imports
Goods and services purchased from international sources
exports
Goods and services sold to foreign buyers.
trade balance
exports minus imports
trade deficit
The amount by which the value of imports exceeds the value of exports in a given time period
trade surplus
The amount by which the value of exports exceeds the value of imports in a given time period
specialization
increases total output
closed economy
A nation that doesn't engage in international trade
consumption possibilities
The alternative combinations of goods and services that a country could consume in a given time period
domestic production possibilities
Without trade, a country's consumption possibilities are limited to its what?
open economy
A nation that engages in international trade
comparative advantage
The ability of a country to produce a specific good at a lower opportunity cost than its trading partners
absolute advantage
The ability of a country to produce a specific good with fewer resources (per unit of output) than other countries
terms of trade
The rate at which goods are exchanged; the amount of good A given up for good B in trade
trade restrictions
Reduce the gains from trade for the country as a whole
dumping
The sale of goods in export markets at prices below domestic prices