global

Question 1

tariffs

Answer 1

–a tax on imported goods
–the tax increases the domestic price for the import good(s)

Question 2

dumping

Answer 2

when a country exports a product at a price lower than it normally charges at domestic market

Question 3

infant industry

Answer 3

a newly-established or developing industry in a country that is considered to be in need of government protection and support in order to grow and become competitive in the global marketplace.

Question 4

sunset industry

Answer 4

an industry experiencing decline due to factors like technological advancements, changing consumer preferences, or broader economic shifts, leading to reduced profitability and potential decline

Question 5

trade protection

Answer 5

government policies and measures aimed at restricting or regulating international trade
- tariffs, quotas, etc.

Question 6

balance of payments (+ 3 accounts)

Answer 6

the record of all international financial transactions made by the residents of a country
- made up of current, capital, financial account

current: goods, services, income, transfers of money (like foreign aid)

capital: capital transfer (money for capital formation or debt forgiveness; fixed assets), non-produced assets (land, copyright)

financial account: direct & portfolio investment, reserve assets (eg. gold, foreigh currencies)

Question 7

direct & portfolio investment

Answer 7

direct: long term assets (eg. property)

portfolio: savings/purchase of financial assets (eg. stocks, bonds, etc.)

Question 8

trading bloc

Answer 8

agreement between 2 or more govs where barriers to trade are reduced

Question 9

preferential trade agreement

Answer 9

2 or more govs agree to reduce trade barriers on some goods/services

Question 10

trade diversion

Answer 10

trading shifts to high cost (low efficiency) producers inside trading bloc and away from low-cost (high efficiency) producers outside trading bloc

Question 11

comparative & absolute advantage

Answer 11

comparative - country can produce a certain good at a lower opportunity cost compared to other country
-ie. how much production possibility of another good is forgone

absolute - country can produce a certain good using fewer resources than another country

Question 12

economic integration

Answer 12

an arrangement among nations that typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies
- leads to more inter-connected global economy

Question 13

exchange rate

1. floating/flexible
2. fixed/pegged
3. managed flexible/dirty float

Answer 13

value of a currency expressed in terms of another currency

floating - determined solely by market forces

fixed - government fixes the vlaue of currency in relation to another nation’s currency

managed - allows currency to float within a specific range

Question 14

trade war

Answer 14

imposition of a trade barrier which trigger off a series of retaliation by a trade partner

Question 15

world trade organization (WTO)

Answer 15

functions include setting rules for international trade and resolving trade disputes

Question 16

world bank

Answer 16

functions include giving loans to developing countries and supports foreign direct investment

Question 17

Remittances

Answer 17

transfer of money/funds [1] from foreign workers to households in home country [2]