International Economics Flashcards

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 60 flashcards covering International Economics

Commodity agreements
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An agreement between nations that produce a particular commodity (for example, coffee) meant to stabilize the global output of the good to maintain stable prices over time. Reduces fluctuations in prices of the commodities that many people in the developing world are involved in the production of.

Commodity agreements
Productivity
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The output per unit of input of a resource. An important determinant of the level of aggregate supply in a nation. Will increase as a result of better or more capital, education and health, all which add to the human capital of a nation.

Productivity
Infant Industry
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An industry that is emerging in a less developed country, but which has not achieved the economies of scale and other efficiencies that allow it to compete with larger producers in more developed countries. Sometimes used as a justification for protectionist policies.

Infant Industry
Devaluation
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When a government or a central bank intervenes in the market for its own currency to weaken it relative to another currency or currencies. May be achieved through measures such as reducing domestic interest rates, selling the currency on foreign exchange markets, or imposing foreign exchange controls that limit the amount of foreign investment in the country, reducing demand for the currency abroad.

Devaluation
Improvement in terms of trade
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When the price of a nation’s exports rises relative to the price of its imports. May result in an improvement in the current account balance if demand for the country’s exports is inelastic relative to its import demand, or a worsening in the current account balance if export demand is elastic relative to import demand.

Improvement in terms of trade
Quota
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A physical limit on the quantity of a good produced in a foreign country allowed to be imported. Meant to restrict imports, allowing domestic producers to sell a greater quantity on the domestic market.

Quota
Free trade area
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An agreement between nations to reduce or remove tariffs and quotas on all goods traded between the member states. Nations can maintain their own external barriers to trade, thus this is a lower level of economic integration than a customs union, but it represents a higher level of integration than a preferential trade area.

Free trade area
Globalization
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The emerging inter-connectedness of the world’s national economies and cultures

Globalization
Net exports
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A component of aggregate demand. Equals the income earned from the sale of exports to the rest of the world minus expenditures by domestic consumers on imports.

Net exports
Revaluation
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When a government or central bank intevenes in the market for its own currency on foreign exchange market to raise its value relative to another currency or currencies. Measures may include raising domestic interest rates, purchasing the currency using foreign exchange reserves, or restricting the outflow of capital for foreign investment (exchange controls).

Revaluation

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