Quiz 4 Flashcards
(48 cards)
Why do nations trade ?
We are lacking in resources, higher in profit
Define opportunity cost
The most desirable alternative given up as a result of a decision
What is an export ?
Putting out goods to other countries
What is an import ?
Something we get from other countries
What country is the largest importer ?
United States
What country is the largest exporter ?
United States
What are the three most common trade barriers ?
Import quotas
Voluntary export restraint (V.E.R)
Tariffs
Define Tariffs
Tax on imported goods
What is a trade war ?
A cycle of increasing trade restrictions
Define protectionism
The use of trade barriers to protect a nations’ industries from foreign competition
Does the US have a trade surplus or trade deficit ?
Trade deficit
Why are we in a trade war with China ?
Exporting to many goods at cheap prices
Natural resources
Land
Human resources
Labor
Human capital
Knowledge and skills gained by working through education and experience
Absolute advantage
The ability to produce more of a given product using all the other products that could be produced
Comparative advantage
The ability to produce a product most efficiently given all the other products that could be produced
Trade barrier
A means of preventing a foreign product or service from freely entering a nation’s territory
Competition
Markets that set prices
Import quota
A limit on the amount of a good that can be imported
V.E.R
Limited exports to a specific country
Tariffs
Tax on imported goods
Why we have import quotas
Protect U.S manufacturing
Protect consumers
Protect prices
Why do we have V.E.R. ?
So another country won’t put up a trade barrier
