Week 4 Vocabulary: Global Economics

Type of economy where not only domestic factors but also entities in other countries engage in trade of products (goods and services).

• Closed economy

• Open economy

• Real investment

• Absolute advantage

A completely self-sufficient economy, with no imports or exports from international trade.

• Open economy

• Closed economy

• Comparative advantage

• Real income

Price of a commodity such as a good or service in terms of another; i.e., the ratio of two prices.

• Absolute income

• Comparative price

• Relative price

• True value

Refers to one's earnings in relation to average income.

• Relative value

• True income

• Relative income

• True value

The amount by which the value of a country's exports exceeds the cost of its imports

• Trade deficit

• Depreciation

• Trade surplus

• Balance of trade

The amount by which the cost of a country's imports exceeds the value of its exports.

• Trade deficit

• Trade surplus

• Appreciation

• Balance of trade

The difference in value between a country's imports and exports for a given period of time.

• Trade surplus

• Trade deficit

• Balance of trade

• Exchange rate

Money that is invested in equipment, machinery, etc., rather than in shares or bonds

• Comparative Advantage

• Real investment

• Relative investment

• Exchange rate

An economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners.

• Comparative advantage

• Absolute advantage

• Balance of trade

• Relative production

when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than other producers

• Relative advantage

• Absolute advantage

• Balance of trade

• Appreciation