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Transcript of Economics-Chapter 17
Vocabulary Comparative Advantage the ability to produce a product or service at a lower cost and more efficiently than another country the idea that a nation is better off when it produces goods and services for which it has a comparative advantage Law of Comparative Advantage Interdependence the shared need of countries for resources, goods, services, labor, and knowledge that are supplied by other countries Trade Barriers Import Quota limit on the amount of a good that can enter a country Sanction action a nation or group of nations takes to punish or put pressure on another nation that places limits on trade Embargo the act of cutting off all trade with another country Trade War a conflict in which a country places tariffs on foreign goods and, in return, finds that tariffs are placed on its own goods Protectionism the use of trade barriers in order to protect domestic industries from foreign competition Infant Industry an industry that is in the early stages of development Free Trade the lowering or removal of protective tariffs and other trade barriers between nations Excise Tax A tax on the total value of the money and property of a person who has died Regional Trade Organization an organization that works toward lowering or removing trade barriers among its members, which are located in the same region a region where a group of countries agrees to reduce or end trade barriers Free-Trade Zone Depreciation a "weakening" or decrease in the value of a currency Appreciation a "strengthening" or increase in value of a currency Exchange Rate the value of a nation's currency in relation to a foreign currency Foreign Exchange Market the market for buying and selling national currencies Discretionary Spending Spending about which Congress is free to make choices Fixed Exchange-Rate System a system in which governments try to keep the values of their currencies constant Means-tested The practice of giving lower, or no, entitlements to people who have higher incomes Flexible-Exchange System a system in which changes in the exchange rate are determined by supply and demand Balance of Trade the difference between the value of a country's exports and imports Trade Surplus a favorable balance of trade that occurs when a country exports more than it imports Trade Deficit an unfavorable balance of trade that occurs when a country imports more than it exports Balance of Payments the value of all money exchanged between a country's economy and the rest of the world something that keeps a foreign produce or service out of a country