Why Trade?
When your country can produce more of a good or service than any other country.
what is absolute advantage?
a set of rules established to allow mutually beneficial trade to occur
what are terms of trade?
makes the value of the dollar appreciate or depreciate
What is trade?
a tax placed on an imported item
what is a tariff?
the world's largest free trade agreement when it was established in 1994
What is NAFTA
When your country can produce a good or a service at a lower opportunity cost than another country.
What is comparative advantage?
when a country imports more than they export
what is a trade deficit?
the price of one nation's currency in terms of another nation's currency
what is an exchange rate?
when a government places high tariffs on imports and limits the number of foreign goods to protect domestic businesses
what is protectionism?
exporters were required to get these in order to waive tariffs
what are certificates of origin?
Comparative advantage questions regarding the production of a good given a certain amount of resources.
What are output questions?
when a country exports more than they import
what is a trade surplus?
to artificially decrease the value of their currency and artificially raise another country's currency
why would a country peg their value to another currency?
This organization helps regulate protectionism worldwide
What is the WTO or World Trade Organization?
The status given to the NAFTA countries ensuring that each country has to treat the other two fairly and can't give better treatment to domestic investors. They also can't offer better deals to investors from non-NAFTA countries
what is most-favored-nation status?
specialization, comparative advantage, wealth building, lower prices for consumers, little dead weight loss
what is the value of trade?
flows of money & flows of goods & services are recorded for are international transactions
what is the balance of payments?
a medium of exchange, a store of value, a measure of value
what are the functions of a currency?
to help domestic producers, to establish good relationships with other countries, to make money, to make consumer goods cheaper and more available, to identify suspicious purchases, to protect our ecosystems & agriculture, and to ensure citizen's safety
Why does the government regulate trade?
NAFTA was renegotiated in 2018. In 2020, all three North American countries signed this new agreement.
what is the United States-Mexico-Canada agreement?
Demand for goods, political stability, interest rates
what factors does international trade depend on?
records the sale and purchase of goods and services, investment income earned abroad, and foreign gifts & aid
what is the current account?
it becomes cheaper to import, exports become more expensive, imports rise
what happens when the value of the dollar appreciates?
crime control, tax transparency, economics, environmental concerns, civilian treatment, free elections
what concerns can free trade help address?
worker exploitation in Mexico, manufacturing jobs moved to Mexico, U.S. workers saw lower wages
What are some of the cons or drawbacks of NAFTA?