EOC Review Vocabulary- Economics and Trade – Flashcards
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The economic idea that a region or country can produce more of a good with the same amount of resources than other nations. This may be because the resources are cheaper, easier to get to or readily available (and not elsewhere). In this case, nations will trade with other nations with an absolute advantage, since their goods are cheaper. In this economic theory, nations trade in goods they have an absolute advantage for goods that they do not have an absolute advantage (importing them is less expensive than producing it at home).
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Absolute Advantage
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A simple economy in which there is no cash or currency system; instead, people trade goods or services for what they need. Many economies have a very low GDP simply because no cash passes hands in a transaction, and thus are not recorded.
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Barter Economy
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A group that controls a significant amount of a resource or industry. OPEC is considered a cartel, as a group of nations that can set oil production and pricing. Mexican drug gangs are sometime referred to as cartels, as they control the price, production and distribution of illegal drugs.
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Cartel
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An economic system in which the government controls and operates the economy, setting production goals and standards, allocating resources and setting prices. Citizens of the country are employees of the state and are provided for by the government from the goods produced. Command economies
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Command Economy
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Farming done on a large scale, usually for export. Commercial farms often focus on a single crop or animal are produce vast quantities of them. Such farms often need more expensive equipment (such as tractors and harvesters), chemical fertilizers and pesticides and other items (trucks, trains) to get the commodity to market. Most commercial agriculture is for foreign export, in order to raise money for the local economy. Examples of commercial farming are: banana plantations, wheat or corn farms, cattle ranches, large-scale rice farming, cocoa plantations, etc.
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Commercial Agriculture
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Any good that can be bought or sold, usually in large amounts. Corn, Chocolate, Petroleum, Gold, Copper, Wheat, etc. are all examples of Commodities.
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Commodity
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The economic idea that a region or country can produce a good at lower cost than other nations, either owing to a more skilled workforce, easier access to markets or resources or some other reason. The idea is, a nation that has a comparative advantage should focus on and dominate that industries for export rather than competing in fields where they do not.
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Comparative Advantage
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Small scale home businesses that can be run by a family or small group of families, usually to produce hand-crafted items. These businesses are small, but can develop into a larger company. Common cottage industries are: shoe making, coppersmiths, clothing & textiles, weaponsmiths, pottery and other hand-crafted objects. Cottage industries are most common in Less and Newly Developing countries.
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Cottage Industry
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How goods and services are supplied to buyers or consumers, and how the resources and production of these goods are organized. Examples are Free Enterprise, Command, Socialist or Barter.
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Economic Systems
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European Union. The European Union is an organization begun in 1957 to help integrate European economies by eliminating tariffs and trade restrictions and to standardize labor, environmental, product standards and other laws to make trade easier between member nations. The EU has expanded to most European nations and is now in the process of integrating political systems as well. The EU has made citizenship standard within the EU, meaning labor can move form one nation to another freely to take advantage of local needs (and higher pay).
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EU
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The economic system that allows Buyers (consumers) and Sellers to freely trade in the marketplace with minimum government involvement. The market sets prices, what is to be made and how much (supply & demand). Government's role is to regulate the markets to insure safe marketplace for consumers, to prevent monopolies from forming, and other goals to insure an efficient market for goods. Examples of Free Enterprise nations include: the United States, Singapore, Australia, Costa Rica, Chile.
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Free Enterprise System
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Agreements between local regions or nations in which all members agree to end all taxes and fees on goods from other members, to allow easier sale of goods and services and to allow each to take advantage of local labor markets. In theory, such goods will be more available at lower prices, resulting in the growth of all member economies. NAFTA is a Free Trade Zone, as an example.
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Free Trade Zones
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The spread of an idea, products, culture or business on a global scale. In economics, it means that a company operates across national borders, having factories, sales and resources scattered across the globe and hiring local people to run them. General Motors, who produces and sells cars and trucks all over the globe made in local factories, ex an example of a globalized company. It also means that the demand of products (cars, as an example) has spread across the globe, so there is a global demand for such goods or services.
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Globalization
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Gross Domestic Product. The total value of all goods and services purchased in a country in a given year.
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GDP
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A country's GDP, divided by the total population of that country. GDP/capita can give an overall indication of the size and development of an economy.
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GDP/capita
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Human Development index. The HDI is a collection of economic & demographic data on countries that give insight into the overall quality of life and economic development of that nation. Data includes: Literacy rates, Birth/Death rates, Infant Mortality, Calories consumed, GDP/capita, Urbanization rates, etc.
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HDI
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All of the things needed to support a city or industry. These include: water systems, sewage, power, streets, transport (railroads, airports), schools to train employees, etc.
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Infrastructure
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The movement of an economy from a predominantly rural, agricultural society to one focused on cities and the production of finished goods and services.
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Industrialization
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Countries that have either not begun, or have only limited development of, local factories and service sectors. Such nations are often agricultural, with much of the population on farms. Literacy rates tend to be low, as there is less demand for an educated population. Examples would be Papua New Guinea, Central African Republic, Burkina Faso, Laos.
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Less Developed Nations
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South American free trade zone created between Paraguay, Brazil and Argentina, to encourage the sale of locally-made products (rather than imports). Additional nations have joined, and several are associate members.
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Mercasur
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an economy which shows features of both Socialist & Free Enterprise Systems. The United States is sometimes referred to as a Mixed Economy, since almost all of the economy is in private hands but some (the Post Office, public schools, the military, police) are still operated by the government.
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Mixed Economy
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When a company gains total control of an industry or sector within an economy. An example would be if all the oil companies in the US merged together to form one company—that company could set the price of gas (since they wouldn't have any competition). Monopolies sometimes exist in countries where the government grants only one company the right to extract or produce a product or commodity (such as operate all the gold mines in a country, or produce & sell all the cars within that country.)
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Monopoly
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Nations that have gone through Industrialization and now have populations centered on the Service Sector and Quaternary Sectors. These nations tend to have high literacy rates, very low or negative birth rates, high lifespan, very low infant mortality rates. Examples would be the United States, Canada, Japan, Germany and France.
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More Developed Nations
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North American Free Trade Agreement. Treaty signed by Canada, the United States and Mexico to remove most tariffs and restrictions on the trade of good between these three nations. Greater trade was expected to produce more jobs for all three nations.
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NAFTA
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Countries that have recently begun to industrialize. In these countries, there is a large-scale movement to cities (that's where the jobs are), a spike in population growth, a decline in death & infant mortality rates (access to healthcare) and a larger % of the population engaged in the service or factory production sectors. Literacy rates tend to increase. Examples of such nations could be: Costa Rica, Ecuador, Cameroon, Vietnam.
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Newly Industrialized Nations
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Commodities that there is a finite (limited) amount of, and when those sources are exhausted that commodity will be no longer available. Oil, copper, gold, titanium, natural gas and coal are all examples of non-renewable resources.
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Non-renewable resources
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To move jobs overseas to take advantage of lower labor costs, less effective environmental or safety laws, or to expand out of one market and into another market. Offshoring is most evident in the American industrial jobs market, where factories closed in the United States and were reopened in China, Taiwan, Vietnam and South Korea to take advantage or low labor costs.
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Offshoring
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A sector or sectors of an economy dominated by a few companies that control the market by agreeing to set certain prices and production for whatever market they control. Works much like a monopoly, except multiple companies are involved.
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Oligopoly
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When a company transfers certain activities within the company to an outside company to do the work, usually because they will do it cheaper or more efficiently. Often the people who did this work are laid off. Departments within companies where outsourcing often happens is in accounting and payroll, maintenance,
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Outsourcing
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Industries involved with production of basic materials, such as growing food, raising animals, lumbering, mining, oil extraction and other basic commodity production.
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Primary Economic Activities
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Are all of the elements that make up the Free Enterprise system: Natural (or raw) resources & commodities, Human resources (to make and sell these items), Capital resources (the investment in equipment to make other things) and Entrepreneurship- the people that create the companies that make the items for sale.
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Productive resources
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Sectors of the economy most seen in More Developed countries, this is the section of the economy that is based in research, knowledge and new technologies. Examples are software development, advanced robotics, nanotechnology, biotechnology, librarians, research & development companies, etc.
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Quaternary Economic Activities
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A fixed number or limit on something. Quotas in trade mean that there is a limit to the number of items that can be imported into a country.
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Quota
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resources that are not finite and more can be produced. Renewable resources include- forests, solar power, hydroelectric power, food crops, etc.
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Renewable Resources
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the regulation of natural resources to maintain the availability of these resources without destroying either the commodity or the natural environment. Many nations regulate the use of natural resources by limited permitting, laws to prevent pollution, testing for contamination, etc.
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Resource Management
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Ancient trade route from China to Europe, crossing though Central Asia and the Middle East. Named for the rich silks and spices that were traded from Asia, in exchange for gold, precious stones and other durable items produced in Europe and the Middle East. Disrupted during the Crusades; the direct cause of explorers looking for a new route to China and India to the West (Age of discovery & Exploration).
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Silk Road/Route
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An economy where much or most of the economy is owned by private enterprise, but key sectors of the economy remain state (government) owned. Common industries run this way in socialist economies are healthcare, transportation, energy production, communications, education and other sectors seen as too important to be left to private investors. Socialized industries are generally run in the public interest rather than a "for profit" enterprise. Examples of nations with Socialist economies would be: France, Sweden, Mexico, Canada.
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Socialist Economy
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The idea in economics that national economies will focus on industries in which they have an absolute advantage (for instance, a country with both coal and iron will focus on steel production) which in turn makes them more efficient in producing these items. Countries generally do not specialize in markets or sectors in which they have no such advantage.
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Specialization
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Farming at the small, local family level. Growing or raising enough food to feed a family, with remaining food sold off for whatever else is needed to sustain the family. Farms generally have multiple crops and animals raised to provide variety of foods to be eaten.
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Subsistence Agriculture
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The basic idea behind Free Enterprise Systems- the idea that the price of an item rises and falls based on the Demand for the item (how many want it) and the Supply of that item (how many are available). High Demand/Low Supply means higher prices; Low Demand/ High Supply indicates prices will fall. Supply and demand can be affected by increases in supply owing to new factories, declines in demand owing to higher prices and such things as Monopolies that can set the price regardless of demand or supply issues.
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Supply & Demand
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Economic development which focuses on industries that produce small or minimal pollutions, focus on renewable energy sources and the recycling of goods or commodities, reducing the demand for new raw resources.
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Sustainable Development
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A tax or fee on a good or commodity being imported into a country from a foreign source. These are often used to raise the price of the item for the consumer, making locally made items price competitive.
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Tariff
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The Sales sector in an economy, where goods are sold to consumers or that services are provided for consumers. Examples are doctors, lawyers, mall clerks, transportation personnel, restaurants, etc.
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Tertiary Economic Activity
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The market of goods changing hands between buyers and sellers, either locally or internationally.
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Trade
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A company that does business in more than one country and often many. Apple, IBM, General Motors and Exxon are all examples of transnational corporations.
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Transnational Corporation
