Exam 1 Flashcards
(23 cards)
globalization
international integration where goods move from a low costing countries to high costing countries
Factor movement
labor and capital
consumer surplus
the difference between the value of a good to consumers and the price they have to pay
producer surplus
the difference between the minimum price a producer would accept to produce a given quantity and the prices it actually receives
tariff
take imposed on imports
quota
a numerical limit on the volume of imports
competitive devaluation
a devaluation or depreciation in a currency with the intent to gain export markets
Bretton woods
july 1944, in bretton woods, new hapshire, negotiations about the shape of the post war international economic order, between the united states and the united kingdom, let to the creation of the IMF and the IBRP, which later became the world bank
World bank
a bretton woods institution, originally charged with the responsibility for providing financial and technical assistance to the war - torn economies of Europe. In the 1950s, the world bank began to shift its focus to developing countries
IMF
international monetary fund began operations on Dec. 27, 1945, with a membership of 29 countries. The IMF provides loans to its members under different programs
General agreement on tariffs and trade (GATT)
the main international agreement covering the rules f trade in most, but not all goods
Trade creation
opposite of the trade diversion. occurs when trade policies cause a shift in production from a higher cost producer to a low cost producer
trade diversion
the opposite of trade creation. trade diversion occurs when trade policies cause a shift in production and imports from a lower cost producer to a high cost producer
absolute advantage
a country has an absolute productivity advantage in a good if its labor productivity is higher, that is, it is able to produce more output with an hour of labor than its trading partners can
comparative advantage
achieved in a good when a country has lower opportunity costs of producing the good than those of its trading partner
relative price
the price of one good in terms of another good. it is similar to a money price which expresses the price in terms of dollars and cents, but relative price is in terms of the quantity of the first good that must be given up in order to buy a second good
production possibility curve
this curve shows the maximum amount of output possible, given the available supply of inputs. it also shows the trade off that a country must make if it wishes to increase the output of one of its goods.
Autarky
the complete absence of foreign trade; total self - sufficiency of a national economy
heckscher - ohlin
a trade theory that predicts the goods and services that countries export and import. the theory states that countries will export goods that require the intensive use of relatively abundant factors to produce, and import goods that require relatively scarce factors to produce
stopper samuelson
a corollary of the heckscher - olin theory stating that changes in import or export prices lead to a change in the same direction of the income of factors used intensively in production of the imported or exported good
internal economies of scale
the idea that an individual firm experiences a deadline in its average cost of production as it increases the number of units produced
external economies o scale
scale economies that are external to a firm, but internal to an industry consequently, all the firms in an industry experience declining average costs as the size of the industry increase
rent seeking
any activity by firms, individuals, or special interests that is designed to alter the distribution of income to their favor. political lobbying, legal challenges, and bribery are common forms of rent seeking behaviors, which use resources but do not add to national output. rent seeking is a net loss to the nation
