Final Exam Study Flashcards
Comparative advantage:
The ability of a country or firm to produce A particular good or service more efficiently than it can produce other goods or services such that each resource is more patiently employed in this activity. The comparison is to the efficiency of other economic activities that an actor might undertake given all the products it can produce — not the efficiency of other countries or firms
Absolute advantage:
The ability of a country or firm to produce more of a particular good or service in other countries or firms can produce with the same amount of effort and resources (The ability to do something better than others)
Neo-mercantilism
A belief that national economic policy should encourage exports and discourage imports and that the country should aim to run a trade surplus so-called in relationship to the classical mercantilism of the colonial powers, which aimed at running trade surpluses with their colonies
Heckcher-Ohlin trade theory
The theory that a country will export goods that make intensive use of factors of production in which it is well endowed for example a rich labor country well export goods that make intensive use of labor
Protectionism
the imposition of barriers to restrict imports
Trade barriers
government limitations on international exchange of goods examples, include tarrifs, quantitative restrictions, import license requirement, the government, by only domestically produce goods and health and safety standards that discriminate against foreign goods
Tariffs
a tax imposed on imports Tariffs, raise the domestic price of the imported goods and may be applied for the purpose of protecting domestic producers from foreign competition
Quantitative restriction (quota)
a limit placed on the amount of a particular good that is allowed to be imported and sold domestically.
Nontariff barriers to trade
obstacles to import other than tariffs and taxes. Examples include restrictions on the numbers of products that can be imported (quantitative restrictions, or quotas) regulations that favor, domestic over imported products, and other measures that discriminate against foreign goods or services by American laws that govern which state and local governments can buy, for example an implicit, but nontariff obstacle to purchase a Imports
Stolper-Samuelson theorem
the theory that trade protection benefits the scarce factor of production. This view flows from the Heckscher-Ohlin theory: if a country, imported goods then limiting imports will help that factor, so in a labor, scarce country, labor benefits, from protection and losses from trade liberalization. → if there is an increase in the relative price of labor-intensive goods, this will benefit the laborer and worse off the capital of the economy and vice versa.
Ricardo-Viner (specific-factors) mode:
A model of trade relations that emphasizes in which factors of production are employed rather than the nature of the factor itself. This differentiates it from the Heckscher-Ohlin theory, in which the nature of the factor - labor, land, capital, - is the principal consideration.
Reciprocity
an international trade relation, mutual agreement to lower tariffs and other barriers to trade reciprocity involves an implicit or explicit arrangement for one government to exchange trade policy concessions with another
Most-favored nation (MFN) status
a status established by most modern trade agreements guaranteeing that the signatories Tories will extend to each other, and any favorable trading terms offered in agreement with third parties
World trade organization (WTO)
an institution created in 1995 to succeed the GATT and to govern international trade relations the WTO encourages the policies of multilateral reduction of barriers to trade and overseas the resolution of trade dispute
General agreement on tariffs and trade (GATT)
an international institution created in 1947 in which members countries committed to reducing barrier to trade and providing similar trading conditions to all other members in 1995 the GATT was replaced by the WTO
Regional trade agreements (RTAs):
agreement among three or more countries in a region to reduce barriers to trade among themselves
Portfolio Investment
Investment in a foreign country via the purchase of stocks, bonds, or other financial instruments. Portfolio investors do not exercise managerial control of the foreign operation.
Sovereign lending
loans from private financial institutions in one country to sovereign governments of other countries
Foreign Direct Investment (FDI)
Investment of foreign countries via the acquisition of a local facility or the establishment of a new facility Direct investors maintain managerial control of the foreign operation.
World Bank
An important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects
Recession
A sharp slowdown in the rate of economic growth and economic activity
Depression
A severe Downturn in the business cycle, typically associated with major declines in economic activity, production, and investment, a severe contraction of credit: and sustained high unemployment.
Default
To fail to make payments on a debt
Austerity
The application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting wages
Bank for International Settlements
One of the oldest international financial organizations, created in 1930. Its members included the world’s principal central banks, and under its spices, they attempted to cooperate in the funicular realm.
International Monetary Fund (IMF)
A major international economic institution established in 1944 to manage international monetary relations. It has gradually reoriented itself to focus on the international funicular system, especially debt and currency crises
Multinational Corporation
An enterprise that operates in a number of countries, with production or service facilities outside its country of origin
Global Supply Chains
A network of customers and suppliers involved in the production and distribution of a product. Part of it may be inside a multinational corporation; Parts may be involved in links between corporations
Bilateral Investment Treaty
an agreement between two countries about the conditions for a private investment across borders. Most of these treaties include provisions to protect an investment firm from government, discrimination, or expropriation, without compensation, as well as mechanisms to resolve disputes
