A means of preventing a foreign product or service from freely entering a nation's territory.
What is a trade barrier?
China produces 50 tractors a day while the US produces 25 tractors a day.
What is an example of absolute advantage?
Import quotas, voluntary export restraints, and tariffs.
What are the 3 common forms of trade barriers?
The ability to produce a product most efficiently given all the other products that could be produced.
What is comparative advantage?
A limit on the amount of a good that can be imported.
What is an import quota?
Includes protecting jobs, protecting infant industries.
What are examples of protectionism?
A country has a comparative advantage in producing a good so they focus on producing that good.
What is specialization?
A country will have a comparative advantage in the good that uses its relatively abundant factor intensively
What is the Heckscher-Ohlin Model?
A K abundant country has a comparative advantage in a K intensive good
what leads to gains from trade according to the Hecksher-Ohlin Model
If the dollar exchange rate fell to 5 RMB per dollar, you would get fewer RMB for each dollar.
What is an example of depreciation?
The idea that a nation is better off when it produces goods and services for which it has a comparative advantage.
What is the law of comparative advantage?
Self-sufficiency specifically : national economic self-sufficiency and independence, a policy of establishing a self-sufficient and independent national economy.
What is an example of Autarky?
The banks and other financial institutions that facilitate the buying and selling of foreign currencies.
What is the foreign exchange Market?