Unit 4 IB Econ SL Vocab

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Free Trade

No barriers to trade between countries.

Protectionism

Government intervention aiming to limit imports and/or encourage exports by setting up trade barriers that protect from foreign competition

Tariffs

A tax placed on imported goods and services.

Quotas

A physical limit on the number or value of goods that are allowed to be imported.

Subsidies

Money is given to domestic producers to increase competitions and reduce domestic price.

Dumping

The situation when foreign firms export their goods at a price below production costs. Typically, established firms will do this and take the loss in revenue to establish grounding in a new market.

FOREX

Marketplace for exchanging currencies around the globe. The buying and selling of currencies.

Appreciation

When the price of a currency increases in a floating exchange rate system or managed exchange rate system.

Depreciation

A decrease in the value of a currency in terms of another currency in a floating or managed exchange rate system.

Floating Exchange Rate

Price of one currency in terms of another are determined by the forces of demand and supply.

Fixed Exchange Rate

An exchange rate system where the exchange rate is fixed to the value of another currency and maintained there with appropriate central bank intervention.

Managed Exchange Rate

An exchange rate that floats in the foreign exchange markets but is subject to intervention from time to time by domestic monetary authorities, in order to prevent undesirable movements in the exchange rate.

Balance of Payments

A record of the value of all transactions of a country with the rest of the world over a period of time. BOP keeps track of a country’s money inflow and outflow.

Foreign Direct Investment(FDI)

This occurs when large multinational corporations (MNC) make a long-term investment in a foreign country.

Portfolio Investment

The buying and selling of financial assets in foreign countries by people or businesses.

World Trade Organazation

An international body that sets the rules for global trading and resolves disputes between its member countries. It also hosts negotiations concerning the reduction of trade barriers between its member nations.

Customer Unions

An agreement between countries to phase out or eliminate tariffs and other trade barriers annd establish a common external barrier toward non-members.

Common Market

When a group of countries agree not only to free trade of goods and services but also to free movement of capital and labour.

Monetary Unions

Where two or more countries share the same currency and have a common central bank.

Devaluation

A decrease in the value of a currency in a fixed exchange rate system.

Revaluation

An increase in the value of a currency in a fixed exchange rate system.

Primary Sector

Anything derived from factor of production land, includes agricultural products, metals, and minerals.

Tertiary Sector

Segment of economy that provides intangible services rather than producing physical goods.

UN Sustainable Development Goals

17 global objectives aimed at achieving sustainable development by 2030, covering economic growth, social inclusion, and environmental protection.

Human Development Index

A composite indicator created by the UN to measure a country’s devolepment beyond just income, focusing on people and capabilities. It rank countries based on three key sectors, life expectancy (health), years of schooling(education), and GNI per capita (standard of living).

Poverty Trap

This is a self-perpetuating condition where an individual , household,or community is caught in a cycle of poverty.

Capital Flight

An high degree of outflow of money from an economy. Typically these are due to negative political, social, or economic changes.

Import Substiution

A strategy that says a developing country should produce goods domestically, rather than import them.

Export Promotion

Outward-oriented growth strategy, based on openness and increased international trade. Growth comes from an increase in export revenue.

Diversification

Process of shifting economy away from single income sources toward broader, more varied sectors and markets.

ODA

Foreign aid provided by governments or international agencies to developing countries, aimed at promoting economic development and welfare.

NGO

Organization with general goal to promote economic development, humanitarian ideals, and sustainable development.

World Bank

UN orgnazaiton that provides grants, low-interest loans, and technical assistance to development nations to reduce poverty and boost economic growth.

IMF

A global organization that works to support economic growth and prosperity for all of its 191 member countries.

Microfinance

A range of financial services, such as small loans and savings accounts, designed to support low-income individuals or small businesses.