ECO 2012 FINAL (written response p2)

What is the difference between a trade surplus and a trade deficit?

a trade surplus is when a country exports more than it imports, however a trade deficit is when a country imports more than it exports

Define purchasing-power-parity theory

the value of currencies is determined by the prices of goods and services in different countries.

Define absolute advantage

Being able to produce something more efficiently than someone else.

Define the principles of comparative advantages

Producing the goods you give up the least to make and trading for other goods

Explain obstacles to economic development

problems that prevent a country from increasing its wealth, productivity and quality of life.

Define underemployment

when someone has a job but isn’t enough hours, pay or skill level for what you're capable of.

Define capital flight

people are talking their money out of a country and investing it somewhere safer

define failed state

a country where the government has basically lost control

define the role of the world bank

helps developing countries grow by funding projects like schools, roads, hospitals and clean water systems.

Distinguish between industrially advanced countries and developing countries

industrially advanced countries are wealthy and highly developed countries while developing countries are still working to improve their economy and living standards.