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32 Cards in this Set

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Absolute Advantage

The ability of a country to produce a good at a lower opportunity cost than another country

Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another county.

Free Trade

The flow of goods between countries without restrictions or special taxes

Protectionism

The government's use of embargoes, tariffs, quotas, and other restrictions to protect domestics producers from foreign competition

Embargo

A law that bars trade with another country

Tariff

A tax on imports

World Trade Organization (WTO)

An international organization of members countries that oversees international trade agreements and rules on trade disputes

Quota

A Limit on the quantity of a good that may be imported in a given time period

Balance of payments

A bookkeeping record of all the international transactions between a country and other countries during a given period

Balance of trade

The value of a nations imports subtracted from its exports. Balance of trade can be expressed in terms of goods, services, or good and services.

Exchange of rate

The number of units of one nations currency that equals one unit of another nation's currency.

Depreciation of currency

A fall in the price of one currency relative to another

Appreciation of currency

A rise in the price of one currency relative to another

Economic System

The organizations and methods used to determine what goods and services are produced, how they are produced, and for whom they are produced.

Traditional Economy

An economic system that answers the What, How, and For Whom questions the way they have always have been answered.

Command Economy

An economic system that answers the What, How, and For Whom questions by a dictator or central authority.

Market Economy

An economic system that answers the What, How, and For Whom questions using prices determined by the interaction of the force of supply and demand

Invisible Hand

A Phrase that expenses the belief that the best interests of a society are served when individual consumers and producer compete to achieve their own private interests.

Mixed Economy

An economic system that answers the What, How, and For Whom questions through a mixture of traditional, command, and market systems.

Capitalism

An economic system characterized by private ownership of resources and markets

Consumer Sovereignty

The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets.

Socialism

An economic system characterized by government ownership of resources and centralized decision making.

Communism

A stateless, classless economic system in which all the factors of production are owned by the workers and people share in production according to their needs. In Marx's view, this is the highest form of socialism toward which the revolution should strive.

GDP per capita

the value of final goods produced (GDP) divided by the total population

Industrially advanced countries (IACs)

High-income nations that have market economics based on large stocks of technologically advanced capital and well-educated labor. The United States, Canada, Australia, New Zealand, Japan, and most of the countries of Western Europe are IACs.

Less-developed countries

Nations without large stocks of technologically advanced capital and well-educated labor. LDCs are economics, based on agriculutre such as most countries of Africa, Asia, and Latin America.

Vicious circle of poverty

The trap in which countries are poor because they cannot afford to save and invest., but they cannot save and invest because they are poor.

Infrastructure

Capital goods usually provided by the government, including highways, bridges, waste and water systems, and airports.

Foreign Aid

The transfer of money of resources from one goverment to another with no repayment required.

Agency for International Development (AID)

The agency of the U.S. State Department that is in charge of U.S. aid to foreign countries.

World Bank

The lending agency that makes long term low-interested loans and provides technical assistance to less-developed countries

Internation Monetary Fund

The lending agency that makes short-term conditional low-interest loans to developing countries.