Quiz #8 Vocab Flashcards
One country can produce goods at a lower opportunity cost than another country
Comparative advantage
One country can produce more than another country
Absolute advantage
Limiting international trade in order to protect domestic firms and jobs
Protectionism
Tax on imports
Imports go down and price rises
Tariff
Legal limit on the number of goods imported
Imports go down and price rises
Quota
A government payment to its firms to make them more competitive with foreign films
Subsidy
International trade that is carried on with little if any trade restrictions
Free trade
Balance of trade
Exports minus imports
Exports>imports
Positive balance of trade
Trade surplus
Imports>exports
Negative balance of trade
Trade deficit
Balanced trade
Exports = imports
Rate at which one currency can be exchanged for another
Ex: $1= 13 pesos
Exchange rate
Imports go up and exports go down
Domestic goods are expensive to foreigners
Foreign goods are cheap to domestic consumers
Strong currency (currency has appreciated)
Imports go down and exports go up
Domestic goods are cheap to foreigners
Foreign goods are expensive to domestic consumers
Weak currency
NAFTA
North American Free Trade Agreement
Free trade between Canada, US, and Mexico
