Final

Question 1

Tariff

Answer 1

taxes imposed on imports. tariffs raise the price to the domestic consumer and reduce the quantity demanded

Question 2

non tariff barrier

Answer 2

any trade barrier that is not a tariff. examples include quotas, red tape, regulations, rules that require governments to purchase from domestic producers

Question 3

comparative advantage

Answer 3

achieved in a good when a country has lower opportunity costs of producing the good than more of its trading partner

Question 4

absolute advantage

Answer 4

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 partner

Question 5

monetary policy

Answer 5

national macroeconomics policies related to the money supply and interest

Question 6

fiscal policy

Answer 6

policies related to government expenditures and taxation

Question 7

Keynesian multiplier

Answer 7

the idea that an expansatory policy such as increased government spending, first directly raises the incomes of the contractions receiving money. then those contractions buy additional goods and sources, boosting other people’s incomes and so on

Question 8

leakages include

Answer 8

taxes, saving, and imports

Question 9

trade balance

Answer 9

net exports, that is, the difference between exports of goods and services and imports of goods and services

Question 10

current account balance

Answer 10

a record of transactions in goods, services, investment income, and unilateral transfers between the residents of a country and the rest of the world

Question 11

capital account

Answer 11

a record of the transactions in highly specialized financial assets and liabilities between the residents of a nation and the rest of the world.