Checkup 1 Flashcards
International trade has gradually _____________ since it began.
increased
International trade decreased during the Great Depression because of decreased ________________ and increased ____________________.
income; trade restrictions
The value of a nation’s exports is generally ________________ the value of its imports.
about the same as
A nation that can produce a good at a lower cost than another nation has an _____________________________ in the ___________________________________ of that good.
absolute advantage; production
The principle of ____________________________________ states that as long as the relative opportunity costs of producing goods differ among nations, there are potential gains from trade, even if one nation has an absolute advantage in the production of everything.
comparative advantage
___________________ advantage is more common than ___________________ advantage.
Comparative; absolute
All nations benefit if each produces and exports goods in which it has the ____________________ relative efficiency and imports goods in which it has the ____________________ relative efficiency.
greatest; least
If one nation has a comparative advantage in producing one good, the other nation must have a __________________________________ in the production of that good.
comparative advantage
When there is more competition, who receives the gains?
Citizens
Nations with the ___________ economies of scale realize more gains.
greatest
What kind of nations tend to receive a larger percentage of the gains?
Smaller nations
When trade occurs between a large and a small nation, which nation receives more benefit? And why is that?
The smaller nation; trade provides more opportunities and therefore more relative gains for that nation
Almost no nation allows completely ________________ trade.
free
_________________ are the most common trade restrictions.
Tariffs
_______________________________________ are procedural rules that limit imports.
Regulatory trade restrictions
