Economy Chapter 17 Vocab Flashcards
Balance of payment outcome when spending on imports exceeds revenues received from exports
Trade Deficit
Situation occurring when the value of a nation’s exports exceeds the value of its imports
Trade Surplus
System under which the values of currencies are fixed in relation to one another; the exchange rate system in effect until 1971
Fixed Exchange Rate
System that relies on supply and demand to determine the value of one currency in terms of another; exchange rate system in effect until 1971
Flexible Exchange Rate
Agreement signed in 1993 to reduce tariffs among the U.S, Canada and Mexico
NAFTA (North American Free Trade Agreement)
The goods and services that a nation produces and then sells to other nations
Exports
Country’s ability to produce a given product relatively more efficiently than another country; production at a lower opportunity cost
Comparative Advantage
Country’s ability to produce more of a given product than can another country
Absolute Advantage
The goods and services that a nation buys from other nations
Imports
Tax placed on an imported product
Tariff
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
Opportunity Cost
Diagram representing all possible combinations of goods and/or services an economy can produce when all productive resources are fully employed
PPC
Limit on the amount of a good that is allowed into a country
Quota
Tax on an imported product designed to protect less efficient domestic producers
Protective Tariff
Gov. order prohibiting the movements of goods to a country
Embargo
Argument that new and emerging industries should be protected from foreign competition until they are strong enough to compete
Infant Industries Argument
People who want to protect domestic producers against foreign competition with tariffs, quotas, and other trade barriers
Protectionists
People who favor fewer or no trade restrictions
Free Traders
Tax placed on imported goods to raise revenue
Revenue Tariff
Difference between money paid to and money received from other nations in trade; balance on current accounts includes goods and services but merchandise trade balance counts only goods
Balance of Payments
