International Economics Flashcards

1
Q

Free trade

A

An explanation that it is international trade that takes place without any protectionism (trade barriers: tariffs, quotas, embargo..)

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2
Q

Absolute Advantage

A

Exists when a country is able to produce a good more cheaply in absolute terms than another country.

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3
Q

Balance of trade

A

Visible exports minus visible imports.

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4
Q

Monetary policy

A

the attempt by government or a central bank to manipulate the money supply, the supply of credit, interest rates or any other monetary variables, to achieve the fulfilment of policy goals such as price stability.

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5
Q

WORLD TRADE ORGANIZATION (WTO)

A

An organization aimed at liberalizing trade by facilitating the reduction or elimination of trade barriers between member states.

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6
Q

Common market

A

A group of countries between which there is free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market.

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7
Q

Balance of payments account

A

A record of all financial dealings over a period of time between economic agents of one country and all other countries.

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8
Q

Barter

A

Swapping one good for another without the use of money.

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9
Q

Bretton Woods System

A

An adjustable peg exchange rate system which was used in the post-Second World War period until its collapse in the early 1970s.

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10
Q

Exchange rate system

A

a system which determines the conditions under which one currency can be exchanged for another.

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11
Q

Common external tariff

A

a common tariff set by a group of countries imposed on imported goods from non-member countries.

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12
Q

Comparative Advantage

A

Exists when a country is able to produce a good more cheaply relative to other goods produced domestically than another country. In other words, the country has lower opportunity cost of production than the other country in question.

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13
Q

Capital and financial accounts

A

that part of the balance of payments account where flows of savings, investment and currency are recorded

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14
Q

Voluntary unemployment

A

workers who choose not to accept employment at the existing wage rate.

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15
Q

Adjustable Peg System

A

An exchange rate system where currencies are fixed in value in the short term but can be devalued or revalued in the longer term.

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16
Q

Quota

A

a physical limit on the quantity, value or volume of imported products (in international economics)

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17
Q

Embargo

A

An extreme quota. A government order that will restrict all trade with a country, or aim to reduce the exchange of specific goods.

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18
Q

Tariff

A

A tariff is a tax levied by the government on imported goods and services.

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19
Q

Subsidy

A

a grant given which lowers the price of a good, usually designed to encourage production or consumption of a good and lower the cost of production per unit.

20
Q

Dumping

A

the sale of goods at less than cost of production by foreign producers in the domestic market.

21
Q

Currency board system

A

a fixed exchange rate system where a country fixes the value of its currency to another currency. Notes and coins in the domestic currency can only be printed to the value of assets in the other currency held by the central bank.

22
Q

Devaluation

A

is when a country’s currency is devalued when it is expressed or exchanged with another currency.

23
Q

Depreciation

A

is a decrease in the exchange rate value of a currency.

24
Q

Appreciation

A

is an increase in the exchange rate value of a currency in terms of another currency in a floating system.

25
Q

floating exchange rate

A

where the value of a currency is determined by free market forces.

26
Q

Purchasing Power Parity (PPP)

A

it is a theory that argues that in the long run exchange rates should move towards levels that would equalize the prices of an identical basket goods and services bought in either of the two countries of which their exchange rates are being compared.

27
Q

Bretton Woods system

A

an adjustable peg exchange rate system which was used in the post-Second World War period until its collapse in the early 1970s

28
Q

Balance of payments account

A

a record of all financial dealings over a period of time between economic agents of one country and all other countries.

29
Q

Balance of trade

A

visible exports minus visible imports

30
Q

Bretton Woods system

A

an adjustable peg exchange rate system which was used in the post-Second World War period until its collapse in the early 1970s

31
Q

Current account deficit or surplus

A

a deficit exists when imports are greater than exports; a surplus exists when exports are greater than imports.

32
Q

Central bank

A

the financial institution in a country or group of countries typically responsible for the printing and issuing of notes and coins, setting short term interest rates, managing the country’s gold and currency reserves and issuing government debt.

33
Q

Common external tariff

A

a common tariff set by a group of countries imposed on imported goods from non-member countries.

34
Q

Common market

A

A group of countries between which there is free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market.

35
Q

Comparative advantage

A

Exists when a country is able to produce a good more cheaply relative to other goods produced domestically than another country. In other words, the country has lower opportunity cost of production than the other country in question.

36
Q

Customs union

A

A type of trade bloc which is composed of a free trade area with a common external tariff.

37
Q

Embargo

A

An extreme quota. A government order that will restrict all trade with a country, or aim to reduce the exchange of specific goods

38
Q

Exchange rate system

A

A system which determines the conditions under which one currency can be exchanged for another.

39
Q

Free trade

A

An explanation that it is international trade that takes place without any protectionism (trade barriers: tariffs, quotas, embargo..

40
Q

Fixed exchange rate

A

a rate of exchange between at least two currencies which is constant over a period of time.

41
Q

Currency bloc

A

a group of currencies which are fixed in value against each other but which may float freely against other world currencies.

42
Q

Devaluation and revaluation

A

a fall or rise in the value of the currency when the currency is pegged against other currencies.

43
Q

Foreign Direct Investment (FDI)

A

Investment of foreign assets in domestic infrastructure, equipment and organizations. e.g: Aramco investing in oil refinery in Nigeria.

44
Q

Gross Domestic Product (GDP)

A

refers to the net value of all goods and services produced and consumed within a country over a given time period (usually a year). E.g: The GDP of the U.S is over $15 Trillion annually, which is currently the largest in the world.

45
Q

Inflation

A

The persistent in the average price level in the economy.

46
Q

Exchange Controls

A

Controls on the purchase and sale of foreign currency by a country, usually through its central bank.