Economic Terms

Trade Barriers Trade is the voluntary exchange of goods and services among people and countries. Sometimes countries try to limit trade by creating trade barriers such as tariffs, quotas, or embargos.

Trade Barriers A tariff is a tax on imports which are goods brought into a country. Tariffs make imported products more expensive.

Trade Barriers A quota is a limit on the number of imports that may enter a country.

Trade Barriers An embargo is an order issued by the government stopping trade altogether.

International Trade and Exchange Rates Since different countries use different currencies or types of money they must exchange their currencies to trade with each other.

Gross Domestic Product GDP is the total value of all the goods and services produced in a country in one year. The GDP of a country is one way to tell how rich or poor a country is. Raising the GDP of a country can mean a higher standard of living for the people in the country.

Types of Capital To increase the GDP, countries must invest in human capital. Human capital is everything and anything that helps people be more productive like education, training, skills, and health When investment is made in human capital, GDP goes up, and when this goes up, people enjoy a higher standard of living

Types of Capital To increase the GDP, countries must invest in physical capital. Physical capital is also known as capital goods. Investment is needed in this area for business to be most productive and to stay competitive. Physical capital includes factories, machines, technology, buildings, and property

Entrepreneurship Entrepreneurship is needed to keep economies healthy and growing. They cause a rise in GDP by putting other people to work. As they create businesses, they create jobs and the more people working, the greater will be the value of goods and services produced.

Natural Resources Natural resources are sometimes thought of as “gifts of nature.” Natural resources include things like water, fertile soil, forests, coal, gold, and natural gas.

Natural Resources Natural resources are very important to countries. Without natural resources of their own a country must import the natural resources they need. If a country has a lot of natural resources it can trade them to other countries.