PART 1

Question 1

refers to a good or service brought into the domestic country

Answer 1

Import

Question 2

refers to a good or service sold to a foreign country

Answer 2

Export

Question 3

The seller is responsible for cost/liabilities until buyer receives the goods

Answer 3

Cost, Insurance and Freight (CIF)

Question 4

The buyer, not the seller, is responsible for cost/liabilities once goods are shipped

Answer 4

Free on Board

Question 5

Occurs when a country lacks efficient capacity to produce its own products- whether due to lack of skill and resources to create that capacity or due to preference to acquire from another country

Answer 5

Trade Deficit

Question 6

can create employment and economic growth but may also lead to higher prices and interest rates within an economy as well as a more expensive currency

Answer 6

Trade Surplus

Question 7

International Trade and Agreements (3 MEANINGS)

Answer 7

a. allows countries to expand their markets and access goods and services that otherwise may not have been available domestically

b. is an exchange involving a good or service conducted between at least two different countries

c. consists of issues raised by the special problems of economic interaction between sovereign states

Question 8

________-When two countries can trade to their______ even when one is more efficient than the other at producing a good or service

Answer 8

Gains from Trade

mutual advantage

Question 9

Gains from Trade

International trade allows countries to _____

Answer 9

specialize

Question 10

Gains from Trade

International trade can adversely affect the owners of resources that are “____” to industries that compete with imports

Answer 10

specific

Question 11

Who sells what to whom

Answer 11

Pattern of Trade

Question 12

Comparative Advantage-
developed by 19th-century British economist ______

Answer 12

David Ricardo

Question 13

attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries

Answer 13

Comparative Advantage

Question 14

Governments have worried about the effect of ______ on the prosperity of domestic industries and have tried either to shield industries from foreign competition by placing ______ or to help them in world competition by ______.

Answer 14

international competition
limits on imports
subsidizing exports

Question 15

The single most consistent mission of international economics has been to analyze the effects of these so-called _______—and usually, though not always, to criticize protectionism and show the advantages of freer international trade.

Answer 15

protectionist policies

Question 16

________ can help make sense of the politics of international trade policy, by showing who benefits and who loses from such government actions as ______ and _____. The key insight of this analysis is that conflicts of interest within nations are usually more important in determining trade policy than conflicts of interest between nations.

Answer 16

Economic analysis

quotas on imports
subsidies to exports

Question 17

is an increase in the value of a currency when compared to others. It means that one unit is capable of buying more foreign currency than before.

Answer 17

Appreciation

Question 18

is a fall in the value of that currency, so it can buy less; this process is also known as devaluation

Answer 18

Depreciation

Question 19

how to produce an acceptable degree of harmony among the international trade and monetary policies of different countries without a world government that tells countries what to do.

Answer 19

International Policy Coordination

Question 20

GATT

Answer 20

General Agreement on Tariffs and Trades