Trade Basics
The next best alternative you give up when making a decision.
What is opportunity cost?
The percentage a lender charges a borrower for a loan.
What are interest rates?
A limit on how much of a good can be imported.
What is a quota?
The 1994 trade agreement among the U.S., Mexico, and Canada.
What is the North American Free Trade Agreement (NAFTA)?
A country with a low standard of living and limited productive resources.
What is a developing country?
The amount of goods a nation produces within a certain time period
What is productivity?
When a currency increases in value compared to another.
What is appreciation?
Policies like tariffs and quotas used to shield domestic industries.
What is protectionism?
The 2019/2020 agreement that replaced NAFTA.
What is the United States-Mexico-Canada Agreement (USMCA)?
Developing industries that often need protection in poorer countries.
What are infant industries?
When a country can produce a product more efficiently than another country.
What is absolute advantage?
When a currency decreases in value compared to another.
What is depreciation?
A special tax placed on imports from another country.
What is a tariff?
DOUBLE JEOPARDY: Groups of nations that agree to reduce or eliminate trade barriers in a region.
What are trading blocs?
This term refers to the safety of a nation and its citizens.
What is national security?
When a country has abundant resources and can outproduce another country.
What is market advantage?
The value of one country’s currency in terms of another’s.
What is an exchange rate?
A government payment to a business to promote an economic goal.
What is a subsidy?
The international organization with 164 members that sets rules for global trade.
What is the World Trade Organization (WTO)?
When a country imports more than it exports.
What is a trade deficit?
When a country can produce a good at a lower opportunity cost than another.
What is comparative advantage?
When supply and demand determine a currency’s value.
What is a floating exchange rate?
A complete refusal to trade with a nation.
What is an embargo?
International trade without government restrictions.
What is free trade?
When a country exports more than it imports.
What is a trade surplus?