Absolute/Comparative Advantage
The way you know if a country has an absolute advantage.
By seeing who can produce more.
Items that a country buys from other nations
Imports
The broad term that describes the protectionist laws that make trade more difficult.
Trade barriers
The meaning of Free Trade
Trade without trade barriers
The meaning of exchange rate
The value of one countries currency in terms of another. Ex: $1 = 15 mxn pesos
Who has the absolute advantage in animal production
Animals Fish
Italy 35 13
China 30 18
Italy
Items that a country sells to other nations
Exports
The difference between tariff and quota
Tariff is a tax on import, while embargo is a limit on the number of imports that can enter a country
The meaning of trading bloc
A group of countries that promote free trade.
The type of exchange rate that changes in value
Floating exchange rate
Who has the absolute advantage in laptop production
Grapes Laptops
France 3 hrs 6 hrs
Japan 4 hrs 4 hrs
Japan, takes them less time.
Another name for a positive balance of trade
Trade surplus
The main reason to put up protective trade barriers.
Protect domestic industry/ Keep jobs at home
Two benefits of free trade
Cheaper products
More choice in products
Better quality goods
Friendly foreign relations
The amount of dollars it takes to equal another currency if the U.S. dollar has fallen in value.
(More or less dollars)
It means it takes more dollars to equal one of another currency because the dollar is worth less.
The way you know a country has a comparative advantage
Do the math and see who has the lower opportunity cost
The U.S. exports $250 million worth of goods and imports $350 million worth of goods. This is the trade situation that the U.S. finds itself in.
Trade deficit or negative balance of trade.
Tariff, Quota, Embargo, Standard, Subsidy
The three main trading blocs we discussed
NAFTA (USMCA), EU, ASEAN
The amount $30 is worth in Euros
Country/Currency One U.S. Dollar In U.S. Dollars
France/Euro .93 1.08
Japan/ Yen 112 .008
27.9 Euros
Who has the compartive advantage in each product
Corn Cucumbers
Canada 25 77
Mexico 77 85
Canada has the comparative advantage in cucumbers and Mexico has it in corn.
What would happen to the balance of trade if the value of a currency depreciated
The balance of trade would improve. Countries would export more, import less.
The description of how a subsidy works
Association of Southeast Asian Nations
Thailand, Vietnam, Phillipines, Cambodia, Laos, Indonesia, Malaysia, Singapore
American tourists visiting South Korea.