Chapter 16 – International Trade Flashcards
Labor-intensive goods
Products that require a relatively large amount of labor to produce
Free-trade
The absence of artificial government imposed barriers to trade among individuals and firms in different nations
Land intensive goods
Products that require a relatively large amount of land produce
Capital intensive goods
Products that require a relatively large amount of capital to produce
Absolute advantage
When the region or nation can produce more of a product with your resources compared to other regions or nations
Comparative advantage
When a producer can create a particular product at a lower opportunity cost than other producers
Opportunity cost ratio
I need quality showing the number of units of two products that can be produced with the same resources
Principle of comparative advantage
When a region or nation can produce a good at a lower domestic opportunity cost compared to a potential trading partner
Terms of trade
The rate at which units of one product can be exchanged for units of another product
Trading possibilities line
Shows the different combinations of two products and economies able to obtain when it specializes in the production of one product and exported to obtain the other product
Gains from trade
The extra output that trading partners obtained through specialization of production and exchange of goods and services
Efficient allocation of resources
That allocation of an economy’s resources among the production of different products that leads to the maximum satisfaction of consumers wants; producing the socially optimal mix of output with societies scarce resources
World price
The international market price of a good or service, determined by world demand and supply
Domestic price
The price of a good or service within a country, determined by domestic demand and supply
Export supply curve
And up sloping curve that shows the amount of a product domestic firms will export at each world price that is above the domestic price
Import demand curve
A downsloping curve that shows the amount of a product in economy will import at each world price below the domestic price
Equilibrium world price
A price determined by the intersection of exporting nation supply the product and importing nations’ demand for the same product
Tariff
A tax imposed by nation on an imported good
Revenue Tariff
The tariff designed to produce income for the federal government
Protective tariff
A tariff designed to shield domestic producers of a good or service from the competition of foreign producers
Import quota
A limit imposed by nation on the quantity or total value of a good that may be important during some period of time
Non-tariff barriers or NTB
All the restrictions other than tariffs the nations direct to impede international trade
Voluntary export restriction or VER
Voluntary limitation by countries are friends of their exports to a particular foreign nation
Export subsidy
A government payment to a domestic producer of export goods, designed to aid that producer.
Dumping
The sale in a foreign country of products below cost or below the prices charged at home
Fair trade movements
The efforts by groups in high income nations to get rowers of agricultural crops in low income nations to adhere to certain weed and workplace standards in exchange for their goods being promoted as fair trade goods to consumers; also efforts by these groups to convince consumers to buy these goods instead of otherwise close substitutes
General agreement on tariffs and trade or GATT
The international agreement reached in 1947 in which 23 nations agreed to give equal and non-discriminatory treatment to one another, to reduce tariff rates by multinational negotiations, and to eliminate export quotas
Uruguay round
A 1995 trade agreement that was fully implemented by 2005 that established the world trade organization, liberalize trade in goods and services, provided added protection to intellectual-property for example, patents and copyrights, and reduced farm subsidies
World trade organization
An organization of 155 nations as of 2012 that oversees the provisions of the current world trade agreement, resolves trade disputes stemming from it, and hold forums for further rounds of trade negotiations
Doha development agenda
Launched in Doha, guitar, in late 2001, this is the ninth, and most recent, round of trade negotiations held by the WTO
European Union
An association of European nations that have eliminated tariffs among themselves, establish common tariffs for goods imported from outside the member nations, and allowed the free movement of labor and capital among themselves
Euro zone
The 17 nations of the 27 member countries as a 2012 of the European Union that use the euro as the common currency
North American Free Trade Agreement or NAFTA
A 1993 agreement astonishing a free-trade zone composed of Canada, Mexico, and the United States
