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Specialization and Comparative Advantage
Government and Trade
Balance of Payments
Money Money Money
100
When a nation can produce a product at a lower opportunity cost (domestic) than its trading partner
What is Comparative Advantage?
100
The four major trade impediments.
What are protective tariffs, import quotas, non tariff barriers, export subsidies?
100
Goods or services that cross borders can be accounted in this.
What is a current account?
100
The three functions of money.
What are medium of exchange, unit of account, store of value?
200
Improves global resource allocation. Same total inputs of world resources and technology result in a larger global output.
What are the gains of specialization in trading?
200
Organization that established a free trading zone.
What is NAFTA (North American Free Trade Agreement)?
200
Shows all the payments a nation recieves from foreign countries and all the payments it makes to them.
What is the Balance of Payments?
200
-Money as Debt -Value of Money *Acceptability *Legal Tender *Relative Scarcity -Money and Prices *Value of the Dollar *D=1/Price Level -Inflation and Acceptability
What backs the money supply?
300
The quantities and conditions under which nations trade with one another
What is terms of trade?
300
General Agreement of Trade and Tariffs.
What is based on the following three principals: (1) equal, nondiscriminatory trade treatment for all member nations, (2) the reduction of tariffs by multilateral negotiation, and (3) the elimination of import quotas?
300
The central bank of nations holds quantities of foreign currencies.
What is the official reserves?
300
Three FED Functions & the Money Supply
-Issuing Currency -Setting Reserve Requirements & Holding Reserves -Lending Money to Banks & Thrifts -Providing for Check Collection -Acting as Fiscal Agent -Supervising Banks -Controlling the Money Supply
400
Causes the contraction of relatively efficient industries that do have a comparitive advantage.
What is Voluntary Export Restriction?
400
What are the barriers to trade?
What are Revenue tariffs, Protective tariffs, Import quotas, and Nontariff barriers?
400
To manipulate the market through use of official reserves.
What is a currency intervention?
400
Price that would prevail in a closed economy that does not engage in international trade.
What is domestic price?
500
Obtaining people's comparitive advantage is found by comparing their _____
What are opportunity costs?
500
The difference between depreciation and devaluation of currency.
Devaluation - occurs when a country lowers the official value of its currency in relation to foreign currencies. This is intended to raise the price of imported goods and increase the value of the country's exported good.
Depreciation - currency decreases in value when compared to another nation's currency.
500
Imbalances between the current account and the capital account.
What are balance of payments deficits and surpluses?
500
Where demand and supply determine exchange rates.
What is a flexible/floating exchange rate?