EC2B3 Topic 9 Flashcards
What is international trade?
The exchange of goods and services across international borders
This includes imports and exports between countries.
What are goods in the context of international trade?
Physical items that are traded between countries
Examples include cars, electronics, and agricultural products.
What are assets in international trade?
Resources that can generate economic value, including financial assets
Examples include stocks, bonds, and real estate.
What is meant by the term ‘imports’?
Goods and services brought into a country from abroad
Imports can be consumer goods, raw materials, or capital goods.
What is meant by the term ‘exports’?
Goods and services sold to other countries
Exports contribute to a country’s economy by generating revenue.
What is a trade balance?
The difference between a country’s exports and imports
A positive balance indicates a trade surplus, while a negative balance indicates a trade deficit.
Define trade surplus.
A situation where a country’s exports exceed its imports
This often leads to a favorable economic position.
Define trade deficit.
A situation where a country’s imports exceed its exports
This can indicate economic challenges or reliance on foreign goods.
What role do tariffs play in international trade?
Taxes imposed on imported goods
Tariffs are used to protect domestic industries and generate government revenue.
What are quotas in international trade?
Limits on the quantity of a specific good that can be imported or exported
Quotas are designed to protect domestic producers by controlling supply.
What is free trade?
Trade without restrictions or tariffs between countries
Free trade agreements facilitate easier exchange of goods and services.
What is protectionism?
Economic policy aimed at restricting imports to protect domestic industries
This can involve tariffs, quotas, and other trade barriers.
Fill in the blank: A _______ is an economic policy aimed at restricting imports.
protectionism
True or False: Exports contribute negatively to a country’s GDP.
False
Exports positively contribute to a country’s GDP.
What is the purpose of trade agreements?
To facilitate and promote trade between countries
Trade agreements can reduce tariffs and eliminate trade barriers.
What is an example of a trade agreement?
NAFTA (North American Free Trade Agreement)
NAFTA was replaced by USMCA, which continues to promote trade between the U.S., Canada, and Mexico.
What is foreign direct investment (FDI)?
Investment made by a company or individual in one country in business interests in another country
FDI can include establishing business operations or acquiring business assets.
Fill in the blank: _______ refers to the exchange of goods and services between countries.
International trade
