4.1-International Trade Flashcards
What is international trade?
The exchange of goods and services between countries.
True or False: Comparative advantage refers to a country’s ability to produce a good at a lower opportunity cost than another country.
True
What does the term ‘balance of trade’ refer to?
The difference between the value of a country’s exports and imports.
Fill in the blank: A __________ is a tax imposed on imported goods.
tariff
What is the main purpose of tariffs?
To protect domestic industries from foreign competition.
Which of the following is a benefit of international trade? A) Increased variety of goods B) Higher prices for consumers C) Less competition
A) Increased variety of goods
What does the term ‘trade deficit’ mean?
When a country imports more goods and services than it exports.
Short Answer: Name one factor that can affect a country’s exchange rate.
Interest rates.
True or False: A strong currency makes exports cheaper for foreign buyers.
False
What is a quota in international trade?
A limit on the quantity of a good that can be imported.
Fill in the blank: ___________ occurs when countries specialize in the production of goods in which they have a comparative advantage.
Specialization
What is the purpose of a free trade agreement?
To eliminate barriers to trade between member countries.
Multiple Choice: Which organization regulates international trade? A) WTO B) IMF C) UN
A) WTO
True or False: Protectionism promotes free trade.
False
What is the difference between absolute advantage and comparative advantage?
Absolute advantage refers to the ability to produce more of a good with the same resources, while comparative advantage refers to producing at a lower opportunity cost.
Fill in the blank: ___________ is a measure of the total value of a country’s exports minus its imports.
Net exports
What are non-tariff barriers?
Regulations or policies other than tariffs that countries use to control the amount of trade across their borders.
Short Answer: What is the impact of currency depreciation on exports?
It makes exports cheaper for foreign buyers.
True or False: An appreciation of a currency can lead to a trade surplus.
False
What is the role of the International Monetary Fund (IMF) in international trade?
To promote global economic stability and provide financial assistance to countries in need.
Multiple Choice: Which of the following can be considered a disadvantage of trade? A) Job losses in certain industries B) Lower prices for consumers C) Increased market access
A) Job losses in certain industries
What is dumping in international trade?
Selling goods in a foreign market at a price lower than their normal value.
Fill in the blank: ___________ is an economic policy that restricts trade between countries.
Protectionism
What does the term ‘foreign direct investment’ (FDI) mean?
Investment made by a company or individual in one country in business interests in another country.
