Econ Chapter 16

Question 1

country’s ability to produce more of a given product than can another country

Answer 1

Absolute Advantage

Question 2

system under which the value of currencies are fixed in relation to one another; the exchange rate system in effect until 1971

Answer 2

Fixed Exchange Rate

Question 3

foreign currencies used by countries to conduct international trade

Answer 3

Foreign Exchange

Question 4

argument that new and emerging industries should be protected from foreign competition until they are strong enough to compete

Answer 4

Infant Industries Argument

Question 5

tax on an imported product designed to protect less efficient domestic producers

Answer 5

Protective Tariff

Question 6

difference between money paid to, and received from, other nations in trade; balance on current account includes goods and services, merchandise trade balance counts only goods

Answer 6

Balance of Payments

Question 7

Where other countries’ currencies, used to facilitate international trade, are bought and sold

Answer 7

Foreign Exchange Market

Question 8

person who wants to protect domestic producers against foreign competition with tariffs, quotas, and other trade barriers

Answer 8

Protectionist

Question 9

limit on the amount of a good that is allowed into a country

Answer 9

Quota

Question 10

tax priced on an imported product

Answer 10

Tariff

Question 11

balance of payments outcome when spending on imports exceeds revenue received from exports

Answer 11

Trade Deficit

Question 12

tax placed on imported goods to raise revenue

Answer 12

Revenue Tariff

Question 13

system that relies on supply or demand to determine the value of one currency in terms of another; exchange rate system in effect since 1971, same as floating exchange rate

Answer 13

Flexible Exchange Rates