| A | B |
|---|
| Absolute advantage | Situation in which an economy or individual can produce more of any good per unit of labor than another country or individual |
| Terms of trade | The rate at which a country can trade domestic products for imported products |
| One-way (or interindustry) trade | Situation in which countries specialize in producing the goods in which they have a comparative advantage and then export those goods so they can import the goods in which they do not have a comparative advantage |
| Two-way (or intraindustry) trade | International trade in which countries both import and export the same or similar goods |
| Protectionist policy | Policy that restricts the importation of goods and services produced in foreign countries |
| Tariff | A tax on imported goods and services |
| Quota | A direct restriction on the total quantity of a good or service that may be imported during a specified period |
| Voluntary export restrictions | A form of trade barrier by which foreign firms agree to limit the quantity of goods exported to a particular country |
| Infant industry | A new domestic industry with potential economies of scale |
| Strategic trade policy | A policy aimed at promoting the development of key industries that may increase a country’s domestic well-being through trade with the rest of the world |
| Dumping | The practice of a foreign firm charging a price in other countries that is below the price it charges in its home country |
| Outsourcing | Situation in which firms in a developed country transfer some of their activities abroad in order to take advantage of lower labor costs in other countries |
