CE8 H2 Flashcards
What does comparative advantage mean?
An economy’s ability to produce a particular good or service at a lower opportunity cost than it’s trading partners.
What does trade deficit mean?
When a country imports more goods than it exports
What is the most negative effect of trade deficit?
Domestic money supply is shrinking
What are three main market entry barriers World Trade can face?
Tariffs, quantitative restrictions, Restrictive practices
Which institute provides short-term international liquidity to countries with Balance of Payments deficit problems?
International Monetary Fund (IMF)
Which institute provides financial and technical assistance to developing countries?
International Bank of Reconstruction and Development (IBRD)
What is an example of Tariffs?
A tax placed on an imported or exported good involved in international trade
What is an example of restrictive practices?
Government laws, regulations, policies, procedures that impede international trade
Name three ways comparative advantage cam be archived
- Lower labour cost
- Building expertise in a certain key areas
- Proximity to raw materials
What are three negative effects for a country when a trade deficit arises?
- Foreign direct investment
- Deflation: domestic money supply will shrink
- Impact in employment: Jobs will also shift abroad when goods are demand abroad
Name three examples of how the WTO promotes trade
- Elimination of non-trading barriers
- Elimination of trade discrimination
- Working on reduce tariffs
How come the Netherlands imports and export similar products?
- Variations in transportation costs
- Seasonal effects
