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Flashcards in Chapter 4 Deck (21):
1

Trade

When goods, services or resources are exchanged

2

Barter

Trade without money

3

Incentives to Trade

-People differ in tastes

-People differ in abilities

-More highly populated markets give rise to better use of resources through specialization

4

Comparative Advantage

Having a lower opportunity cost of producing a good, in terms of other goods sacrificed

5

Transactions Costs

Sacrifices made in order to search out, negotiate, and complete an exchange

6

Balance of Trade (as pertaining to mercantilists)

the dollar value of exported good - the dollar value of imported goods

7

Trade Surplus

Positive Balance of trade

8

Trade Deficit

Negative Balance of Trade

9

The Current Account

The monetary value of the flow of GOODS and SERVICES

10

The Capital Account

The monetary value of the flow of STOCKS and BONDS

11

Exchange Rate

The price of one country's currency in terms of another country's currenct

12

Modern Day Mercantilists are known as.....

Protectionists

13

Tariff

Tax on imports

14

Quota

Restrictions on quantities of imports people can buy

15

Subsidies

Government paying domestic firms to produce

16

Export Subsidies

Government paying domestic firms to export

17

Domestic Content Restriction

Laws that say a product made in the country must be made with resources from the country

18

Anti-Competitive Manufacturing Specifications

Requiring that a particular imported product be manufactured with inputs that are difficult to acquire except in the importing country

19

Division of labor is limited by

the market

20

Internal Cost

What is given up in production in terms of another good

21

External Cost

Given up in trade