Chapter 19 Flashcards
Globalization
Refers to the increased interdependence of economies in the modern world. Imports and exports have risen across the globe.
How has trade grown since 1970? Since 2003?
World trade in goods grew from 1.3 trillion to over 15 trillion. Since 2003 the world goods trade has doubled,
Net exports
The total exports of final goods and services minus total imports of final goods and services.
Trade balance
The difference between total exports and total imports
Trade Surplus
Occurs when exports exceed imports indicating a positive trade balance.
Trade Deficit
Occurs when imports exceed exports indicating a negative trade balance.
Protectionism
A blanket term for government actions and policies that restrict or restrain international trade, often with the intent of protecting local businesses and jobs from foreign competition.
Tariffs
Taxes levied on imported goods and services.
Ad Valorem Tax
Percentage of a value tax
Specific Tax
Per unit tax
How are tariffs damaging to both parties
If foreign shoe manufacturers cannot sell as many shoes, they will acquire fewer dollars to use in purchasing US exports. Higher shoe prices for consumers and for sales for US exporters.
Import Quotas
Limits on the quantity of products that can be imported into a country.
What is the main difference between quota and a tariff
Instead of money being paid to the government foreign produces get to keep the revenue generated in the rectangle. Otherwise equally damaging to the consumer. .
How are shoe tariffs a regressive tax?
Did not protect industry jobs, but does cost poor people more in shoe. Since the poor have larger families on average it cost them more to cloth their children.
Infant Industry Argument
Domestic industries need trade protections until they are established and able to compete internationally.
