7.6 : Trade and the World Economy (Pgs. 485-491)

Question 1

Trade

Answer 1

Occurs when one party desires a good or service that it does not have or cannot produce and another party has the desired good or service with which it is willing to part.

Question 2

Barter

Answer 2

A system of exchange in which no money changes hands.

Question 3

Comparative Advantage

Answer 3

The ability to produce a good or service at a lower cost than others.

Question 4

Complimentarity

Answer 4

When a country has the income, goods, or services that another country desires.

Question 5

Free Trade

Answer 5

Policies, or laws, that reduced barriers to trade.

Question 6

Neoliberal Policies

Answer 6

A set of reforms that reduced government regulations and taxation.

Question 7

^ Policies decreasing trade

Answer 7

U.S. Govt. increased tariffs on many Chinese-made goods sold in the U.S. hoping that Americans would buy more U.S. products. Instead, China responded by reducing its purchases of U.S. farm products and increasing tariffs on U.S. goods.
Another factor is health problems.

Question 8

^ Government efforts to promote economic growth (5)

Answer 8

• Tax Breaks
• Loans
• Direct Assistance
• Changes in Regulations
• Tariffs

Question 9

Trading Blocs

Answer 9

Groups of countries that agree to a common set of trade rules.

Question 10

Mercosur

Answer 10

Southern Common Market, includes several South American countries.

Question 11

World Trade Organization (WTO)

Answer 11

A global organization.

Question 12

^ Impacts of economic interdependence

Answer 12

It has strengthened the links among the countries’ economies. Economic downturn in one country can lead to economic challenges elsewhere.

Question 13

International Monetary Fund (IMF)

Answer 13

Created in 1945 to aid countries caught in need of financial assistance.