A Global Perspective: International Economics

A set of flashcards covering key vocabulary related to international economics and globalisation, specifically designed to aid in understanding essential concepts for an exam.

Globalisation

The growing interdependence of countries and the increasing integration of local, regional, and national economies into a single international market.

Absolute Advantage

Exists when a country can produce a good more cheaply in absolute terms than another country.

Comparative Advantage

The ability of a country to produce a good more cheaply relative to other goods produced.

TNCs (Transnational Corporations)

Large companies operating around the world that influence globalisation by sourcing production due to lower labor costs.

Trade Liberalisation

The process of reducing barriers to trade, making it cheaper and more feasible to trade between countries.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Consumer Welfare

The economic well-being of consumers, which can be enhanced through increased choice and lower prices.

Protectionism

Government policies that restrict international trade to protect domestic industries.

Balance of Payments

A record of all economic transactions between a country and the rest of the world over a specific time period.

Exchange Rate

The value of one currency in terms of another, determined by the market demand and supply.

Trade Creation

A situation where a country buys goods from a lower-cost producer within a trading bloc, increasing overall welfare.

Trade Diversion

When consumption shifts from a lower-cost producer outside a trading bloc to a higher-cost producer within the bloc.

WTO (World Trade Organisation)

An international organization that regulates international trade and ensures countries adhere to trade agreements.

Infant Industry Argument

A rationale for protectionism that suggests new industries need to be protected until they can compete in the global market.

Structural Unemployment

Unemployment resulting from changes in the economy that lead to a mismatch between workers' skills and job requirements.

Terms of Trade

The ratio at which one country's goods trade for those of another, reflecting the purchasing power of exports.

Fiscal Policy

Government policy regarding taxation and spending to influence the economy.

Monetary Policy

The process by which the central bank manages the money supply and interest rates to control inflation and stabilize currency.

Global Trade Imbalances

Disparities in trade flows between countries that can lead to economic stress and require corrective measures.

Environmental Effects of Globalisation

The impact on the environment due to increased production and consumption patterns on a global scale, including resource depletion and pollution.