Chapter 16
Misery Index
It helps determine how the average citizen is doing economically
It is the unemployment rate added to the inflation rate
Created by Arthur Okun
Advantages and Disadvantages of International Trade
Stability in prices
Economic Dependence
Optimal use of natural resources
Globalization vs. Protectionism
The theory of shielding a country's domestic industries from foreign competition by taxing imports
Globalization is the process where businesses develop international influence
Collectivization vs. Privatization
Example of collectivization is Russia taking goods from the lower class and giving it to the working class.
Privatization is converting state owned companies into privately owned companies.
Collectivization is giving goods from one class to another.
NAFTA
A three-country accord negotiated by the governments of Canada, Mexico, and the United States
Entered force in January 1994
North American Free Trade Agreement
European Union
Made by the European nations in response to NAFTA.
Made up of 28 countries
A trade agreement between European nations
Comparative Advantange
A person has a comparative advantage at producing something if he can produce it at a lower cost than anyone else.
The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.