21 Foreign Trade

Question 1

causes

Answer 1

• lacks ability to produce
• surplus
• foreign relations

Question 2

can produce more efficiently than others

Answer 2

absolute advantage

Question 3

proponent of absolute advantage

Answer 3

adam smith

Question 4

no need to produce everything, only what you’re good at

Answer 4

absolute advantage

Question 5

countries have their own abs. advantage; trading makes goods and services more available

Answer 5

specialization

Question 6

best option, given trade-off

Answer 6

comparative advantage

Question 7

proponent of comparative advantage

Answer 7

david ricardo

Question 8

less opportunity cost is GOOD

Answer 8

comparative advantage

Question 9

pros of foreign trade

Answer 9

• broaden supply
• employment gen
• economics of scale
• lower prices
• break domestic monopolies

Question 10

cons of foreign trade

Answer 10

• industries have no change to grow due to competition
• risk of losing jobs
• diversity output may suffer as local producers leave the market
• colonial mentality

Question 11

diff between monetary value of exports and importants

Answer 11

balance of trade

Question 12

I > E

Answer 12

trade deficit

Question 13

I < E

Answer 13

trade surplus

Question 14

imposed restraint on flow of int’l goods and services; for protection and strategy

Answer 14

trade barriers

Question 15

imposed by nature

Answer 15

natural trade barriers

Question 16

distance, land and water forms

Answer 16

natural trade barriers

Question 17

language, religion and tradition, ideologies

Answer 17

cultural trade barriers