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Flashcards in Test 9 Deck (45):
1

Exports

Goods or services that are sold to a buyer in another country

2

Balance of Trade

A comparison of the nations imports and exports

3

Trade Surplus

When your exports exceed your imports

4

Trade Deficit

When your imports exceed your exports

5

Absolute Advantage

A situation where a country can produce more of a good than another country can produce with the same quantity of resources

6

Comparative Advantage

A situation where a country can produce a good at lower opportunity cost than another country

7

Barriers to Trade

1. Tariff
2. Quotas
3. Export Subsidy

8

Tariff

Tax on imported goods

9

Types of Tariffs

1. Revenue Tariff
2. Protective Tariff

10

Revenue Tariff Purpose

To raise money for the government

11

Protective Tariff Purpose

To protect domestic industry from foreign competition

12

Quotas

A restriction on the number of goods that can enter the country from abroad

13

Export Subsidy

A payment by a country to its exporters that enables them to sell their products to other countries at a lower price that they can sell them for at home

14

Why do nations restrict international trade?

1. To protect industries that are essential to national defense
2. To protect infant industries
3. To diversify the economy
4. Protection form cheap foreign labor
5. To stimulate economic growth
6. It can be used as retaliation against other countries

15

Free Trade

The absence of any form of government interference in international trade

16

Free Trade Assosiation

An agreement between countries to remove the barriers of trade

17

Customs Union

Promotes Free Trade among its members, but imposes a common tariff on non-member countries

18

Imports

A good or service that is purchased from a seller in another country

19

Major Agriculture Programs

1. Set Aside Program
2. Acreage Allotments
3. Government Disposal of Surplus Crops

20

Set Aside Program

Pays farmers to take land out of production to decrease supply and prevent overproduction

21

Acreage Allotments

Allocates an acreage base to a farm involuntarily

22

Government disposes of surplus crops

The Government buys surplus crops and then destroys it

23

Determinants of Equilibrium of Wages

1. Compensation Differentials
2. Human Capital
3. Ability, Effort, and Chance
4. Signaling

24

Compensating Differentials

Difference in wages that arise from non-monetary characteristics of different jobs

25

Human Capital

The accumulation of investments in people

26

Ability, Effort, and Chance

More attractive people will about 5% more in their lifetime than people with average people
Average looking people will make 5-10% more in their lifetime than below average looking people

27

Signaling

An action taken by an informed party to reveal private information to an uninformed party

28

Signaling Example

A person with a college degree signals to the employer that he is more dedicated than the other candidate

29

Discrimination

The offering of different opportunities to similar individuals who differ only by race, ethnic group, gender, age, or other personal characteristics

30

Poverty Rate

The percentage of the population who's family income falls below an absolute level called the Poverty Line

31

Poverty Line

An absolute level of income set by the federal government, for each family size, below which a family is deemed to be in poverty

32

Government Programs to Help Poverty

1. Food stamps
2. Housing vouchers
2. Obamacare/Medicaid

33

Life Cycle

The regular pattern of income variation over a person's life

34

What Age Does the Average Americans Income Peak?

50

35

How many people are below the Poverty Line?

In a typical 10 year period, 1 out of 4 families will fall below the poverty line for at least one year

36

How many millionaires are first generation? (first in their family)

4 out of 5

37

Utilitarianism

The political philosophy according to which the government should choose policies to maximize to total utility of everyone in society

38

Who started Utilitarianism

Jeremy Bentham and John Stuart Mill

39

What is the goal of Utilitarianism

apply the logic of individual decision-making to generations concerning...

40

Utility

The level of happiness or satisfaction that a person receives from his or her circumstances

41

Liberalism

1. Society's institutions, laws, and policies must be just
2. Can we objectively determine what a just society should be?

42

What novel is under Liberalism?

John Rawls A Theory of Justice

43

Libertarianism

The political philosophy according to which the
government should punish crimes and enforce voluntary agreements but not redistribute income

44

Libertarianism says...

1. Society itself doesn't have income
2. Only individuals earn income
3. Government shouldn't take from individuals to give to others
4. Equality of opportunity is more important that equality of incomes

45

Policies to reduce poverty

1. Minimum-wage laws
2. Welfare
3. Income tax
4. Transfer payments