The International Economy Flashcards
Absolute advantage
When an economy is able to produce greater quantity of output with the same quantity of input
Aid
Transfer of resources between economies
Bilateral aid
Aid given from one country to another
Comparative advantage
When an economy is able to produce greater quantity of output at a lower opportunity cost
Debt relief
Partial or total forgiveness of debt slowing of debt growth
Developed countries
Countries with high GDP per capita; tend to export manufactured goods
Developing countries
Countries with low GDP per capita; tend to export agriculture
Economic development
Assessing the standards of living and economic welfare of those in a country
Economic integration
The process by which economies become more closely linked
Emerging countries
Countries that aren’t fully developed, yet are more developed than LEDCs
Foreign direct investment (FDI)
When firms in one country make investments into another country
Free trade
Trade with no barriers or restrictions
Human Development Index (HDI)
Measures an economy’s development based on 3 main criteria; life expectancy, educational achievement, and living standards Measures an economy’s development based on 3 main criteria; life expectancy, educational achievement, and living standards
Globalisation
The process in which economies become increasingly interconnected and markets become worldwide in scope
Multi-national corporation (MNC)
Firms who operate in multiple countries
Protectionism
When governments enact policies to restrict the free entry of imports into an economy
Quota
A limit on the amount of a good that can be imported into a country
Sustainability
Meeting current-day needs without putting the future at risk
Tariff
Form of tax placed on imported goods, making them less price competitive to disincentivise consumption
Trade creation
Creation of trade between members within a bloc
Trade diversion
Diversion of trade from between a country in a bloc and efficient countries outside a bloc, to less efficient countries within a bloc
Trade liberalisation
Reduction or removal of protectionist policies
Trading bloc
Government agreements that promote trade between certain countries
World Trade Organisation (WTO)
International organisation that aims to make trade as free as possible, discussing trade agreements and settling trade disputes
