international trade
exchange of goods and services between countries
WTO
an international organization that sets rules for global trading and resolves disputes between its member countries
free trade
trade with no barriers put in place by the government or international organizations. goods and services can move freely between countries
protectionism
trade policies that protect the domestic economy from the disadvantages of international trade
dumping
selling by a country of large quantities of a commodity at a price lower than its production cost in another country
tariff
tax that is charged on imported goods
subsidy
an amount of money paid by the government to a firm per unit of output
quota
a physical limit on the number or value of goods that can be imported into a country
embargo
a complete ban on imports usually put in place as a political punishment
exchange rate
value of one currency expressed in terms of another
fixed exchange rate
value of a currency is fixed, or pegged, to another currency, to the average value of a selection of currencies, or a value of a commodity
floating exchange rate
value of a currency is allowed to be determined solely by the demand for, and supply of, the currency on the foreign exchange market
economic integration
how countries link up their economic policies
administrative barrier
Any administrative requirement that might prevent or reduce the amount of imports
balance of payments
a record of the value of all the transactions between residents of one country and the residents of all other countries in the world over a given period of time
current account
a measurement of the flow of funds from trade in goods and services, plus other income flows
financial account
measure of the net change in foreign ownership of domestic financial assets
capital transfers
measure of net monetary movements gained or lost (through actions such as the transfer of goods and financial assets by migrants entering or leaving the country, debt forgiveness, transfers relating to the sale of fixed assets, gift taxes, inheritance tax
transactions in non-produced, non-financial assets
the net international sales and purchases of non produced assets (such as land of the rights to natural resources) and net international sales and purchases of intangible assets (such as patents, copy rights, franchises, and brand names)
preferential trade agreement
Where a country agrees to give preferential access( e.g. reduced tariffs, to certain products from one or more trading partners)
free trade areas
a group of countries that agree to free trade (NAFTA)
custom union
An agreement made between countries, where the countries agree to trade freely among themselves, and they also agree to adopt common external barriers against any country attempting to import into the customs union.
common market
An economic unit, typically formed of nations, intended to eliminate or markedly reduce trade barriers
economic and monetary union
a group of countries that agree to using the same currency as well as the same rules of the common market (EuroZone)
trading bloc
a large free trade area formed by tax, tariff, and trade agreements
managed exchange rate
the currency is allowed to float, but there is some element of interference from the government
comparative advantage
the production of a good can be produced at a lower opportunity cost than in another country