International Economics Module 1 - Key Vocabulary

Thirty vocabulary flashcards summarizing key terms from Module 1: International Economics, covering trade, globalization, demand, supply and related concepts.

International Economics

The branch of economics that studies economic interactions—trade, investment, finance—between independent nations.

Global Economy

A worldwide system in which goods, services, labor, capital and information move rapidly across national borders.

Trade Surplus

A situation in which a nation’s exports exceed its imports, bringing more money into the economy.

Outsourcing

Shifting jobs or production from advanced economies to emerging markets to reduce costs.

International Trade

Voluntary exchange of goods and services between two or more countries.

Domestic Trade

Exchange of goods and services that occurs entirely within a country’s borders.

Trade Theory

Analytical framework that explains the basis for and gains from international trade.

Trade Policy

Government actions—tariffs, quotas, regulations—designed to influence the volume or pattern of international trade.

International Finance

Study of foreign-exchange markets, balance of payments, and adjustments to external disequilibria.

Exporter

A seller that ships goods or services to a foreign market.

Importer

A buyer that purchases goods or services from a foreign market.

Globalization

The growing integration of the world’s economic, political and cultural systems driven largely by technology.

Four Waves of Globalization

1870-1914 Industrial Revolution; 1945-1980 Post-WWII integration; 1980-2008 market liberalization; 2008-present digital and fragmented globalization.

Sovereignty (Economic Context)

A nation’s authority to set its own monetary, fiscal and trade policies, distinguishing international from domestic economics.

Factor Mobility

The ability of labor and capital to move between countries in response to economic opportunities.

Balance of Payments

A statement summarizing a country’s transactions with the rest of the world—goods, services, income and financial flows.

Foreign Exchange Market

Global marketplace where national currencies are bought and sold and exchange rates are determined.

Fiscal Policy

Government decisions on taxation and public spending aimed at influencing economic activity.

Monetary Policy

Central-bank actions that manage the money supply and interest rates to achieve macroeconomic goals.

Normal Good

A product for which demand rises when consumer income increases.

Inferior Good

A product for which demand falls when consumer income increases.

Substitute Goods

Products that can replace each other; a price rise in one increases demand for the other.

Complement Goods

Products consumed together; a price rise in one reduces demand for the other.

Law of Demand

Principle that, ceteris paribus, a higher price leads to a lower quantity demanded and vice versa.

Determinants of Demand

Factors—population, income, tastes, price expectations, prices of related goods—that shift the entire demand curve.

Law of Supply

Principle that, ceteris paribus, a higher price leads to a higher quantity supplied and vice versa.

Determinants of Supply

Non-price factors—technology, production costs, number of sellers, related-goods prices, future price expectations—that shift the supply curve.

Ceteris Paribus

Latin for “all else equal”; assumption that other variables remain constant when analyzing one relationship.

Quantity Demanded vs. Change in Demand

Quantity demanded is movement along a demand curve from a price change; change in demand is a shift of the entire curve.

Quantity Supplied vs. Change in Supply

Quantity supplied is movement along a supply curve due to a price change; change in supply is a shift of the entire curve.