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Economics > International Trade Study Guide > Flashcards

International Trade Study Guide Flashcards

1
Q

Comparative advantage is the ability to produce a good or device at a ___ ___

A

A lower cost

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2
Q

Absolute advantage is the ability to produce _____ of a good or service with the same inputs

A

more

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3
Q

Which one is trade based on

A

Comparative advantage

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4
Q

Why is trade not like sports

A

Bc both sides are better off with trade

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5
Q

Who trade

A

People and firms

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6
Q

who doesn’t trade

A

Nations

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7
Q

If a production cost of T-shirts in Columbia is $1.25 and in the USA is $9.50, which nation has comparative advantage

A

Columbia

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8
Q

If a production cost of T-shirts in Columbia is $1.25 and in the USA is $9.50. Who will export t-shirts and who will import them

A

Export: Columbia
Import: USA

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9
Q

Many Free Trade Agreements began in the early 1990s because ____ made it easier to borrow, lend, invest, import and export with other nations

A

the internet

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10
Q

Who are the largest trading partners of the United States

A

Canada, Mexico, and China

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11
Q

An exchange rate is the value of one currency in terms of _________ __________

A

Another currency

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12
Q

Currency values fluctuate due to changes in ____ and ____ in the Foreign Exchange Market

A

S and D

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13
Q

If Canada’s currency appreciates, its exports are likely to ____

A

fall

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14
Q

If Canada’s currency depreciates, its exports are likely to

A

rise

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15
Q

US exporters will benefit if the USD

A

depreciates

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16
Q

US importers will benefit if the USD

A

appreciates

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17
Q

US tourists abroad will benefit if the USD

A

appreciates

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18
Q

Foreign tourists in the US will benefit if the USD

A

depreciates

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19
Q

The World Trade Organization acts as a _____ between nations who trade

A

referee

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20
Q

Is a nation that does not trade

A

Closed economy

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21
Q

is a nation that is open to trade with other nations

A

Open economy

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22
Q

Protectionism is the use of ____ to trade in order to protect ____ ____

A

barriers
domestic producers

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23
Q

Examples of Protectionist policies

A

Tariffs and quotas
Long and expensive process
Higher quality standards for imports

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24
Q

What is an argument for protectionism that you think is valid

A

Dumping, infant industry

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25
Q

Why don’t economists favor protectionism

A

The benefit for a few firms does not outweigh harm to all consumers

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26
Q

If Brazil trades with other nations but puts a protectionist tariff of $1 per pound on imported $10 soybeans, what will the price of soybeans be in Brazil

A

$11

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27
Q

Who is worse off after this soybean tariff

A

Soybean consumers

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28
Q

Who is better off after this soybean tariff

A

Soybean producers

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29
Q

A downstream effect of this soybean tariff would be the ____ _____ for Brazilian tofu factories

A

High cost

30
Q

A quota is a ___ on ___

A

Limit
imports

31
Q

Who benefits from a quota on imported coal

A

Domestic coal producers

32
Q

If Egypt puts a quota on imported coal, will the price of a coal rise or fall in Egypt

A

rise

33
Q

Who is worse off after a coal quota

A

Anyone who buys coal

34
Q

Who is better off after this coal quota

A

Domestic coal producers

35
Q

Who pushes for tariffs and quotas

A

Producers

36
Q

The difference in value of exports and imports is called

A

Balance of Trade

37
Q

If South Korea has a trade deficit, its ____ are greater than its ____ (wealthy)

A

imports
exports

38
Q

If South Korea has a trade surplus, its ____ are greater than its ____ (poor)

A

exports
imports

39
Q

Since all trade is voluntary, goods and services traded are paid for, a Trade Deficit does not involve any ___, so it is not an economic problem

A

debt

40
Q

When Congress overspends and must borrow, that is called a ____ ____, which increases National Debt, so that is an economic problem

A

Budget Deficit

41
Q

If S go up P will go ___
If S go down P will go _

A

down
up

42
Q

If D go up P will go ___
If D go down P will go _

A

up
down

43
Q

In Jan, the exchange rate for $1 US is 100 Kenyan Shillings.
In July, the exchange rate for $1 US is 98 Ksh
The dollar (depreciated/appreciated)

A

depreciated

44
Q

In Jan, the exchange rate for 1E is $1 US.
In July, the exchange rate for 1E is $1.10 US
The dollar (depreciated/appreciated)

A

depreciated

45
Q

In Jan, the exchange rate for 1E is 600 Chilean pesos.
In July, the exchange rate for 1E is 550 Chilean pesos
Which currency appreciated

A

Chilean pesos

46
Q

Depreciation of the US dollar benefits

A

exporters
Hospitality industry

47
Q

Appreciation of the US dollar benefits

A

importers
American tourists abroad

48
Q

There will be more demand for your currency if

A

appreciation
-trading partners increase their demand for your goods and services
- trading partners get wealthier

49
Q

There will be less demand for your currency if

A

depreciation
- recession
-trading partners decrease their demand for your goods and services

50
Q

If more paper clips are sold,

A

Both buyer and seller will be better off

51
Q

If fewer paper clips are sold

A

Both buyer and seller will be worse off

52
Q

There is inflation in Kenya and now the price of 10 paper clips in Kenya is 200 shillings instead of 100
Is the American buying imported paper clips better off or worse off
Is the Kenyan paper clip producer better off or worse off

A

worse off

53
Q

The Kenyan Shilling appreciates
Is the American buying imported paper clips better or worse off
Is the Kenyan paper clip exporter better or worse off
Is an American tourist in Kenya worse or better off

A

worse off

54
Q

The US dollar appreciates
Is the American buying imported paper clips better or worse off
Is the Kenyan paper clip exporter better or worse off
Is an American tourist in Kenya worse or better off

A

better off

55
Q

There was a US tariff on foreign paperclip imports that is removed
Is the American buying imported paper clips better or worse off
Is the Kenyan paper clip exporter better or worse off

A

better off

56
Q

When the dollar depreciates, American purchasing power (grows, shrinks). Imports will (more expensive, less expensive) for Americans. The US dollar is said to be (weaker/stronger)

A

shrinks
more expensive
weaker

57
Q

If interest rates in the US rise, demand for the US dollar in the ForEx market will (increase, decrease). The US dollar will (appreciate, depreciate). The US dollar is said to be (weaker/stronger)

A

increase
appreciate
stronger

58
Q

Inflation in Venezuela results in a ForEx market (increase, decrease) in demand for the Bolivar, causing the Bolivar to (appreciate, depreciate)

A

decrease
depreciate

59
Q

An increase in incomes in the US causes the supply of US dollars in the ForEx market to (increase, decrease). The dollar will (appreciate, depreciate) and the Japanese Yen will (appreciate, depreciate)

A

increase
depreciate
appreciate

60
Q

If the US has a tax cut relative to the EU the demand for the euro in the market will (increase, decrease) and the euro will (appreciate, depreciate)

A

increase
appreciate

61
Q

If there is a sudden rise in demand for Kenyan goods, the shilling will (appreciate, depreciate). This means the shilling is (stronger, weaker) in relation to its trading partner currencies

A

appreciate
stronger

62
Q

A decrease in the US demand for Chinese goods will (increase, decrease) the demand for Chinese yuan and the yuan will (appreciate, depreciate)

A

decrease
depreciate

63
Q

If the exchange rate for one US dollar changes from 1 E to 1.3 E, the US dollar is (weaker, stronger) and the euro is (weaker, stronger)

A

stronger
weaker

64
Q

If the exchange rate for one US dollar changes from 1 E to .75 E, the US dollar is (weaker, stronger) and the euro is (weaker, stronger)

A

weaker
stronger

65
Q

If the exchange rate for one US dollar changes from 1.2 E to 2 E, the euro has (appreciated, depreciated)

A

depreciated

66
Q

Purpose of a tariff or quota

A

To shield domestic producers from competition

67
Q

how do tariffs benefit a nation that quotas don’t

A

tax revenue

68
Q

results of tariffs and quotas

A

Price goes up
Imports go down
Domestic production goes up
Domestic consumption goes down

69
Q

What makes trade easier

A

free trade, no barriers

70
Q

Exporters and hospitality firms (depreciate/appreciate)

A

depreciate

71
Q

Importers and tourists (appreciate/depreciate)

A

appreciate

Economics (7 decks)

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