The Wealth of Nations. The Theory of Moral Sentiments

Labor is the physical work required to produce exchangeable value from a commodity. Labor can be comprised of a wide variety of tasks, from setting pins to writing study guides. Labor composes one-third part of the price of any good.

This refers to income derived through the employment of capital stock, whether it be raw commodities or machinery. The profits of stock are simply money generated using some asset. The profits of stock are one-third of the price of any good.

Rent of land is money charged for the use of land by the owner of such land. In the context of The Wealth of Nations, such rent is paid to employ productive labor to generate value using capital stock. The rent of land is one-third of the price of any good.

A commodity is a raw material that can be traded, such as corn, gold, water, steel, oranges, etc. Commodities can be improved through manufacturing, which increases their value. 

Capital is an asset that can be used to increase the value of some other commodity, thus enabling it to be sold for a higher price. Smith defines capital as the portion of a person’s stock that will earn revenue.

An amount charged to a borrower by a lender for the use of money lent. Smith describes interest as a rent paid for the use of money for a particular time. Interest is often paid on money borrowed to employ profitable labor on capital stock, to increase its value, with the intention of repaying the loan and interest, and making a profit.

Any forum in which goods or services are exchanged for value. A free market is one that exists free from restrictions and taxes, in which people are free to exchange as they please, based on their needs and wants.

The transfer of goods and services from one entity to another in an exchange of value. When two sovereign nations trade, it is called international trade. Trade conducted without restrictions or tariffs is called free trade.

To purchase and transport goods from one sovereign nation into another sovereign nation, typically for the purpose of reselling such goods.

To sell and transport goods from one sovereign nation into another sovereign nation, typically for the purpose of reselling such goods.

A tariff is a tax on goods imported and exported between sovereign states. The tax is paid by importers and passed to consumers through the increase price of affected goods. Tariffs are used to regulate international trade.

The return of a tariff paid by an importer, typically on goods subsequently exported. The drawback places the importer in the same situation as if the tariff did not exist at all, except for the time value of money. Functionally, the importer pays the tariff on goods when they are imported, and then receives a refund on the tariff when the goods are exported.

A bounty is commonly known as a subsidy. It is money given by a governmental entity to businesses within a certain industry to preserve a low price and competitiveness in that industry.

A country controlled by another country, referred to as the mother country, and occupied by settlers from the mother country. Much of Europe colonized the Americas to extract gold and silver under the mercantilist belief that doing so would increase the wealth of their nations.