international trade test Flashcards
International trade
is the exchange of goods and services across international boundaries.
protectionism
is policy of protecting home industries from foreign competition by the imposition of trade barriers on imported goods ad services.
free trade
a policy of imposing no restrictions on the movement of goods and services between countries.
In what date did the WTO replaced GATT (general agreement on trade and tariffs) ??
January 1, 1995
150 members
WTO 3 objectives
- To help reduce trade restrictions
- to provide an impartial means of settling disputes
- to help global trade flow as freely as possible
absolute advantage
a country has absolute advantage if it produces more goods and services compared with other countries with the same quality of resources.
Comparative Advantage
Comparative Advantage occurs when a country can produce a good at the lowest opportunity cost when compared with other countries which have the same resources.
Terms of trade
the ratio of export prices to import prices
Base year
always a 100
Gains from trade
are the advantages that a county obtains as a result of trade.
favorable movement
a rise in the value of terms of trade index is described as favorable movement of the terms of trade.
Above 100
deterioration
less than 100
