Econ - Globalization and Trade vocab

specialization

a particular area which someone concentrates on/ is an expert on

comparative advantage

when a country can produce a good at a lower opportunity cost

Absolute advantage

when a country can produce more of a good using the same quantity of resources

production possibilities curve

shows possible alternatives of production/ illustrates trade offs and opportunity costs

opportunity cost

the most valued alternative you give up when you make a choice

tariff

a tax on imports so they become more expensive - makes people want to buy from American companies rather than foreign companies

quota

a legal limit on the amount of a good that may be imported from other countries - meant to protect American companies from competition of other countries

embargo

a government order prohibiting the selling of goods to another country - usually because that country has bad/tyrannical/cruel leaders

world trade organization (WTO)

formed to help make trade agreements and settle trade disputes between countries

US-Mexico-Canada (USMCA)

A major free trade agreement was created that includes Canada, Mexico, and the United States.  -Lowers trade restrictions between the countries to allow for better trading conditions.

exchange rate

the price of one country’s currency in terms of another country’s currency. (1 US dollar = 0.94 Euro)

trade deficit

negative balance of trade (imports greater than exports)

trade surplus

positive balance of trade (exports greater than imports)

balance of trade

difference between a country’s exports and its imports.

globalization

the spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures.

outsourcing

to receive goods/services from an outside or foreign supplier.

European Union

a political and economic alliance of 27 countries located primarily in Europe

OPEC

an intergovernmental organization controlling most of the world’s oil supply