International Economics: Key Concepts and Vocabulary

These flashcards review key vocabulary and concepts from the International Economics lecture, aiding students in understanding and recalling important terms.

International Economics

The study of how nations interact through trade of goods and services, flows of money, and investment.

Gains from Trade

The mutual benefits countries achieve by selling goods and services to each other.

Gravity Model

A model that describes the influence of an economy’s size on trade, considering distance and other trade impediments.

Trade Deficit

A situation where a country imports more than it exports in value.

Exchange Rate

The measure of how much domestic currency can be exchanged for foreign currency.

Tariff

A tax on imports or exports.

Quota

A quantity restriction on imports or exports.

Service Offshoring

The practice of moving service operations to a foreign location to reduce costs.

Balance of Payments

A measurement of all economic transactions between residents of a country and the rest of the world.

Export Subsidy

A payment to producers that export goods.

Political Economy

The interplay between politics and economics, influencing trade policies and practices.

Vertical Disintegration

The breakdown of production processes into separate stages, often spanning multiple countries.

Manufactured Goods

Products that have been processed or manufactured, as opposed to raw materials.

Cultural Affinity

A relationship or connection based on shared culture, including language or heritage, often influencing trade.

Free Trade Agreement

A pact between countries to reduce or eliminate barriers to trade.

International Capital Market

Markets where money is exchanged for promises to pay in the future, often involving foreign investments.

Net Inflows of Financial Assets

The total value of financial investments that flow into a country, which can offset trade deficits.