Trade Flashcards

1
Q

what does PPF stand for

A

production possibilities frontier

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what does the ppf show

A

a graphical representation of 2 goods that can be produced by diverting resources from one good to another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what is a comparative advantage

A

when the opportunity cost of producing a good is lower than another country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

is it possible for a country to be able to produce more of a good but still lack comparative advantage

A

yes
eg germany technically has more resources and could produce more pharmaceutical goods than ireland but this would mean they’d have to allocate those resources away from a market their even more productive in eg car manufacturing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

after beginning to export a good, is the world price higher or lower than the domestic price

A

higher

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

how does opening up to trade make a country more efficient

A

with trade, extra surplus is created that didn’t belong to either consumers or producers before

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

who gains more from exporting, consumers or producers

A

producers as there is more demand for their product

consumers have a higher price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

who gains more from importing, consumers or producers

A

consumers as they gain lower prices from imported goods

producers domestically find it hard to compete with world prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

after beginning to import, is the world price higher or lower than the domestic price

A

lower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

why would a country want to have trade policy

A

to protect domestic producers eg farmers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

types of restrictive trade policy

A

tariffs
quotas
other non tariff barriers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

example of trade policy used in past

A

by US and UK to create successful industries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what does WTO stand for

A

world trade organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is half of all irish exports made up of

A

chemicals and computer services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

up to what % does US apply tariffs on Chinese products

A

25%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

benefit of free trade

A

increases economic output and income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

how to calculate the opportunity cost of good X

A

sacrifice in good X / gain in good Y

18
Q

describe the shape of the ppf

A

bowed outwards in shape

19
Q

which is the most efficient part of the ppf

A

most outmost part

20
Q

when can the ppf curve shift

A

when theres more productive technology

when theres more education = more productive labour force

21
Q

who has an absolute advantage

A

whichever producer can produce using fewer inputs than the other

22
Q

who has a competitive advantage

A

whichever producer has the lowest opportunity cost

23
Q

what is specialisation

A

when each country concentrates on the product that they have the least opportunity cost

24
Q

why does china have a great comparative advantage

A

extremely cheap labour

25
Q

as China’s labour force become more aware of their low labour costs and demand higher wages, how will China maintain their competitive advantage

A

through investing in technology and innovation to make production costs as cheap as possible

26
Q

if the domestic price of a good is less than the world price, what should the country do

A

export their good

they have comparative advantage

27
Q

if the domestic price of a good is greater than the world price, what should the country do

A

import the good

28
Q

what is a tariff

A

tax on good produced abroad and sold domesticallly

29
Q

what is a quota

A

limit of a good produced abroad and sold domestically

30
Q

other barriers that arent tariffs or quoats

A

complex or discriminatory rules on origin and quality
sanitary conditions
administrative regulations
currency manipulation

31
Q

benefits of trade

A
increased variety of goods
lower costs
increased competition
enhanced flow of ideas and innovation
economic growth
32
Q

arguments to restrict trade

A

domestic job loss
national security
infant industries and older industries
unfair competition

33
Q

what is a net exporter

A

a country who exports more than they import eg USA

34
Q

What is a net imprter

A

a country who imports more than they export eg Ireland

35
Q

benefits of trade barriers

A
protect domestic industries
health reasons
enviornmental reasons
prevent unfair competition
decrease reliance on supply chains
36
Q

disadantages of trade barriers

A
less choice for consumers
higher prices for consumers
black markets may establish
lower demand, unemployment
drop in productivity
37
Q

ireland has the highest tariffs on what products

A

sugar beet
why
mushrooms
milk

38
Q

how can AD be boosted by trade

A

nx increases
c increases as more goods available
i could boost with foreign investment

39
Q

how can LRAS be shifted by trade

A

higher output and lower prices shifts LRAS

Also foreign investment changes capital

New innovation and technologies can be introduced

40
Q

if an industry is present in many markets worldwide, will fluctuations be less or more intens

A

less as one individual country wont have a huge impact

41
Q

why can trade be great for smaller countries

A

cooperation and good established relationships with the larger countries can be beneficial
(less likely to have wars)