unit 5

Question 1

exchange rate

Answer 1

the value of one currency for the purpose of conversion to another.

Question 2

fixed exchange rate

Answer 2

regime applied by a government or central bank that ties the country’s official currency exchange rate to another country’s currency or the price of gold.

Question 3

flexible exchange rate

Answer 3

system where the foreign exchange market determines a country’s currency price based on supply and demand.

Question 4

purchasing power

Answer 4

financial ability to buy products and services

Question 5

absolute advantage

Answer 5

the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group

Question 6

comparative advantage

Answer 6

the ability to produce a good or service at a lower cost than others, relative to the opportunity cost of producing something else.

Question 7

world happiness index

Answer 7

ranking of countries based on how happy their citizens perceive themselves to be

Question 8

globalization

Answer 8

the process of increasing interdependence and interconnectedness between people and countries around the world.

Question 9

world bank

Answer 9

international financial institution that provides financial and technical assistance to developing countries to help reduce poverty and promote economic development

Question 10

privatization

Answer 10

process of transferring ownership of a business or property from the government to the private sector

Question 11

nafta

Answer 11

trade agreement between the United States, Canada, and Mexico that established a free-trade zone in North America

Question 12

imports

Answer 12

bring (goods or services) into a country from abroad for sale.

Question 13

exports

Answer 13

send (goods or services) to another country for sale.

Question 14

trade deficit

Answer 14

amount by which the cost of a country’s imports exceeds the value of its exports.

Question 15

trade surplus

Answer 15

the amount by which the value of a country’s exports exceeds the cost of its imports.

Question 16

free trade

Answer 16

trade policy that allows for the import and export of goods without tariffs or other trade barriers

Question 17

protectionism

Answer 17

theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports.

Question 18

tariffs

Answer 18

tax on the import or export of goods between countries

Question 19

revenue tariffs

Answer 19

a tariff imposed principally to raise government revenue rather than to protect domestic industries.

Question 20

protective tariffs

Answer 20

tax on imported goods that makes them more expensive than similar domestic products

Question 21

most favored nation status

Answer 21

principle of international trade that requires countries to treat all trading partners equally

Question 22

primary goods

Answer 22

set of basic resources and liberties that all people should have, and a term for goods sold in their natural state

Question 23

secondary goods

Answer 23

Goods or services produced by an industry other than the primary product of that industry.

Question 24

ngo

Answer 24

nonprofit entities independent of governmental influence (ex: salvation army)

Question 25

world trade organization

Answer 25

intergovernmental organization that regulates and facilitates international trade

Question 26

remittance

Answer 26

money that immigrants send home

Question 27

marshall plan

Answer 27

proposed that the United States provide economic assistance to restore the economic infrastructure of postwar Europe