vocab
vocab
1. Benefits and Issues of International Trade
2. Trade Barriers
3. Measuring the value of Trade
4. Modern International Institutions
100
What are imports?
products produced by one country, and purchased by another.
100
What are exports?
goods and services produced by one country, and sold by another.
100
Define Specialization
a situation that occurs when individuals or businesses produce a narrow range of products
100
What is a tariff?
a fee charged for goods brought into a country from another country.
100
What is a trade deficit?
An economic measure of a negative balance of trade in which a country's imports exceeds its exports.
200
What is absolute advantage?
The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service
200
What is trade surplus?
nation exports more than imports; favorable balance.
200
Who is David Ricardo?
economist famous for the idea that a trading nation should produce a certain product if it can do so at a lower opportunity cost than that of another trading nation
200
Explain Protectionism
the use of trade barriers between nations to protect domestic industries.
200
What is the World Trade Organization and what are it's purposes?
-the only global international organization dealing with the rules of trade between nations. -includes negotiating/administering trade agreements, resolving trade disputes, monitoring the trading policies of member nations, and provides support for developing countries
300
What is a trade barrier?
a law limiting free trade among most nations; most mandatory
300
What are quotas?
limits on the amount of a product that can be imported
300
Explain the law of comparative advantage
countries gain when they produce items that they are most efficient at producing and that are at the lowest opportunity cost
300
What is an effect of Trade Barriers?
-leads to a trade war(a succession of trade barriers between nations) -could save domestic jobs in certain industries
300
How do customs unions affect barrier nations?
They abolish trade barriers among the members and establish uniform tariffs for non members.
400
What are customer unions?
agreements that abolish trade barriers among members
400
What is a Balance of Payments?
accounting record of all monetary transactions between a country and the rest of the world
400
What are some advantages of free trade?
-improves production ratios -increases world output leading to economic growth
400
Why do some people feel that barriers to free trade are essential for national security?
-Free trade can enhance national security, on the condition that a nation does not trade with its enemies. -gives economic advantages, which translates into more economic and military power and more technological innovation.
400
What is the name of the system in which the exchange rates for currencies change as the supply of and demand for the currencies change?
Flexible Rate of Exchange
500
What is a Protective Tariff?
tax on imported goods to protect domestic products
500
What is a revenue tariff?
tax on imports, specifically to raise money, rarely used today
500
What is the difference between absolute advantage and comparative advantage?
-Absolute Advantage means you can produce a good using less resources. -Comparative Advantage means you can produce a good at smaller opportunity cost.
500
Sometimes, to avoid a quota or tariff, a country may choose to limit an export. this is called a __________.
voluntary export restraint
500
What is the name of the specific regions in which trade between nations takes place without protective tariffs?
free trade zones
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