unit 5 Flashcards
exchange rate
the value of one currency for the purpose of conversion to another.
fixed exchange rate
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.
flexible exchange rate
system where the foreign exchange market determines a country’s currency price based on supply and demand.
purchasing power
financial ability to buy products and services
absolute advantage
the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group
comparative advantage
the ability to produce a good or service at a lower cost than others, relative to the opportunity cost of producing something else.
world happiness index
ranking of countries based on how happy their citizens perceive themselves to be
globalization
the process of increasing interdependence and interconnectedness between people and countries around the world.
world bank
international financial institution that provides financial and technical assistance to developing countries to help reduce poverty and promote economic development
privatization
process of transferring ownership of a business or property from the government to the private sector
nafta
trade agreement between the United States, Canada, and Mexico that established a free-trade zone in North America
imports
bring (goods or services) into a country from abroad for sale.
exports
send (goods or services) to another country for sale.
trade deficit
amount by which the cost of a country’s imports exceeds the value of its exports.
trade surplus
the amount by which the value of a country’s exports exceeds the cost of its imports.
free trade
trade policy that allows for the import and export of goods without tariffs or other trade barriers
protectionism
theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports.
tariffs
tax on the import or export of goods between countries
revenue tariffs
a tariff imposed principally to raise government revenue rather than to protect domestic industries.
protective tariffs
tax on imported goods that makes them more expensive than similar domestic products
most favored nation status
principle of international trade that requires countries to treat all trading partners equally
primary goods
set of basic resources and liberties that all people should have, and a term for goods sold in their natural state
secondary goods
Goods or services produced by an industry other than the primary product of that industry.
ngo
nonprofit entities independent of governmental influence (ex: salvation army)
world trade organization
intergovernmental organization that regulates and facilitates international trade
remittance
money that immigrants send home
marshall plan
proposed that the United States provide economic assistance to restore the economic infrastructure of postwar Europe
