Ch. 17 Flashcards
(21 cards)
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
an increase in the value of a currency
appreciation
a decrease in the value of a currency
depreciation
the value of a foreign nation’s currency in terms of the home nation’s currency
exchange rate
a regional trade organization made up of European nations
European Union
a good that is sent to another country for sale
exports
a currency in which governments try to keep the values of their currencies constant against one another
fixed exchange rates
a currency system that allows the exchange rate to be determined by supply and demand
flexible exchange rates
a good that is brought in from another country for sale
imports
a new industry
infant industry
the idea that a nation is better off when it produces goods and services for which it has a comparative advantage
law of comparative advantage
agreement that will eliminate all tariffs and other trade barriers between Canada, Mexico, and the US
NAFTA
the use of trade barriers to protect a nation’s industries from foreign competition
protectionism
a limit on the amount of a good that can be imported
quota
a tax on imported goods
tariff
a means of preventing a foreign product or service from freely entering a nation’s territory
trade barrier
the result of a nation importing more than it exports
trade deficit
the result of a nation exporting more than it imports
trade surplus
a cycle of increasing trade restrictions
trade war
a worldwide organization whose goal is freer global trade and lower tariffs
world trade organization (WTC)
