International Definitions Flashcards
Define free trade.
Trade of goods and services between countries without restrictions or government intervention.
Define tariffs.
Taxes imposed on goods and services imported from a foreign country
Define quota.
A legal limit to the quantity of a good that can be imported over a particular time, usually a year
Define production subsidies.
Money paid to domestic firms per unit of output regardless of where the goods and services are sold
Define export subsidies.
Money granted to domestic producers only for the units that they export to foreign countries
Define administrative barriers.
Obstacles that prevent imports, e.g. health and safety regulations, red tape, technical standards
Define floating exchange rate.
The value of one currency expressed in term of another, whose value is determined by demand and supply with no government intervention
Define fixed exchange rate.
The value of one currency expressed in terms of another, whose value is fixed or pegged by monetary authority
Define trading blocs.
Groups of countries that agree to reduce trade barriers for freer trade and cooperation.
Define free trade area.
Agreement to eliminate trade barriers on certain goods and services (e.g. NAFTA)
Define customs union.
Free trade area + common trade policies on non-member countries
Define common market.
Customs union + further eliminate trade barriers between member countries for free flow of FOP (EAC)
Define monetary union.
Common market + adopt common currency, central bank, and monetary/exchange rate policies, coordinate macroeconomic policies (e.g. the EU)
