Global Economy Flashcards
In Adam Smith’s, “Wealth of the Nations,” he states that there are advantages of specialization and international trade. What are 2 advantages he notes?
- Increase productive efficiency
2. Greater total output
After what war has world trade increased?
World War II (1939-1945)
What is the “principle of comparative advantage”?
The efficiency gains of specialization
What is considered one of the most recent, controversial, and significant accomplishments of the EU?
Establishment of the common currency: Euro
In what year was the European Union established?
1958
What agreement formed a major trade bloc between Canada, Mexico, and the United States?
The 1993 North American Free Trade Agreement (NAFTA)
What is NAFTA?
North American Free Trade Agreement that has formed a major trade bloc between Canada, Mexico, and the US.;
What did NAFTA establish in addition to the major trade bloc?
Free-trade zone designed to reduce and eliminate tarrifs and other trade barriers.
What are tarriffs?
Taxes on imports or exports
What organization provides for some standardization on significant trade issues such as protectionist quotas, subsides, and trademark, patent, or copyright infringement?
World Trade Organization (WTO)
What established the World Trade Organization?
The 1995 General Agreement on Tariffs and Trade (GATT)
The balance of payments account refers to what?
The sum of a country’s transactions with other countries.
The balance of payments account refers to three main accounts: current, capital, and ________________.
Financial account balances
If a nation exports more than it imports, does it have a favorable or unfavorable balance of trade\current account deficit?
Favorable
What was the trade deficit on goods and services in 2003?
About $490 Billion
