Chapter 6: International Trade and Foreign Exhange Flashcards
What are restrictions on free exchange of goods and services?
Trade barriers
What is exchange of goods, services and capital between countries?
International trade
What are taxes levied on imported goods and services?
Tariffs
What are limits on quantity of goods that can be imported?
Quotas
What include a range of measures such as certification, licensing, sanctions, or embargoes, which make it more difficult and expensive for foreign producers to compete with domestic producers?
Non tariff barriers
What is it when a country is more efficient in producing a good or a service than other countries and needs less resources to produce the good or service?
Absolute advantage
What tracks transactions between a country and the rest of the world over a period of time, usually a year?
Balance of payments
What is primarily driven by the trade of goods and services with the rest of the world, that is exports and imports?
Current account
What reflects the ownership of assets - in particular, it reflects the types of investments domestic entities make in foreign entities as well as types of investments foreign entities make in domestic entities?
Capital and financial account
What is difference between exports and imports of goods and services?
Net exports or balance of trade
What are the three sub accounts that make up for the current account balance?
Goods and services, income and current transfers
What is currency that is held in significant quantities by many governments and institutions as part of their foreign exchange services?
Reserve currency
What are investments made by foreign investors and companies?
Foreign direct investments
What is risk associated with fluctuation of foreign exchange rates?
Currency risk or foreign exchange risk
What is decision made by country’s central bank to decrease the value of domestic currency relative to other currencies?
Devaluation
