Key Terms Flashcards
1
Q
Absolute Advantage
A
- the ability to produce more efficiently (eg with less labour)
2
Q
Absolute Poverty
A
- the situation of a household whose income is insufficient to allow it to purchase the minimum bundle of goods and services regarded as necessary for survival
3
Q
Comparative Advantage
A
- the ability to produce a good relatively more efficiently ( eg at a lower opportunity cost)
4
Q
Law of Comparative Advantage
A
- a theory arguing that there may be gains from trade arising when countries (or individuals) specialise in the production of goods or services in which they have a comparative advantage.
5
Q
Trading Possibilities Curve
A
- shows the consumption possibilities under conditions of free trade
6
Q
Terms of Trade
A
- the ratio of export prices to import prices
7
Q
Globalisation
A
- a process by which the world’s economies are becoming more closely integrated
8
Q
Multinational Corporation (MNC)
A
- a company whose production activities are carried out in a number of countries.
9
Q
General Agreement of Tariffs and Trade (GATT)
A
- the precursor of the WTO, which organised a series of tariff reductions
10
Q
World Trade Organisation (WTO)
A
- a multilateral body responsible for overseeing the conduct of international trade
11
Q
Sustainable Development
A
- development which needs the needs of the present without compromising the ability of future generations to meet their own needs
12
Q
Foreign Direct Investment
A
- investment undertaken in one country by companies based in other countries
13
Q
Emerging Economies
A
- economies that have experienced rapid economic growth with some industrialisation and characteristics of developed markets
14
Q
Free Trade Area
A
- a group of countries that agree to trade without barriers between themselves, but having their own individual barriers with countries outside the area
15
Q
Customs Union
A
- a group of countries that agree to trade without barriers between them, and with a common tariff barrier against the rest of the world
16
Q
Trade Creation
A
- the replacement of more expensive domestic production or imports with cheaper output from a partner within the trading bloc
17
Q
Trade Diversion
A
- the replacement of cheaper imported goods by goods from a less efficient trading partner within a bloc
18
Q
Common Market
A
- a set of trading agreements in which a group of countries which have common factors in their trading
19
Q
Monetary Union
A
- a situation in which countries adopt a common currency
20
Q
Economic and Monetary Union
A
- a set of trading arrangements the same, as for a common market, but in addition having a common currency and a common monetary policy
21
Q
Tariff
A
- a tax imposed on imported goods
22
Q
Quota/ Voluntary Export Restraint
A
- an agreement by a country to limit its exports to another country to a given quantity or quota
23
Q
Non-Tariff Barriers
A
-Measures imposed by a government that have the effect of inhibiting international trade
24
Q
Protectionism
A
- When government enact policies to restrict the free entry of imports into their country, such as tariffs and quotas
25
Q
Trade Liberalisation
A
- Reduction or removal of protectionist policies
26
Q
Trade Bloc
A
- A group of countries that reduce or remove trade barriers between them
27
Q
Preferential Trading Areas (PTA)
A
- Where tariff and other trade barriers are reduced on some but all goods traded between member countries
28
Q
Economic Union
A
- where there is a common market with coordination of social, fiscal and monetary policy
