Trade Basics
The thing that a country can produce more efficiently than anything else.
How do consumers benefit from free trade?
They pay lower prices for goods.
What is a developed country?
A country with a strong economy, and a high standard of living.
What is productivity?
Is the amount of goods and services produced given the amount of resources used.
What is trade?
The exchange of goods and services.
Domestic trade occurs within an individual country. International trade occurs between countries.
Which category of countries benefit the least from trade?
Low income countries
What does having high purchasing power enable people to do?
Buy more things they need and want.
What benefits do students who take classes to gain new skills are hoping to have?
They hope to gain good paying jobs.
What is a tariff?
A tax on imports and exports.
Why did many of the countries of the European Union decide to adopt the same currency?
It made trade easier by eliminating the need to exchange currencies.
For what reasons do governments enact trade barriers?
To try and protect domestic products from competition from lower-priced imports.
If a country invests to improve its universities, how is it trying to boost development?
By investing in human capital.
How does technology affect productivity?
Technology can help workers do tasks more quickly and efficiently, which increases productivity.
What is GDP?
Gross domestic product is the total value of all goods and services produced in a country in a year.
How does resource distribution make trade necessary?
Resources are distributed unevenly, so countries have to trade to get things they need or want but don't have.
Did the Smoot-Hawley Tariff Act accomplish what the government wanted?
No, instead of helping U.S trade, it caused other countries to enact tariffs, so trade decreased.
Why do higher wages indicate a higher level of development for a country?
Higher wages indicate a higher standard of living.
Why do economists use GDP to measure a country's economy?
So it can measure a country's output.
What is free trade?
The removal of trade barriers.
What are two ways in which geography affects the location of economic activities?
(Any Two) The availability of resources, access to a port, and distance to major markets are all geographic factors that affect economic activity.
Suppose a free trade agreement allows a foreign country to sell cheap cars in the United States. What are the possible positive and negative consequences?
Positive: Consumers can buy cheaper products.
Negative: Fewer U.S. cars are purchased, so U.S. workers lose jobs.
How can a society increase its level of development?
A country can specialize in what it makes best and trade for other goods. Also, invest in the country's human capital.
How does specialization encourage international trade and make countries interdependent?
Countries specialize in what they produce best and import what they cannot produce efficiently. Since all countries must import some goods, they all become dependent on one another.
What is economic growth?