Issues at National Level

Question 1

What are some sociopolitical issues associated with international trade?

Answer 1

• Domestic unemployment linked to use of foreign labor
• Loss of manufacturing capabilities
• Reduction of industries essential to national defense
• Lack of domestic protection for start-up industries

Question 2

Identify and describe the balance-of-payment accounts.

Answer 2

• Current account: Net dollar amounts earned from export of goods and services, amounts spent on import of goods and services, and government grants to foreign entities
• Capital account: Net dollar amount of inflows from investments and loans by foreign entities, amount of outflows from investments and loans U.S. entities made abroad, and the resulting net balance
• Financial account: Net dollar amount of U.S. owned assets abroad and foreign-owned assets in the U.S.

Question 3

What is the difference between import quotas and import tariffs?

Answer 3

• Import quotas are restrictions on the quantity of goods that can be imported into a country.
• Import tariffs are taxes imposed on imported goods as a means of reducing the quantity of goods imported into a country.

Question 4

What is a country’s balance-of-payments account?

Answer 4

A summary accounting of all of a country’s transactions with other countries.

Question 5

Define a “balance-of-payments deficit.”

Answer 5

A country has a balance-of-payments deficit when its imports and investment outflows exceed its exports and investment inflows.