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AICE Econ AS Unit 4
Review of terms and concepts from Unit 4 of AICE Econ AS Level
Term | Definition |
---|---|
Export | Goods and services sold to another country. |
Import | Goods and services purchased from another country. |
Balance of Payments | The record of a country's economic transations with the rest of the world, usually over the course of a year. |
Multilateral Trade | Trade between a number of countries. |
Bilateral Trade | Trade between two countries. |
Absolute Advantage | A situation where, for a given set of resources, one country can produce more of a particular good than another country. |
Comparative Advantage | The reason for trade. Even with an absolute advantage in production, another country may have a lower opportunity cost of production. |
Protectionism | Policies used to protect an economy from foreign competition. |
Tariff | A tax that is imposed on imports and exports. |
Quota | A physical restriction on imports. |
Export Subsidies | A policy designed to make a nation's exports more competative on the international market. |
Dumping | Selling goods in an overseas market at below their cost of production. |
Sunrise Industry | A newly created industry within an economy. |
Infant Industry Argument | The case for protecting new firms in a developing economy. |
Globalisation | The process by which the world's economies are becoming increasingly dependant upon each other. |
Economic Integration | The process whereby individual economies get together to form a single unit. |
Free Trade Area | Where member states agree to remove any restrictions on trade among themselves. |
Customs Union | Free trade among members and common external terrif on imports. |
Economic Union | Member states agree to common economic policies and, sometimes, a common currency. |
Terms of Trade | A numerical measure of the relationship between export prices and import prices. |
Trading Possibility Curve | A representation of what trade is possible for given terms of trade. |
Balance of Trade | The difference between exports of goods and services and imports of goods and services. |
Current Account | Part of the balance of payments. A record of the trade in goods and services, investment income and current transfers. |
Financial (Capital) Account | Part of the balance of payments. Shows the transfer of financial assets between a country and the rest of the world. |
Trade Creation | The high cost of domestic production is replaced by more efficiently produced imports from within a customs union. |
Trade Diversion | Where trade with a low cost country outside a customs union is replaced by higher cost products supplied from within. |