Ch.17 Flashcards
(33 cards)
Economics 12
Chapter 17 Vocabulary
absolute advantage
The capacity of one economy to produce a good or service with fewer resources than another.
balance of merchandise trade
The difference between a nation’s merchandise exports and imports.
bilateral
Involving two nations, as in an agreement reached between two nations.
Canada-US Automotive Products Agreement (or Auto Pact)
A 1965 agreement between Canada and the USA to eliminate tariffs on auto parts and automobiles.
common market
The strongest form of free trade agreement, which includes free movement of labour and capital among members, tariff-free movement of goods, and a common policy on trade restrictions against non-members.
comparative advantage
The capacity of one economy to produce a good or service with comparatively fewer resources than another (e.g., having a lower opportunity cost.)
customs union
Extension of a free trade agreement among members to include a common policy on trade restrictions on non-members.
dumping
The deliberate practice of selling a product internationally at a price lower than its domestic price.
embargo
An action taken by one nation against another for some political purpose to prevent import or export of goods.
European Union (EU)
The 15-member European common market, the largest in the world, which introduced its own currency, the euro, in 1999.
extraterritoriality
The imposition of political, economic, or legal influence by one nation over another that is seen to infringe upon its sovereignty; charged by Canadians against the US from time to time.
Free Trade Agreement (FTA)
The 1989 agreement reached between Canada and the USA to phase out trade restrictions, establish mechanisms to settle trade disputes, relax investment rules, and settle other trade issues; it became part of NAFTA in 1994.
free trade area
An agreement between two or more nations to eliminate tariffs between them while retaining the right to impose tariffs upon non-members.
General Agreement on Tariffs and Trade (GATT)
The 1947 agreement reached by major trading nations for the gradual reduction of tariffs over time; replaced in 1995 by the World Trade Organization (WTO).
globalization
the creation of a world economy caused by increased international trade, investment flows, and the spread of multinational corporations.
merchandise (or visible) trade
Tangible goods that are grown, extracted, or manufactured.
multilateral
Pertaining to many nations, as an agreement reached among many countries.
National Policy
A policy of tariff protection for Canadian industry, linked to railroad building and western settlement, that was launched by the Conservative government of Sir John A. Macdonald in 1879.
non-merchandise (or invisible) trade
Services, tourism, investment income, and other transfers.
North American Free Trade Agreement (NAFTA)
The 1994 free trade agreement among Canada, the United States, and Mexico.
quota
A restriction placed on the amount of product that domestic producers are allowed to produce; also, a limit on the total quantity of goods imported into a country.
Reciprocity Treaty
A free trade agreement between British North America and the US, lasting from 1854 to 1866.
relative factor endowment
The natural advantages, in terms of resources, that one nation or area has compared to another.
