ch 26

Question 1

Export

Answer 1

goods/services produced in nation sold to buyers in other nations

Question 2

Import

Answer 2

goods/services produced in other nations bought in this nation

Question 3

Globalization

Answer 3

the integration of industry, commerce, communication, travel and culture among the world’s nations – is one of the major trends of our time.

Question 4

Trade Balance

Answer 4

• Exports of a nations goods minus its imports

Question 5

Trade Deficit

Answer 5

Amount by which nation’s imports of goods exceed its exports of goods

Question 6

Trade Surplus

Answer 6

Amount by which nation’s exports of goods exceed its import of goods

Question 7

Ø Most trade (over half) occurs with other industrially advanced nations.
Ø Major global trade participants are the U.S., nations of the European Union, Japan and China
Ø Canada is the largest trading partner for the U.S. (19% of U.S. exports and 13% of U.S. imports)

Answer 7

reasons that support global trade

Question 8

1. Military Self-Sufficiency – Protective tariffs are needed to preserve or strengthen industries that produce materials essential for national defense.
2. Diversification for Stability – Some countries are highly dependent upon international markets for their national income need tariff and quota protection to diversify their production
3. Infant Industry – Protective tariffs are needed to allow new domestic industries to establish themselves.

Answer 8

reasons that support protectionism

Question 9

Tariffs

Answer 9

Excise taxes on dollar values or physical quantities of imported goods imposed to obtain revenue or protect domestic firms.

Question 10

Revenue Tariff

Answer 10

Imposed to obtain revenue from a product that is not being produced domestically (bananas, coffee, or tin)

Question 11

Protective Tariff

Answer 11

Imposed to shield domestic producers from foreign competition

Question 12

Import Quotas

Answer 12

Limits imposed by a nation on the quantity (or total value) of a good that may be imported during some period of time. All imports for the product are prohibited once the quota is filled.

Question 13

Voluntary Export Restriction (VER)

Answer 13

Foreign firms voluntarily limit amount of exports to a particular country (usually to avoid more stringent tariffs or quotas)

Question 14

Export Subsidy

Answer 14

Government payments to domestic producers of export goods enable them to reduce the price of good or service to foreign buyers and sell more products in world markets.

Question 15

Non-Tariff Barriers

Answer 15

Barriers used to impede international trade, include onerous licensing requirements, unreasonable product quality standards, bureaucratic red tape, or customs procedure delays for a product.

Question 16

Smoot Hawley Tariff Act of 1930

Answer 16

U.S. legislation that established very high tariffs. Its objective was to reduce imports and stimulate the domestic economy. It resulted in retaliatory tariffs (Trade Wars) by other nations, U.S. output fell and worldwide trade was reduced.

Question 17

Reciprocal Trade Agreement of 1934

Answer 17

It authorized the President to negotiate up to 50% lower tariffs with foreign nations that agreed to reduce their tariffs on U.S. goods.

Question 18

General Agreement on Tariffs and Trade (GATT) of 1947

Answer 18

was initially signed by 23 nations, including the U.S.

GATT is based on three principles:
n Equal, non-discriminatory trade treatment for all member nations
n Decrease tariffs through multilateral negotiation
n Eliminate import quotas

Question 19

World Trade Organization (WTO)

Answer 19

oversees provisions of trade agreements, rules on trade disputes and meet regarding trade policies.

Question 20

European Union

Answer 20

Association of 27 European nations
a. First agreement establishing European Economic Community signed in 1957 (Belgium, Germany, France, Italy, Luxembourg & the Netherlands).

Question 21

USMCA

Answer 21

is a free trade zone established in 2018 among the United States, Canada and Mexico.

Question 22

NAFTA

Answer 22

is a free trade zone established in 1993 among the United States, Canada and Mexico.

This agreement eliminated tariffs and other trade barriers among the nations for most goods and services.

Question 23

Trade Adjustment Assistance Act

Answer 23

2002 provides support to qualified workers displaced by imports or plant relocations from international trade. To qualify workers must participate in job searches, training programs, or remedial education.

Question 24

Offshoring

Answer 24

shifts American work done in the U.S. to workers located in other nations.