L2 : International Trade Flashcards
What is international trade?
The exchange of goods and services between countries.
True or False: International trade only involves physical goods.
False
What are exports?
Goods and services produced in one country and sold to another.
What are imports?
Goods and services purchased from other countries.
Fill in the blank: The balance of trade is the difference between a country’s ______ and ______.
exports; imports
What is a trade deficit?
When a country’s imports exceed its exports.
What is a trade surplus?
When a country’s exports exceed its imports.
What does WTO stand for?
World Trade Organization
True or False: The WTO aims to facilitate smooth international trade.
True
What is the main purpose of tariffs?
To protect domestic industries by making imported goods more expensive.
Fill in the blank: A ______ is a tax imposed on imported goods.
tariff
What are quotas?
Limits on the quantity of a specific good that can be imported.
What is the primary benefit of international trade?
Access to a larger market and increased variety of goods.
What is comparative advantage?
The ability of a country to produce a good at a lower opportunity cost than another country.
True or False: Countries should specialize in goods where they have a comparative advantage.
True
What is the role of trade agreements?
To reduce trade barriers and promote trade between countries.
What is the difference between bilateral and multilateral trade agreements?
Bilateral agreements involve two countries, while multilateral agreements involve three or more countries.
Fill in the blank: The ______ is an example of a multilateral trade agreement.
North American Free Trade Agreement (NAFTA)
What does FTA stand for?
Free Trade Agreement
True or False: Protectionism is the economic policy of restraining trade between countries.
True
What is an embargo?
A government order that restricts commerce with a specified country.
What is the main goal of trade liberalization?
To reduce or eliminate barriers to trade.
What is foreign direct investment (FDI)?
Investment made by a company or individual in one country in business interests in another country.
Fill in the blank: ______ is a measure of how well a country can attract and retain investment.
Investment climate
What is the purpose of export promotion?
To encourage domestic companies to sell their products abroad.
What is the main function of export credit agencies?
To provide financing and insurance to domestic companies exporting goods.
True or False: Exchange rates can affect international trade.
True
What is a floating exchange rate?
An exchange rate determined by the market forces of supply and demand.
What is a fixed exchange rate?
An exchange rate that is set and maintained by a government.
What does the term ‘trade barriers’ refer to?
Government policies that restrict international trade.
What is dumping in international trade?
Selling goods in a foreign market at a price lower than their normal value.
Fill in the blank: The ______ theory explains how trade can benefit all countries involved.
Heckscher-Ohlin
What is the purpose of anti-dumping measures?
To protect domestic industries from unfair competition.
What is the significance of trade statistics?
They provide insights into a country’s trade patterns and economic health.
What are trade sanctions?
Restrictive measures imposed by a country against another country to influence its behavior.
True or False: Trade liberalization leads to increased competition.
True
What is the impact of globalization on international trade?
It has increased the volume and complexity of trade worldwide.
What is the role of the International Monetary Fund (IMF) in international trade?
To promote global monetary cooperation and financial stability.
Fill in the blank: The ______ is a global organization that provides loans to countries for development projects.
World Bank
What is a trade bloc?
A group of countries that work together to promote trade among themselves.
What is the main characteristic of a common market?
The free movement of goods, services, capital, and labor among member countries.
What is the purpose of trade facilitation?
To simplify and streamline international trade procedures.
What does the term ‘trade finance’ refer to?
The financing of international trade transactions.
True or False: Currency fluctuations can impact trade profitability.
True
What is the significance of trade policy?
It determines how a country engages in international trade.
What is the difference between visible and invisible trade?
Visible trade involves tangible goods, while invisible trade involves services.
Fill in the blank: ______ are agreements between two or more countries to reduce tariffs and other trade barriers.
Trade agreements
What is the main objective of the General Agreement on Tariffs and Trade (GATT)?
To promote international trade by reducing trade barriers.
What is the main impact of tariffs on consumers?
Tariffs increase the prices of imported goods.
What is the role of customs authorities?
To regulate the flow of goods into and out of a country.
True or False: Free trade can lead to job losses in certain industries.
True
What is a trade mission?
A trip taken by business leaders to promote trade and investment opportunities.
What is the purpose of trade negotiations?
To reach agreements that facilitate trade between countries.
Fill in the blank: The ______ effect refers to the impact of trade on income distribution within a country.
Stolper-Samuelson
What is the relationship between trade and economic growth?
Increased trade can lead to higher economic growth rates.
What is the importance of trade relations?
They can enhance diplomatic ties and economic cooperation.
What is the role of trade associations?
To represent the interests of businesses engaged in international trade.
True or False: Trade can help in the transfer of technology between countries.
True
What is a trade barrier?
Any regulation or policy that restricts international trade.
What does the term ‘non-tariff barriers’ refer to?
Trade restrictions that do not involve tariffs, such as quotas and standards.
Fill in the blank: ______ can be used to promote exports by providing financial assistance to exporters.
Export subsidies
What is the effect of exchange rate volatility on trade?
It can create uncertainty and affect pricing strategies.
What is the significance of trade balance?
It provides insights into a country’s economic performance and competitiveness.
What are trade negotiations typically aimed at?
Reducing trade barriers and enhancing economic cooperation.