ECONOMICS-class period:2
unit 5
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Depreciation
(n.) a lessening in value; a belittling
developing country
A country that has low industrial production and little modern technology
World Bank
A specialized agency of the United Nations that makes loans to countries for economic development, trade promotion, and debt consolidation. Its formal name is the International Bank for Reconstruction and Development.
Tariff
A tax on imported goods
Euro
European currency
infant industry argument
New industries in developing countries must be temporarily protected from international competition to help them reach a position where they can compete on world markets with the firms of developed nations.
Cartel
a formal organization of producers that agree to coordinate prices and production
capital flight
a large and sudden reduction in the demand for assets located in a country
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
absolute advantage
the ability to produce a good using fewer inputs than another producer
trade surplus
when a country exports more than it imports
subsidy
A government payment that supports a business or market
Free Trade Area
A group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent external trade policies.
Quota
A limit placed on the quantities of a product that can be imported
capital account
An account used to summarize the owner's equity in a business.
trade deficit
An excess of imports over exports
appreciation
An increase in the value of a currency
European Union
An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members.
Protectionism
Economic policy of shielding an economy from imports.
GATT
General Agreement on Tariffs and Trade
IMF
International Monetary Fund
Capital Flows
Investment flows per period of time, into and out of a country. EX: Portfolio/FDI
NAFTA
North American Free Trade Agreement
OPEC
Organization of Petroleum Exporting Countries
exchange rate
The measure of how much one currency is worth in relation to another.
Embargo
an official ban on trade or other commercial activity with a particular country.
current account
in the balance of payments, records transactions involving the export or import of goods and services
terms of trade
the ratio at which a country can trade its exports for imports from other countries