depreciation
(n) A lessening in value; a belittling of a currency
Protectionism
the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition
Trade barrier
any regulation or policy that restricts international trade
Tariff
a tax on imported goods
Foreign exchange market
The market in which the currencies of different countries are bought and sold.
Appreciation
an increase in price or value of a currency
Exchange rate
The value of a foreign nation's currency in terms of the home nation's currency.
Euro
the basic monetary unit of most members of the European Union (introduced in 1999)
European Union (a.k.a. EU)
International organization comprised of Western European countries to promote free trade among members.
World Trade Organization (a.k.a. WTO)
a worldwide organization whose goal is freer global trade and lower tariffs
International Free Trade Agreement
agreement that results from cooperation between at least two countries to reduce restrictions
Infant Industry
a new industry
Trade war
cycle of increasing trade restrictions
Voluntary export restraint
self imposed limitation on the number products shipped to a particular country
Import quota
a limit on the number of products that can be imported
Import
goods brought in from a foreign country for sale
Export
goods sent to a foreign country for sale
Law of comparative advantage
idea that nation is better off when is produces goods & sevices for which it has a comparative advantage
Comparative advantage
the ability to produce a product most efficiently given all the other products that could be produced
Absolute advantage
the ability to produce a good using a given amount of resources
Customs duty
A tax on items purchased abroad
Free trade zone
a region where a group of countries has agreed to reduce or eliminate trade barriers
NAFTA (a.k.a. North American Free Trade Agreement)
North American Free Trade Agreement that elimitanes all trade barriers between the US, Mexico, and Canada
Flexible exchange rate system
a system in which the exchange rate is determined by supply and demand
Fixed exchange rate system
a currency system in which governments try to keep the values of their currencies constant against one another
Trade surplus
when a country exports more than it imports
Balance of trade
The relationship between a nation's imports and exports
Trade deficit
When a country imports more than it exports