| A | B |
|---|
| mutual benefit | nations who voluntarily trade are better off |
| imports | products that are purchased from another country |
| exports | products that are sold to another country |
| absolute advantage | one nation can produce a product while a second nation can not |
| comparative advantage | both nations can produce a product, but one is far more efficient than the other |
| goss domestic product | the total amount of goods and services a nation produces in a year |
| trade deficits | a nation buys more goods and services than it sells to other countries |
| trade surplus | a nation sells more goods and services than it buys from other countries |
| balance of payments | summary of all transactions that have taken place between residents and foreigners in a year |
| tariff | a federal tax on imports |
| quota | a limite placed on the quantity of goods coming into a country |
| embargo | a government stops all trade with another country |
| voluntary restraints | an agreement to limit the exports of goods |
| currency | money |
| foreign exchange market | determine foreign exchange rates |
| fixed exchange | value of a currency is not allowed to fluctuate |
| flexible exchange rate | value of currency is allowed to change |
| managed exchange rates | government intervention used to bolster a nation's currency |
| International Trade | individuals, firms, or government import or export goods or services |
| specialize | nations produce only those goods and services that they produce efficiently |
