chapter 7 international economics Flashcards
whats the definition of international trade?
exchange goods and service between two country
whats the definition of domestic trade?
exchange goods and services within a country
whats the difference between international trade & domestic trade?
- mobility of factor of production
- natural resources
- monetary unit
- size of market
- national policies
what does comparative advantage refer to?
ability of one country to produce goods at a lower apportunity cost than another country
what is the advantage of international trade?
1- increase income and economic growth
- increase world output
- share knowledge and technology
- variety of good and service
- better relationship w other trade partner
what’s the disadvantage of international trade?
- depletion of country reserves
- economics and political dependence
- transportation costs
protectionism. what’s the reason for protectionism?
- national security argument
2. infant industry argument
3. anti dumping argument
4. domestic employment argument
5. low foreign wage argument
what’s the tools of protectionism instrument?
- tariff - specific tariff , ad valorem tariff
- quotas
- embargoes
- import license
- exchange control
- industry subsidies
what is specific tariff?
fixed tariff imposed on unir or imported goods
whats ad valorem tariff?
tax based on value imported goods
what is quotas?
limitation imposed on imported good quantity
whats embargoes?
a law that bars trade w another country - kena banned dri country lain
what is import license?
license which can contorl the number of importing firms & value of imported goods
what is exchange control?
control on amount money that allowed to be out and in of a acountry
what is industry subsidies?
to protect domestic firm from competition from abroad
