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.