no central bank intervention

22
Q

fixed exchange rate system

A

exchange rates are fixed by the central bank of each country at a particular level and are not allowed to respond to currency supply and demand

23
Q

devaluation

A

decrease in fixed level of exchange rates by the central bank

24
Q

revaluation

A

increase in fixed level of exchange rates by the central bank

25
managed exchange rate system
exchange rates are free to float to their market levels over the long term, but central banks periodically intervene in order to stabilise them over a short term
26
balance of payments
record of all transactions between the residents of the country and the residents of all other countries
27
credits
payments received from other countries
28
debits
payments made to other countries
29
speculation
buying and selling currencies to make a profit from changes in exchange rates
30
expenditure reducing policies
reducing imports by lowering aggregate demand
31
expenditure switching policies
reducing imports by switching consumption away from imports to domestically produced goods
32
economic development
a process where increases in real per capita output and incomes are accompanied by improvements in standards of living and reduction of poverty
33
poverty trap
an economic system that requires a significant amount of capital in order to earn enough to escape poverty
34
capital flight
large scale transfer of private owned financial capital to another country resulting from fear and uncertainty of holding domestic assets
35
informal economy
economic activities that are unregistered and legally unregulated
36
import substitution
growth and trade strategy where a country begins to manufacture simple consumer goods for the domestic market to promote its domestic industry, it depends on protective measures that prevent the entry of imports that compete with domestic producers
37
export promotion
growth and trade strategy where a country expands exports
38
social enterprise
a commercial organisation that aims to achieve particular social goals to improve people's well-being
39
trade liberalisation
elimination of trade barriers to achieve free trade
40
foreign direct investment
investment by firms based in one country in production facilities in another country
41
multilateral development assistance
lending to developing countries with rates of interest and repayment periods determined in the market
42
microfinance
loans in small amounts to people who do not normally have access to credit due to a lack of collateral
43
market-oriented policies
policies, in which government intervention is limited, economic decisions are made mainly by private decision-makers and the market has significant freedom to determine resource allocation
44
interventionist policies
policies based on government intervention in the market
45
economic inequality
the degree to which people differ in their ability to satisfy their economic needs
46
absolute poverty
a situation, where a person does not have enough income to satisfy their economic needs
47
relative poverty
comparison of income of individuals in society with median incomes
48
transfer payments
payments made by the government to individuals for the purpose of redistributing income away from those who work and pay taxes to those who need financial assistance
49
universal basic income
a sum of money residents of a country would receive regardless of any other income they may have