Trade and the World Economy

Flashcards covering key concepts related to trade and the global economy.

Interdependence

The concept that countries and economies are interconnected and rely on one another for goods, services, and resources.

Complementarity

The idea that if one country has something that another country wants, they can trade to mutual benefit, thus increasing the value of what they possess.

Effective Demand

The desire for a product coupled with the ability to pay for it.

Comparative Advantage

The principle that countries should specialize in the production of goods they can produce most efficiently, allowing for greater overall trade.

Neoliberalism

An economic philosophy favoring free-market capitalism, deregulation, and privatization over state control or planning.

Free Trade Agreement (FTA)

A treaty between two or more countries to facilitate trade and eliminate tariffs on goods traded between them.

North American Free Trade Agreement (NAFTA)

An agreement between the United States, Canada, and Mexico aimed at eliminating barriers to trade and investment.

World Trade Organization (WTO)

An international organization that regulates trade between nations and aims to ensure that trade flows as smoothly and predictably as possible.

Agglomeration

The clustering of businesses or industries in a particular area to gain advantages in providing their services or products.

Tariff

A tax imposed on imported goods, typically intended to protect domestic industries by making foreign products more expensive.