global economy The system of economic interaction among the countries of the world. It includes international trade as well as transfers of money, resources, and technology among countries.
imports Goods and services produced in other countries and sold domestically.
exports Goods and services produced domestically and sold in other countries.
free trade The policy of eliminating barriers to international trade. Free trade allows goods and services to move more freely across borders.
protectionism The policy of erecting trade barriers to shield domestic markets from foreign competition. Protectionism limits foreign trade.
protective tariff A tax on imported goods designed to protect domestic producers from foreign competition. A tariff is one form of trade barrier.
foreign exchange The trading of one national currency for another. Foreign exchange is a necessary element of global trade.
balance of trade The difference between the value of a country's exports and the value of its imports. When a country exports more than it imports, it has a trade surplus. When imports exceed exports, it has a trade deficit.