The US And World Trade Flashcards
What is the basic concept that makes trade necessary between nations or within a nation?
Law of Comparative Advantage
When all nations have a different combination of resources economists call this an unequal __________ of productive resources.
Endowment
Developing one product over others is called what?
Specialization
Nations specialize in products made from the resources which are ___________ in the nation.
Abundant
In order for trade to occur, the surplus of goods must be priced ___________ than a potential trading partner can produce the product itself.
Cheaper
It is highly probable that a nation with an abundance of a resource is going to have a what?
Cost advantage
The basic advantage of trade is that scarce resources can be used to their best ____________. Which means efficiency.
Advantage
A second advantage of trade would be that the standard of living of both trading partners does what?
Increases
Attempts at self sufficiency commit scarce resources in ___________ production.
Insufficient
Buying inefficient production reduces what?
The standard of living
Trade between nations enhances __________ and standard of living.
Efficiency
Virtually every nation in the world has legislation that removes some ___________ from international trade.
Freedom
What is one of the most common type of barriers that restricts trade?
A tariff
What is an import tax on a good?
Tariff
Another trade barrier is an import _______.
Quota
What limits the number of goods entering a country?
Import Quota
An extreme type of import quota is what?
An embargo
An embargo stops ______ trade of a particular product.
All
What exists when the process of securing the rights to import a product is so laborious businesses don’t bother?
Administrative barrier
Trade barriers _________ the price of goods and services in the US.
Increase
One reason we restrict trade is purely __________. If we don’t approve of a nation, we don’t trade with them.
Political
The reason for trade barriers are not ___________ in the first place.
Economic
A second justification for trade barriers is to restrict the flow of some goods in the US because they are dangerous to the _________ of our population.
Health
A third justification for trade barriers is because we must always have the capability to maintain security through an adequate __________ System.
Defense
To avoid problems of importing weapons, the US relies on domestic producers for what?
Military needs
The forth justification for trade barriers is industry needs ____________.
Protection
By protecting industry from cheaper imports, citizens are forced to pay higher prices reducing what?
Standard of living
An industry in the very early development stages is considered what?
Infant industry
Infant industry demands __________.
Protection
The final justification for trade barriers most often used is to protect ______ in the US.
Jobs
People prefer less expensive product in similar quality over __________ Product.
Domestic
Another factor effecting the flow of trade is the value of the nations ___________.
Currency
The stronger a currency is relative to another nations currency, the more _________ a nation has.
Imports
A strong currency will reduce __________.
Exports
As a nations currency weakens, exports will _____ but imports will ______.
Rise
Fall
The Federal Reserve System cooperates with other central banks to regulate big swings in currency _______ so _______ can continue to flow.
Values
Trade
What states that nations are able to produce some products cheaper than others due to unequal distribution of productive resources?
Law of Comparative Advantage
Any legislation that obstructs a nation from exploiting its comparative advantage is a what?
Trade barrier
The value of one nations currency in terms of another nations currency is what?
Exchange rates
