4. International

Question 1

U.S. government tax on foreign goods sold in the U.S

• Leads to: increase in the price of foreign goods sold as well as an increase in the price of the same goods sold by domestic producers

Answer 1

Tariff

Question 2

Upper limit by the U.S. government on the amount of foreign goods that are sold in the U.S.
- Lead to a decrease in the quantity of foreign goods sold and an increase in the price of those goods

Answer 2

Import Quota

Question 3

1. Both will decrease the # of imports
2. Both will increase price of both imported and domestic goods

Answer 3

Effects on Trade Restrictions

Question 4

1. Both will benefit domestic producers and domestic government
2. Both will harm domestic consumers and foreign producers

Answer 4

Group Results

Question 5

1. Infant Industry Argument: if a company was just founded and new
2. National Defense: to protect them or our nation will be in jeopardy
3. Preventing Product Dumping: when foreign firms sell goods below the cost in domestic areas to gain monopoly and force firms out of business

Answer 5

When can trade restrictions benefit?

Question 6

Goods produced in the U.S. that are sold to another country

Answer 6

Exports

Question 7

Goods that are produced in another country and sold in the U.S.

Answer 7

Imports

Question 8

Exports - Imports

Answer 8

Balance of Trade

Question 9

Exports - Imports (only positive value)

Answer 9

Trade Surplus

Question 10

Imports - Exports (only positive value)

Answer 10

Trade Deficit

Question 11

Purchases of foreign investments/assets by the U.S. minus purchases of U.S. investments/assets by foreigns

What we buy from them - what they buy from us

Answer 11

Net Foreign Investment

Question 12

Compare the value of one currency in relation to another currency

Appreciation: if the $ buys more in another country
- Benefits consumers
- Dec AD

Depreciation: if the $ buys fewer in another country
- Does not benefit consumers
- Inc AD

1. Multiply the U.S. x foreign exchange rate
2. That # over foreign currency = foreign #
3. < 1 = cheaper in U.S.

Answer 12

Nominal Exchange Rates

Question 13

The Real Exchange Rate to be 1 to 1

Answer 13

Law of One Price

Question 14

Above price but below demand

Answer 14

Consumer Surplus

Question 15

Below price but above supply

Answer 15

Producer Surplus