Economics Fundamentals and Principles

The study of how individuals, businesses, and governments make choices about allocating scarce resources to satisfy unlimited wants.

The additional benefit gained from taking one more unit of action.

The additional cost incurred from taking one more unit of action.

The value of the next best alternative forgone when making a choice.

Costs that have already been incurred and cannot be recovered regardless of future actions.

The study of individual decision-making, markets, and prices.

The study of the economy as a whole, including GDP, inflation, and unemployment.

The principle that individuals should take an action if and only if the extra benefits are at least as great as the extra costs.

A market where many buyers and sellers trade a standardized product, and market forces determine the price.

The amount of adjustment needed to exchange rates between countries to make the rate equivalent to each currency's purchasing power.

The value of a country's total exports minus its total imports.

When a country's exports are greater than its imports.

When a country buys more goods and services from other countries than it sells to them.

The purchase of goods and services from another country.

The sale of goods and services to another country.

International competition can harm certain domestic industries that compete with imported goods. This can impact income distribution, particularly for less-skilled workers who may experience wage declines.

The European Union (EU), with 27 member countries, has the largest internal trade volume, accounting for about 21% of global trade.

Trade between the US and Europe makes up a significant 26% of global trade flows.

North, Central, and South America trade with the Caribbean region, comprising 8% of global trade. This trade mostly happens within the USMCA (US, Mexico, and Canada).

Asia, notably China, is a major player in global trade, contributing 29% of total exports. China has become the leading exporter worldwide.

The Middle East and Russia contribute 9% of global trade, primarily driven by exports of oil and natural gas.

Africa, despite its size and population, contributes only 2% of global trade. To increase trade and promote development, Africa needs better economic connections with the rest of the world.

Canada, China, Mexico, Japan, and Germany were the top five trading partners of the US in 2015. The top 20 trading partners accounted for 80% of US trade value.

A model that helps explain the volume of trade between countries based on their economic size and distance.

The value of all goods and services produced in a country over a specific period, typically a year.

The greater the distance between two countries, the lower the volume of trade between them.

Factors beyond economic size and distance that influence international trade, including cultural similarities, geographic advantages, multinational corporations, and border policies.

A trade agreement that eliminates barriers to trade between member countries, leading to increased trade among them.

A sector with significant potential for growth in international trade, as many services can be delivered remotely or outsourced.

The percentage of a country's total trade that comes from manufactured goods, such as automobiles, computers, and clothing.

The percentage of a country's total trade that comes from services, such as shipping, insurance, and tourism.