Ch. 17 Flashcards
(26 cards)
A good or service sent to another country for sale
Export
A good or service brought in from another country for sale
Import
The ability to produce more of a given product using a given amount of resources
Absolute advantage
The ability to produce a product most efficiently given all the other products that could be produced
Comparative advantage
The principle that the nation is better off when it produces goods and services for which it has a comparative advantage
Law of comparative advantage
The shared need of countries for resources, goods, services, labor, and knowledge supplied by other countries
interdependence
Means of preventing if one product or service from freely entering a nation’s territory
Trade barrier
A tax on imported goods
Tariff
A set limit on the amount of a good that can be imported
Import quota
Actions a nation or group of nations takes in order to punish or put pressure on another nation
Sanctions
Ban on trade with a particular country
Embargo
A cycle of escalating trade barriers
Trade war
The use of tray barriers to shield domestic industries from foreign competition
protectionism
An industry in the early stages of development
Infant industry
The lowering or elimination of protective tariffs and other trade barriers between two or more nations
Free-trade
Region where a group of countries agrees to reduce or eliminate trade barriers
Free-trade zone
The value of a nations currency in relation to a foreign currency
Exchange rate
An increase in the value of a currency
Appreciation
A decrease in the value of a currency
Depreciation
System of financial institutions that facilitate the buying and selling of foreign currencies
Foreign exchange market
A system in which governments try to keep the values of their currencies constant against one another
Fixed exchange rate system
A system in which the exchange rate is determined by supply and demand
Flexible exchange rate system
The relationship between the value of the countries exports and value of its imports
Balance of trade
Situation in which a nation exports more goods and services than it imports
Trade surplus
