International Trade Flashcards
What are “Tariffs”?
Taxes that a government levies on imported goods.
What are “Quotas” ?
Government policies that restrict the quantity of a good that can be imported into a country, generally for a specified period of time.
What is an “Export Subsidy” ?
A subsidy paid by the government to the firm when it exports a unit of good that is being subsidized.
What are “Domestic Content Provisions” ?
Stipulate that some percentage of the value added or components used in production should be of domestic origin.
What are “Capital Restrictions”?
Controls placed on a foreigners’ ability to own domestic assets and/or domestic residents’ ability to own foreign assets.
What is a “Small Country”?
A country that is a price taker in the world market for a product and cannot influence the world market price.
What is an “Import License” ?
A license that specifies the quantity of a good that can be imported into a country.
What are “Quota Rents”?
Profits that foreign producers can earn by raising the price of their goods higher than they would without a quota.
What are “Free Trade Areas”?
One of the most prevalent forms of regional integration, in which all barriers to the flow of goods and services among members have been eliminated.
What is a “Customs Union”?
An extension of the free trade area (FTA) by not only allowing free movement of goods and services among members, but also creating a common trade policy against non-members.
What is a “Common Market”?
A level of economic integration that incorporates all aspects of the customs union and extends it by allowing free movement of factors of production among members.
What is an “Economic Union”?
A union that incorporates all aspects of a common market and in addition requires common economic institutions and coordination of economic policies among members.
What is a “Monetary Union”?
An economic union in which members adopt a common currency.
What is “Trade Creation”?
When regional integration results in the replacement of higher-cost domestic production by lower-cost imports from other members.
What is “Trade Diversion”?
When regional integration results in lower-cost imports from non-member countries being replaced with higher-cost imports from members.
