Econ Unit 4

World Bank

A United Nations agency created to assist developing nations by loans guaranteed by member governments

International Monetary Fund

A United Nations agency to promote trade by increasing the exchange stability of the major currencies

Extreme Poverty

A condition in which people are too poor to meet their basic survival needs, including food, shelter, and clothing

Multi-National Corporations

A corporation that does business in more than one country

Pollution Haven

A country that attracts polluting industires because of its weak or poorly enforced environmental laws

Least Developed Country

A country that suffers from severe poverty and low standards of living

Strong Dollar

A dollar with a high exchange rate; a dollar that has risen in value, or appreciated, relative to other currencies

Weak Dollar

A dollar with a low exchange rate; a dollar that has fallen in value, or depreciated, relative to other currencies

Depreciation

A fall in the value of one currency relative to another, based on supply and demand

Money

A generally accepted medium of exchange that can be traded for goods and services or used to pay debts

Trade Barriers

A government measure that limits international trade, such as a protective tariff or an import quota

Import Quota

A limit on the quantity of a good that can be imported during a specified period of time; a type of trade barrier

Developing Country

A low-to-medium-income country in which most people have less access to goods and services than the average person in a developed country

Sustainable Development

A pattern of resource use and economic growth designed to meet current needs while preserving the environment and ensuring that future generations will also be able to meet their needs

Cultural Imperialism

A process by which one country imposes its cuture or language on another country, often through the influence of economic forces

Appreciation

A rise in the value of one currency relative to another, based on supply and demand

Coincidence of Wants

A situation in which each of two individuals has something the other wants; the basis for barter

Protective Tariff

A tax on imported goods and designed to protect domestic producers from foreign competition; a type of trade barrier

Developed Country

A wealthy,industrialized country in which the majority of the poeple have more than enough income to meet their basic needs and maintain a high standard of living

Service Exports

All exported business services, including internet services, travel, and transportation

Export-Led Development

An economic model that emphasizes the production of goods for export as a means of the economic growth

Fixed Exchange Rate

An exchange rate set by a government at a fixed value relative to another currency

Floating Exchange Rate

An exchange rate that fluctuates based on supply and demand

World Trade Organization

An international agency which encourages trade between member nations, administers global trade agreements and resolves disputes when they arise

United Nations

An organization of independent states formed in 1945 to promote international peace and security

Commerce Clause

Article 1, Section 8 of the US Constitution, which gives Congress the power to regulate interstate trade

North American Free Trade Agreement (NAFTA)

Created to allow the free movement of goods between Canada, Mexico, and the U.S. by lessening and eliminating tariffs

Exports

Goods and services produced domestically an sold in other countries

Imports

Goods and services produced in other countries and sold domestically

Differentiated Products

Goods that are essentially the same, but are distinguished from each other by variations in style, materials, or other characteristics

Mass Production

Large-scale manufacturing

Non-Governmental Organizations (NGO)

Nonprofit organizations that operate outside of governments, often with a focus on humanitarian or environmental concerns

International Organizations

Organizations that help implement the rules that govern the elements of world politics. They create the capability for states to cooperate in mutually beneficial ways by reducing the costs of making and enforcing agreements

Voluntary Exchange

The act of willingly trading one item or service for another

Division of Labor

The allocation of separate tasks to different people, based on the principle of specialization

Debt Forgiveness

The cancellation of all or part of a debt

Economic Interdependence

The characteristics of a society in which people rely on others for most of the goods and services they want

Comparative Advantage

The condition that exists when someone can produce a good or service at a lower opportunity cost than someone else

Absolute Advantage

The condition that exists when someone can produce a good or service using fewer resources than someone else

Specialization

The development of skills or knowledge in one aspect of a job or field of interest

Balance of Trade

The difference between the value of a country's exports and the value of its imports; this figure can represent a surplus (more exports than imports) or a deficit (more imports than exports)

Barter

The direct exchange of goods or services without the use of money; a typical feature of traditional economies

Capital Flow

The movemtn of money into and out of a country through foreign inverstment and other financial activities

Foreign Debt

The part of a country's total debt that is owed to foriegn creditors

Free Trade

The policy of eliminating barriers to international trade; free trade allows goods and servies to move more freely across borders

Protectionism

The policy of erecting trade barriers to shield domestic markets from foreign competition

Economic Development

The process by which a country makes economic progress and raises its standard of living; development includes improvements in agriculture and industry, the building of roads and other economic infrastructure, and investments in human capital

Cultural Diffusion

The process of sharing ideas and knowledge across cultures

Subsistence Agriculture

The raising of crops or livestock mainly for personal consumption rather than for sale

Debt Service

The series of payments of interest and principal a borrower agress to pay a lender over the life of a loan

Global Economy

The system of economic interaction among the world's countries, including international trade and transfers of money, resources, and technology

Foreign Exchange

The trading on one national currency for another

How Does Trade Create Wealth?

Trade lowers the cost of goods, trade creates more winners than losers, trade moves goods to people who value them, trade increases the quantity and variety of goods available