Words Flashcards
(C) principle #1
Choices are necessary because resources are scarce
- money
- time
(O) Principle #2
Opportunity cost
The true cost of something is opportunity
-what I must give up for what I want
- all cost are opportunity cost
(T) Principle #4
People usually respond to incentives
(G)Principle #5
There are gains from trade
(eq) Principle #6
Markets move towards equilibrium
-an economic situation is in equilibrium when no individual would be better off doing something different
(R) Principle #7
Resources should be used efficiently to achieve society’s goals
-an economy is efficient if it takes all opportunities to make some people better off without making other people worse off
(Ef)Principle #8
Markets usually lead to efficiently -the invisible hand -definition of efficiency -some people made better off without making me others worse off Market failures
(S)Principle #9
When markets don’t achieve efficiently,government intervention
Can improve society’s welfare
(I)Principle #10
One persons spending is another persons income
GATT
The general agreement on tariffs and trade
Covers international trade in goods
WTO
World trade organization
- it is a forum for governments to negotiate trade agreements
- it is a place to settle their trade disputes
Trade barriers
Anything that keeps you out of something
Prevents trading
Exchange rates
Different currency between countries
Measure of currency in different countries
The current account
Book keeping, measuring national wealth
Future of trade
Depends on a a lot, factors of production
Can’t predict
Marginal analysis
Make decisions that add value
Rational behavior
People behave towards their wants and needs
Open economy
Economy that trades with other economies
Reality
My perception is my reality
Paradox
People try to save money during a recession
Affecting the demand
Comparative advantage
The ability to produce goods at a lower cost than another producer
Absolute advantage
The ability to produce goods with fewer resources than another producer
Tariffs
Tax on imports
Embargo
Restrictions on imports
Quotas
Limits on allowable imports/exports
USMCA
United States Mexico agreement
It’s a free trade agreement between those countries
NAFTA
Trade pact signed in 1992 any products and services passing thru u.s, Canada, Mexico
Now the called the usmca
(M)Principle #3
Marginal analysis
Examining the cost/benefits of an opportunity
Imports
Traded goods coming in from other countries
Exports
Traded goods going out to other countries
Trade/purpose
We trade so we don’t go to war with one another and it makes sense to trade if one can produce certain goods
Globalization
Process of ideas ,knowledge, information, goods and services spread around the world
Trade deficit
When a country imports exceeds its exports
Trade surplus
When a countries exports exceeds its imports
