Economics Key Terms: Trade, GDP, Inflation, and Comparative Advantage

Trade

The exchange of goods and services between people, businesses, or countries.

Import

Goods or services brought into a country from another country.

Export

Goods or services sent out of a country to another country.

Factors of Production

The resources used to make goods and services: land, labor, capital, and entrepreneurship.

Trade Surplus

When a country exports more than it imports.

Trade Deficit

When a country imports more than it exports.

Absolute Advantage

When a country can produce a good using fewer resources than another country.

Comparative Advantage

When a country can produce a good at a lower opportunity cost than another country.

Unemployment

he condition of people who are able and willing to work but cannot find jobs.

Inflation

The general increase in prices over time.

CPI

A measure that tracks the average change in prices of a "basket" of goods and services.

GDP (Gross Domestic Product)

The total value of all final goods and services produced within a country in a given time period.

GDP Per Capita

GDP divided by the population; shows the average economic output per person.

GDP PPP

GDP adjusted for cost of living differences, showing what people can actually afford in different countries.

Specialization

When individuals, businesses, or countries focus on producing what they do best.