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| Question | Answer |
| Globalisation | The process of growing economic integration of the world's economies. |
| World Trade Organisation | An international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers to trade. |
| Multinational corporations | Enterprises operating in several countries but with their headquarters in one country. |
| Less developed countries | Countries considered behind in terms of their economy, human capital, infrastructure and industrial base. |
| More developed countries | Countries with a high degree of economic development, high average income per head, high standards of living, usually service industry dominates manufacturing, and investment taken place over many years in human capital and infrastructure. |
| European Union | An economic and political union established in 1993 after the ratification of the Maastricht Treaty by members of the European Community and since expanded to include numerous central and eastern European nations. |
| Absolute advantage | A country has an absolute advantage if it can produce more of a good than other countries from the same amount of resources. |
| Comparative advantage | This is measured in terms of opportunity cost; the country with the least opportunity cost when producing a good possesses a comparative advantage in that good. |
| Quotas | Physical limits on the quantities of imported goods allowed into a country. |
| Tariffs | Taxes imposed on imports from other countries entering a country. AKA import duties. |
| Export subsidies | Money given to domestic firms by the government to encourage firms to sell their products abroad and to help make their goods cheaper in export markets. |
| Eurozone | The name used for the group of EU countries that have replaced their national currencies with the Euro. In 2015, 19/28 were in the Eurozone. |
| Free trade area | Member countries abolish tariffs on mutual trade, but each partner determines its own tariffs on trade with non-member countries. |
| Customs union | A trading bloc in which member countries enjoy internal free trade in goods and possibly services, with all the member countries protected by a common external tariff barrier. |
| Single European Market | The SEM was intended to establish the four freedoms of free movement of goods, services, workers and capital between EU member states. Only partially complete. |
| Current account | Measures all the currency flows into and out of a country in a particular time period in payment for exports and imports of goods and services, together with primary and secondary income flows. |
| Balance of payments | The record of all money flows or transactions between the residents of a country and the rest of the world in a particular time period. |
| Trade in goods | Exports and imports of tangible items such as cars, oil and tea. |
| Trade in services | Exports and imports of services such as financial services, tourism and shipping. |
| Primary income flows | Inward primary income flows = income flowing into the economy in the current year, which is generated by UK-owned capital assets overseas. Outward primary income flows = income flowing out of the economy in the current year, generated by foreign capital assets in the UK. |
| Secondary income flows | Current transfers, such as gifts of money, international aid and transfers between the UK and EU, flowing into or out of the UK economy in a particular year. |
| Financial account | The part of the balance of payments which records capital flows into or out of the economy. |
| Foreign direct investment | Investment in capital assets in a foreign country by a business with its headquarters in another country. Often establishing a subsidiary company where it is investing. |
| Portfolio investment | The purchase of one country;s securities by the residents or financial institutions of another country. |
| Expenditure-reducing policy | A government policy which aims to eliminate the current account deficit by reducing the demand for imports by reducing the level of AD in the economy. Conversely, to reduce a surplus, AD would be increased to stimulate import spending. |
| Expenditure-switching policy | A government policy which aims to eliminate a current account deficit by switching domestic demand away from imports to domestic goods. Conversely, to reduce a surplus, policy would aim to switch domestic demand towards imports. |
| Exchange rate | The external price of a currency, usually measured against another currency. |
| Freely floating exchange rate | The exchange rate is determined solely by the interplay of demand for, and supply of, a currency. |
| Fixed exchange rate | An exchange rate is fixed at a certain level by the country's central bank and maintained by the central bank's intervention in the foreign exchange market. |
| Currency union | An agreement between a group of countries to share a common currency, and usually to have a single monetary and foreign exchange rate policy. |
| Indicators of development | These include GDP per head, information on the distribution of income, mortality rates and health statistics. |
| UN Human Development Index | An index based on life expectancy, education and per capita income, which ranks the world's countries into four tiers; very high, high, medium, or low human development. |
| Education and training | Education develops individual knowledge and intellect, while training develops work skills. Both are necessary for economic growth and development. |
| Corruption | A barrier holding back economic growth and development, especially in less developed economies. |
| Institutional factors | Examples of institutional factors include rules, laws, constitutions, the financial system and defined property rights. |
| Infrastructure | For the most part, the result of past investment in buildings, roads, bridges, power supplies, fast broadband and other fixed capital goods that are needed for the economy to operate efficiently. |
| Human capital | The accumulated stock of skills and knowledge, relevant to work, embodied in human beings. |
| Aid | Money, goods and services and soft loans given y the government of one country or a multilateral institution such as the World Bank to help another country. NGOs such as Oxfam also provide aid. |
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