Balance of Trade The ratio of exports to imports. A "favorable" balance of trade is said to occur when the value of a nation's exports exceeds that of its imports, so that other nations owe it money or gold. An "unfavorable" balance of trade is said to occur when a nation imports more in value than it exports and thus was money or gold to other nations. These are the commonly used meanings (derived from mercantilist doctrines), not those of fundamental economics. (See Lesson 3)

Balance of Payments The amount of credits and debits accumulated from the total trade transactions of the people of one country with other countries, usually calculated annually.

Bounty Payments of support for a particular industry, made by the government; now usually called "subsidy".

Ecosystem Services processes by which the natural environment produces resources useful to people, akin to economic services. Many see the proper pricing of these services as a key to environmental sustainability.

Elasticity The tendency of one variable to change in response to changes in another variable -- most often used to describe the tendency for demand, or supply, of a good to change in response to changes in price. The demand for cigarettes is inelastic because people tend to buy the same amount of them even when their price increases.

Export Any item of wealth sent out of a country, usually for sale abroad.

GATT The General Agreement on Tariffs and Trade, a series of multilateral trade agreements, begun in 1947. GATT negotiations went through three long sessions, or rounds, the Kennedy, Tokyo and Uraguay rounds. GATT became the WTO in 1995.

GDP Gross Domestic Product. The total value of all finished goods and services in a nation over a given period of time, usually a year.

Gilded Age The period in the late-nineteenth century when the industrial revolution was vastly increasing production in the United States, and the wages of industrial workers fell rapidly. This led to the rise of the labor union movement.

GPI The Genuine Progress Indicator, a proposed alternative index which seeks to measure truly beneficial economic growth, subtracting out economic transactions that impose harm or merely repair damage.

IMF the International Monetary Fund, the "Bretton Woods Institution" (see World Bank, below) set up to monitor international currency exchanges and provide short-term loans to nations that are having trouble meeting their balance of payments.

Import Any item of wealth brought into a country, usually for sale.

Laissez Faire The idea that government should interfere as little as possible with economic activity, leaving economic decisions to the free marketplace.

Land The entire physical universe, except human beings and their products. Land, labor and capital are the three fundamental factors of production.

Money A medium of exchange, or measure of value. Money does not directly satisfy human desires but is useful in being universally exchangeable (within the borders of the issuing nation) for all goods and services.

Natural opportunity The Georgist definition of land includes not just the surface of the globe, but all naturally-occurring processes of opportunities that can be localized and used in production. To make this broad definition clear, the term "natural opportunity" is often used.

Neoclassical Economics The school of economic thought that grew in response to the 19th-century "classical school" of Malthus, Ricardo and Mill. Neoclassical economics focuses on microeconomics, examining individual proft-maximizing choices, and interpreting all economic phenomena as aggregations of such individual choices.

Nontariff Barriers Regulations adopted by a nation which are seen as hindering international trade, and may be proscribed by trade agreements under the WTO. These provisions are very controversial, because they are seen as compromising nations' ability to enact laws protecting their safety or environment.

NAFTA The North America Free Trade Agreement, enacted in 1994, which established tariff reductions and other rules involving investment security and "nontariff barriers to trade", among the United States, Canada and Mexico.

OECD The Organization for Economic Cooperation and Development, an international organization of 30 developed countries. It originated in 1948 as the Organization for European Economic Co-operation (OEEC), to help administer the Marshall Plan for the re-construction of Europe after World War II. Later its membership was extended to non-European states, and in 1961 it was reformed into the Organization for Economic Co-operation and Development.

Proletariat In Marxist theory, the class of industrial workers, for whom, under capitalism, conditions will inevitably become so intolerable that they will organize to overthrow the capitalist order and create a planned economy.

Tariff A levy or duty upon goods coming into a country, imposed by the government of that country. Also known as a custom duty. Tariff for revenue is primarily for the purpose of public revenue and is usually imposed upon imports not produced in the country levying such tariff. Protective tariff is for the purpose of protecting domestic producers against competition by foreign producers, and thus are levied on imports of goods which are also produced in the country levying such tariff. It is the latter type of tariff which is most in dispute. Ambrose Bierce, in The Devil's Dictionary, defines a protective tariff thus: "A scale of duties levied on imports, designed to protect the domestic manufacturer from the greed of his consumers."

Tax A compulsory contribution levied upon persons, property or business, for the support of government. A direct tax is one paid directly to the government by the party or property-owner on whom it is levied. An indirect tax is one which the party on whom it is levied passes on to another party, usually in the purchase price of the item taxed. An ad valorem tax is one based upon the value of the thing taxed.

Trade The exchange of commodities for commodities. International trade is trade between parties of different countries. Trade may be carried on directly, called "barter"; or indirectly, through the use of money; but the trade is not completed until the money is again exchanged for commodities. Ultimately, all trade is barter the exchange of goods for goods. Trade has been called "a two-way profit." It is a voluntary, freely entered contract in which both parties benefit. Each trading party gives up something less valuable in exchange for something more valuable.

Trade Agreements These cover a variety of arrangements, all of which fall short of full free trade. The government of one nation my agree with the government of another nation to allow their respective citizens to exchange certain articles of wealth. Quotas are negotiated limitations on imports. Bilateral agreements are undertaken between two nations, and multilateral agreements are undertaken when several nations are involved. A trade bloc is a grouping of nations which have agreed to reduce or eliminate tariffs among themselves but erect a common tariff wall against other countries. Large monopolistic companies also make agreements among themselves on prices, supply, etc. These are known as cartels, and my occur internationally or within one nation.

Trade sanctions Punitive tariffs on the export products of a particular country. They could be adopted unilaterally, as when the US placed high tariffs on goods produced in South Africa under Apartheid, or multilaterally, as when used by the World Trade Organization to enforce its trade rules.

Wealth Material products of labor that satisfy human desires and have exchange value. The production and distribution of wealth is the fundamental subject of political economy.

World Bank One of the "Bretton Woods Institutions" (along with the International Monetary Fund) set up at a 1945 conference of allied leaders to manage international monetary policy. The World Bank was mainly set up to provide loans to developing countries; since the 1940s it has loaned more that $330 billion.

WTO The World Trade Organization, an international body that negotiates and governs international trade agreements. The WTO presently has 150 member nations, which account for over 90% or world trade.