| A | B |
|---|
| absolute advantage | the ability of one person or nation to produce a particular good at a lower cost than another person or nation |
| comparative advantage | the ability of one person or nation to produce a good at an opportunity cost that is lower than that of another person or nation |
| law of comparative advantage | the idea that a nation is better off when it produces goods and services for which it has a comparative advantage |
| export | a good that is sent to another country for sale |
| import | a good that is brought in from another country for sale |
| trade barrier | a means of preventing a foreign product or service from freely entering a nation's territory |
| import quota | a limit on the amount of a good that can be imported |
| voluntary export restrain(VER) | a self-imposed limitation on the number of products shipped to a particular country |
| customs duty | a tax on certain items purchased abroad |
| tariff | a tax on imported goods |
| trade war | a cycle of increasing trade restrictions |
| protectionism | the use of trade barriers to protect a nation's industries from foreign competition |
| infant industry | a new industry |
| World Trade Organization(WTO) | a worldwide organization whose goal is freer global trade and lower tariffs |
| free-trade zone | a region where a group of countries agrees to reduce or eliminate trade barriers |
| European Union(EU) | a regional trade organization made up of European nations |
| euro | a single currency that replaces individual currencies among members of the European Union |
| NAFTA | agreement that will eliminate all tariffs and other trade barriers between Canada, Mexico, and the United States |
