Each nation specialized in a product for which its opportunity cost is lower in terms of the production of another product and the nations trade.
Benefits a nation as a whiling but individuals may lose jobs and incomes from the competition from foreign goods and services.
A government’s use of embargoes, tariffs, quotas, and other methods to protect particular domestic industries by imposing barriers that reduce imports.
Prohibits the import or export of particular goods.
Discourages imports by making them more expensive.
Balance of payments
A summary bookkeeping record of all the international transactions
Balance of trade
Measures only merchandise goods (not services) that a nation exports and imports. It is the most widely reported and largest part of the current account
Is the price of one nation’s currency in terms of another nation’s currency. The intersection of the supply and demand curves for dollars determines the number of units of a foreign currency per dollar
Depreciation of Currency
Occurs when a currency becomes worth fewer units of another currency
Appreciation of currency
occurs when a currency becomes worth more units of another currency
A limit on the quantity of a good that may be imported in a given time period
The set of established procedures by which s society answers the What, How, and For whom to produce goods questions
Based on decisions made according to customs
Answers the three economic questions through some some powerful central authority.
Uses the impersonal mechanism of the interaction of buyers and seller through markets to answer the what, how, and for whom questions
An economic system in which the factors of production are privately owned, and economic choices are made by consumers and firms in markets
The determination by consumers of the types and quantities of products that are produced in an economy
Describes and economy which the government owns the factors of production. The central authorities make the myriad of society’s economic decisions according to a national plan
An economic system envisioned by Karl Marx to be an ideal society in which the workers own all the factors of production. Marx believed that workers who worked hard would be public spirited and voluntarily redistribute income to those who are less productive.
A phrase that expresses the belief that the best interests of a society are served when individual consumers and producers compete to achieve their own private interests
An economic system that answers the what, how, and for whom questions through a mixture of traditional, command, and market systems
GDP per capita
The value of final goods produced (GDP) divided by the total population
Industrially advanced countries
High-income nations which have market economies based on large stocks of technologically advanced capital and well-educated labor
Nations without large stocks of technologically advanced capital and well educated labor. LDCs are economies based on agriculture such as most countries of Africa, Asia, and Latin America
Vicious circle of poverty
A trap in which countries are poor because they can’t afford to save and invest, but they can’t save and invest because they are poor.
Capital goods usually provided by the government, including highways, bridges, waste and water systems, and airport
The transfer of money or resources from one government to another for which no repayment is required
Agency for International development
The agency of the U.S. State department that is in charge of U.S. aid to foreign countries
Is the lending agency that makes long-term low-interest loans and provides technical assistance to less-developed countries
International Monetary Fund
Is the lending agency that makes short-term conditional low-interest loans to developing countries
What is economics? study of how people allocate their limits 2 Branches of economics Macroeconomics (large) Microeconomics (small) Macroeconomics Study of behavior of the economy as a whole -Inflation -Taxes -Unemployment Microeconomics study of decision Read more…
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Considers how prices affect individual buyers and sellers Microeconomics Companies use it to understand what to sell, what to charge, and how to make Microeconomics Study of how individuals and businesses behave within certain economic Read more…