Econ Ch. 5
Terms
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- the value of goods and services sold to foreigners
- exports
- the value of goods and services purchased from foreigners
- imports
- the value of a nation's exports minus its imports
- trade balance
- the amount by which a nation's trade balance is in deficit (imports exceed exports)
- trade deficit
- the amount by which a nation's trade balance is in surplus (exports exceed imports)
- trade surplus
- a situation whereby a country can produce a good at a lower resource cost than another country
- absolute advantage
- a curve that shows alternative combinations of the maximum amounts of two products that can be consumed within a country during a particular time period
- consumption possibilities curve
- a restriction on the quantity of an imported good
- quota
- a tax on an imported good
- tariff
- a situation in which one country responds to the trade restrictions of another country by imposing trade restrictions of its own
- retaliation
- demand in which buyers are relatively unresponsive to changes in price
- inelastic demand
- a situation in which the price of a country's exports declines relative to the price of its imports
- declining terms of trade
- restrictions on trade with another country for political reasons
- embargo
- an agreement between the United States, Canada, and Mexico allowing more equal access to one another's markets. The agreement went into effect on January 1, 1994
- North American Free Trade Agreement (NAFTA)
- an international trade agreement, first negotiated in 1947, that has included efforts to reduce tariff barriers among member countries of the world. It is now replaced by the World Trade Organization
- General agreement on tariffs and trade (GATT)
- the organization that replaced GATT in 1995 and continues to pursue GATT's agenda to reduce barriers to trade among member countries
- World Trade Organization (WTO)
- the price of one country's currency in terms of another country's currency
- exchange rate
- a system whereby exchange rates are determined on te basis of international demand and supply for a currency
- flexible (floating) exchange rate system
- an increase in the value of one country's currency relative to another country's currency
- appreciate
- a decrease in the value of one country's currency relative to another country's currency
- depreciate
- a group of eight countries (the U.S., Canada, Britain, France, Italy, Germany, Japan, and Russia) that coordinate policies in an effort to influence exchange rates
- Group of Eight (G-8)
- a group of six (original) countries (the U.S., Japan, China, Singapore, Australia, and Hong Kong) that coordinate financial policies
- Six Markets Group (Asian G-6)
- a situation whereby a country can produce a good at a lower opportunity cost than another country
- comparative advantage
- unprocessed raw material and agricultural products
- primary commodities