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