CH26: International trade

Question 1

Trade deficit

Answer 1

When imports exceed exports

Question 2

Trade surplus

Answer 2

when exports exceed imports

Question 3

Absolute advantage

Answer 3

when a person/country can produce more of a particular good from a specific quantity as compared to other

Question 4

Comparative advantage:

Answer 4

when a product can be produced at a lower opportunity costs as compared to another country

Question 5

Benefits of free trade

Answer 5

promotes competition
avoid monopoly
gives consumer a wide range of product choices

Question 6

What is exports and imports

Answer 6

export-supply
import-demand

Question 7

Import quota

Answer 7

a limit imposed by a nation on the quantity of a good

Question 8

Voluntary export restriction

Answer 8

a trade barrier by which foreign countries voluntarily limit the amount of their exports to a partiular country

Question 9

Effect of tarrif:

Answer 9

Decline in consumption
Increased domestic production
Decline in imports
Tariff revenue

Question 10

Offshoring

Answer 10

the practice of shifting work previously done by domestic workers to workers located abroad

Question 11

Advantages of offshoring:

Answer 11

increase demand for complementary job
Encourages domestic investment