Theories of Trade
A trade theory summarized by this main idea: a country is better off if the value of its exports are more than the value of its imports.
Mercantilism
This exists if you can produce more of a good or service than someone else.
Absolute advantage
A type of international trade agreement common before WWII that consisted of two parties, but often resulted in unfair treatment of some.
Bilateral Trade Agreements
Name two opponents to interntional trade.
Environmentalists, labor unions, human rights activists, and politicians.
A tax on imports or exports
Tariff
A trade theory summarized by this main idea: if a country specializes in what it produces best and freely trades those products, then society would be better off.
Free Trade
This exists if you can produce a good at a lower opportunity cost than someone else.
Comparative Advantage
After WWII, many countres including, the U.S., signed this trade agreement with the goal of reducing tariffs and other trade barriers so that countries could equally enjoy the benefits of free trade.
General Agreement on Tariffs and Trade (GATT)
As countries specialize, production will concentrate in countries that have fewer regulations to protect the environment from pollution and habitat destruction is what kind of a concern against interntional trade?
Environmental Concern
Limits on trade
Quotas
The trade theory summarized by this main idea: if two countries have different mixes of labor and capital and specialize according to their mix, then they will benefit more from trade than two countries with similar mixes of labor and capital.
Heckscher-Ohlin Theory
Canada can produce 10 aircraft or 14 submarines. Argentina can produce 8 aircraft or 10 submarines. Which country has the absolute advantage in submarines?
Canada
A notable trade agreement between European nations.
The European Union (EU)
Production will shift towards countries that have little or no union representation, and therefore negatively impact their membership is what kind of a concern about interntional trade?
Labor Union Concern
A ban on trade
Embargo
Japan and the U.S. both are high in capital to produce cars, but trade with each other anyway. This an exception to the Heckscher-Ohlin Theory. What is this exception called?
The Paul Krugman exception
When calculating comparative advantage, you must find the opportunity cost for producing ONE of each product. We do this by dividing __________ by ________.
Cost / Gain
A notable trade agreement between the U.S., Canada, and Mexico signed by president Bill Clinton but later ended by president Trump.
North American Trade Agreement (NAFTA)
Production shifts to countries where working conditions are miserable and often inhumane, and where workers are not given the same rights and privileges as in industrialized countries is what kind of a concern about international trade?
Human Rights Concern
Which trade barrier can be used to raise money for the government and to protect certain industries?
Tariffs
Why do some countries benefit from trading when they have similar labor and capitalization (like Japan and the U.S. trading cars even though they could make all of their own)?
It offers diversity and gives people options. (You can buy a Toyota if you prefer it over a Ford)
Panama and Greece both produce coffee and petroleum by the ton. Here are their amounts and per unit opportunity costs:
Panama
100 tons coffee (1C costs 0.75P)
75 tons petroleum (1P costs 1.3C)
Greece
75 tons coffee (1C costs 1.7P)
125 tons petroleum (1P costs 0.6C)
The country with the comparative advantage in coffee is...
Panama (0.75P verses 1.7P)
The trade agreement that replaced NAFTA.
The United States, Mexico, and Canada Trade Agreement (USMCA)
Decisions affecting the nation are being made by an international body not directly subject to the people is what kind of concern about international trade?
Political Concern.
Which type of trade barrier doesn't generate revenue for the government but does create more responsibility
Quotas