Introduction

This report will examine the world economy in general these issues. In this way, people can learn basic information about the world economy. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one. It can be evaluated in various kinds of ways. It is inseparable from the geography and ecology of Earth, and is therefore something of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. This report would talk about several definition would used during the world economy.

Finding

1. Free trade

Free trade is the interchange of goods and services (but not of capital or labor) unhindered by high tariffs, nontariff barriers (such as quotas), and onerous or unilateral requirements or processes (businessdictionary, 2015).

The North American Free Trade Agreement is an agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-based trade bloc in North America. U.S. exports to Canada and Mexico support more than three million American jobs and U.S. trade with NAFTA partners has unlocked opportunity for millions of Americans by supporting Made-in-America jobs and exports(businessdictionary, 2015). As the U.S.’ two largest export markets, Canada and Mexico buy more Made-in-America goods and services than any other countries in the world. Since NAFTA’s implementation, U.S. states like Illinois, Ohio, Michigan, and many others have seen a surge in exports across North American borders.

2. Absolute and Comparative Advantage

In the theory of international trade, a country or firm has an absolute advantage if it can produce a product (good or service) more 'efficiently' (cheaply) than others.