Economy Chapter 17 Vocab

Question 1

Balance of payment outcome when spending on imports exceeds revenues received from exports

Answer 1

Trade Deficit

Question 2

Situation occurring when the value of a nation’s exports exceeds the value of its imports

Answer 2

Trade Surplus

Question 3

System under which the values of currencies are fixed in relation to one another; the exchange rate system in effect until 1971

Answer 3

Fixed Exchange Rate

Question 4

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

Answer 4

Flexible Exchange Rate

Question 5

Agreement signed in 1993 to reduce tariffs among the U.S, Canada and Mexico

Answer 5

NAFTA (North American Free Trade Agreement)

Question 6

The goods and services that a nation produces and then sells to other nations

Answer 6

Exports

Question 7

Country’s ability to produce a given product relatively more efficiently than another country; production at a lower opportunity cost

Answer 7

Comparative Advantage

Question 8

Country’s ability to produce more of a given product than can another country

Answer 8

Absolute Advantage

Question 9

The goods and services that a nation buys from other nations

Answer 9

Imports

Question 10

Tax placed on an imported product

Answer 10

Tariff

Question 11

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another

Answer 11

Opportunity Cost

Question 12

Diagram representing all possible combinations of goods and/or services an economy can produce when all productive resources are fully employed

Answer 12

PPC

Question 13

Limit on the amount of a good that is allowed into a country

Answer 13

Quota

Question 14

Tax on an imported product designed to protect less efficient domestic producers

Answer 14

Protective Tariff

Question 15

Gov. order prohibiting the movements of goods to a country

Answer 15

Embargo

Question 16

Argument that new and emerging industries should be protected from foreign competition until they are strong enough to compete

Answer 16

Infant Industries Argument

Question 17

People who want to protect domestic producers against foreign competition with tariffs, quotas, and other trade barriers

Answer 17

Protectionists

Question 18

People who favor fewer or no trade restrictions

Answer 18

Free Traders

Question 19

Tax placed on imported goods to raise revenue

Answer 19

Revenue Tariff

Question 20

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

Answer 20

Balance of Payments