International Trade

Question 1

Exports

Answer 1

Goods and Services that are produced and sold to other nations

Question 2

Imports

Answer 2

Goods and Services that one country buys from another

Question 3

Law of Comparative Advantage

Answer 3

The idea that a nation is better off when it produces goods and services for which they have a comparative advantage

Question 4

Absolute Advantage

Answer 4

The ability of one person or nation to produce a particular good at a lower cost than another person or nation

Question 5

Comparative Advantage

Answer 5

The ability of one person or nation to produce a good at a lower opportunity cost than that of another person or nation

Question 6

Opportunity Cost

Answer 6

The best alternative you give up when making a choice

Question 7

Specialization

Answer 7

When countries focus on producing good/services that they are good at

Question 8

Production Possibilities Graph

Answer 8

Graph that shows alternative ways to use an economy’s resources

Question 9

Production Possibilities Frontier

Answer 9

The line on the production possibilities graph that shows the maximum possible output

Question 10

Efficiency

Answer 10

Using resources in such a way as to maximize the production of goods and services

Question 11

Underutilization

Answer 11

Using fewer resources than an economy is capable of using

Question 12

Unemployment

Answer 12

Inability to adapt and find a new job

Question 13

Relocation

Answer 13

Moving to where current skills meet current jobs

Question 14

Retraining

Answer 14

Gaining new human capital to meet the demands of specialized labor markets

Question 15

Trade Barrier

Answer 15

A means of preventing a foreign product or service from freely entering a nation’s territory

Question 16

Quotas, Tariffs, Voluntary Export Restraints

Answer 16

3 Main Types of Trade Barriers

Question 17

Import Quota

Answer 17

A law limiting the amount of a good that can be imported

Question 18

Voluntary Export Restriction (VER)

Answer 18

A self-imposed limitation on the number of products shipped to a particular country

Question 19

Tariff

Answer 19

Tax placed on imported goods

Question 20

Customs Duty

Answer 20

A tax on certain items purchased abroad

Question 21

Trade War

Answer 21

A cycle of increasing trade restrictions

Question 22

Protectionism

Answer 22

The use of trade barriers to protect a nation’s industries from foreign competition

Question 23

Infant Industries

Answer 23

New Industries

Question 24

WTO (World Trade Organization)

Answer 24

Founded in 1995 to ensure compliance with GATT, to negotiate new trade agreements, and to resolve trade disputes

Question 25

Free Trade Zones

Answer 25

Regions where a group of countries has agreed to reduce trade barriers among themselves

Question 26

NAFTA

Answer 26

North American Free Trade Agreement--1993 Lowered trade barriers between Canada, U.S., and Mexico

Question 27

European Union (EU)

Answer 27

A regional trade organization made up of European nations

Question 28

Euro

Answer 28

A single currency that replaces individual currencies among members of the EU

Question 29

Foreign Exchange Rate

Answer 29

The value of one country's currency in relation to anothers

Question 30

Appreciation

Answer 30

An increase in the value of a currency

Question 31

Depreciation

Answer 31

A decrease in the value of a currency

Question 32

Foreign Exchange Market

Answer 32

A network of about 2,000 banks and other financial institutions

Question 33

Fixed Exchange Rates

Answer 33

Rate of exchange that doesn't change--commonly used when we operated on the gold standard

Question 34

Flexible Exchange Rates

Answer 34

Exchange rate determined by supply and demand

Question 35

Balance of Trade

Answer 35

The relationship between a nation's imports and its exports

Question 36

Trade Deficit

Answer 36

When the value of products imported is greater than the value of goods exported

Question 37

Trade Surplus

Answer 37

When the value of products imported is less than the value of goods exported