Chapter 15 Flashcards
Factors affecting demand for money
Cash needed on hand
Interest rates
Price levels in the economy
General level of income
Money creation
The process by which money enters into circulation
Reserve requirement
The simplest way for the federal government to adjust the amount of reserve in the banking system is to change the required reserve ratio
Absolute advantages
The ability to produce more of a given product using a given amount of resources
Comparative advantages
The ability to produce a product most efficiently given all of the other products that could have been produced
Trade barriers
A means of preventing a foreign product or service from entering the nations territory
Import quotas
A limit on the amount of good that can be imported
Voluntary export restraint or VER
Self-imposed limitations on the amount of products shipped to a particular country
Tariffs
A text on imported goods
Customs duty
A Texan certain items purchased a board
Arguments for protectionism
Protecting jobs, infant industries, and safeguarding national security
NAFTA
Agreement that will eliminate all tariffs and other trade barriers between Canada Mexico and the United States
Exchange rates or trade
The value of the foreign nations currency in terms of the nations currency
Flexible exchange rate system
Currency system that allows the exchange rate to be determined by supply and demand
Balance of trade
The relationship between a nations imports and its exports
