Glossary of Key Terms• balance of payments. An account of the flow of

goods, services, and money coming into and going out of the country.

• capital. Money used to generate income or to invest in a business or asset.

• cartel. A group of countries or firms that control the production and pricing of a product or service.

• comparative advantage. The benefit to the party that has the lower opportunity cost in pursuing a given course of action.

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Glossary of Key Terms• economic globalization. The flow of goods, services,

labor, money, innovative ideas, and technology across borders.

• economies of scale. The concept that cost of producing one unit of something declines as the number of units produced rises.

• European Union (EU). A group of nations joined together to form a trade sector, most of which use a common currency called the euro.

• exchange rate. The value of one currency compared to another.

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Glossary of Key Terms

• exports. The goods and services grown or made in a particular country and then sold in world markets

• free trade. A policy of limited government trade restrictions.

• imports. Goods and services that come into a country from foreign countries.

• international trade. The buying and selling of goods and services across national borders and among the people of different nations.

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Glossary of Key Terms• migrants. People who move from one place or

country to another. • multinational corporation. A business that operates

in more than one country. • North American Free Trade Agreement (NAFTA). An

agreement that lowered trade barriers and opened markets among the United States, Canada, and Mexico.

• offshore outsourcing. The procedure of moving sections of a business to another country.

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Glossary of Key Terms

• outsourcing. The procedure of a company moving sections of its business to other companies or to its own subsidiaries.

• specialization. The range of products and services a country can produce and then trade for whatever it cannot produce.

• trade barrier. Any action taken to control or limit imports.

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Glossary of Key Terms

• trade deficit. The loss of economic power due to a country importing more than it is exporting over a period of time.

• trade surplus. A gain of economic power due to a country exporting more than it is exporting over a period of time.

• World Trade Organization (WTO). An international organization that mediates trade disputes among 151 member nations and establishes trade practices that are acceptable and fair to all nations.

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