Economics and Personal Finance Vocabulary (Unit 6: Global Economics)

European Union

(EU) of free-trade agreement that has allowed for increase straight across Europe and the introduction of a common currency, the euro

North American Free Trade Agreement

(NAFTA) an agreement that began on January 1, 1994 between the US Canada and Mexico, it removes most trade barriers among those countries

World Trade Organization

(WTO) and organization that is helped to reduce barriers to international trade and to increase production efficiencies

Embargo

A ban on imports from and/or exports to a particular foreign nation, usually for political reasons

Non-Tariff Barriers

A type of trade barrier that restricts imports of foreign made products (ex: embargo)

Free Trade Agreements

Agreements between nations to reduce trade barriers and open up foreign markets to exporters

Closed Economy

An economy that does not trade outside its bounds

Open Economy

An economy that trades outside its bounds

Voluntary Free Trade

And ideal feature of the global economy it is when each party involved in a trade expects to gain from the trade

Market Forces

Changes in supply and demand

Time Lags

Delays between economic actions and their consequences

Appreciated

Describes something that has gained value

Depreciated

Describes something that has lost value

Air Transportation

Enables economic activity through transferring goods between national and international destinations by aircraft such as airplanes and helicopters

Maritime Transportation

Enables economic activity through transferring goods between national and international destinations by way of boats and ships

Strong Dollar

Has a high value compared to many, but not all, foreign currencies

Weak Dollar

Has a low value compared to many, but not all, foreign currencies

Multinational Corporations

Large businesses that have offices, factories, or other facilities in multiple countries

Quotas

Limits on the amount of a specific product people can import in the country

Currency

Money in any form when used as a medium of exchange, especially virtual or paper money that circulates

Trade Surplus

Occurs when a country exports more goods and services than it imports

Trade Deficit

Occurs when a country imports more goods and services than it exports

Globalization

Refers to the close relationships and communications among national governments, corporations, and individuals on a worldwide scale. International trade drives globalization, affecting culture, the environment, and the economic development of countries. The global distribution of the production of goods and services through the reduction of barriers to international trade, such as tariffs export fees and import quotas

Trade Barriers

Restrictions on trade imposed by the government

Tariffs

Specialized taxes levied on certain imports to protect domestic producers

Balance of Trade

The difference in the monetary value of the countries exports and imports for a specific period

Elasticity of Demand

The extent to which buyers respond to changes in prices (also Price Elasticity??)

Exchange Rate

The rate at which the local currency is exchanged for foreign currencies, reflects whether US currency is strong or weak

Fixed Exchange Rate

When the value of a country's currency is set, through government action, at a certain conversion rate

Floating Exchange Rate

When the value of the countries currency is determined by the private market through supply and demand