The Dynamic Environment of International Trade Flashcards
What is the balance of payments?
The system of accounts that records a nation’s international financial transactions
It records international transactions usually over one year and is maintained on a double-entry bookkeeping system.
What is protectionism?
The use of various measures to restrict entry of unwanted goods into a country
This includes tariffs, quotas, and nontariff barriers.
What are the three accounts included in the balance of payments?
- Current account
- Capital account
- Reserves account
What is a trade surplus?
When international receipts are greater than payments
What is a trade deficit?
When international payments are greater than receipts
What does the General Agreement on Tariffs and Trade (GATT) aim to do?
Help reduce tariffs and other trade barriers
What was the primary purpose of the Marshall Plan?
To promote capitalism and assist in rebuilding Europe and Japan
What significant change occurred in the U.S. share of world GNP from 1950 to 2017?
Dropped from 39 percent to less than 25 percent
What is the difference between tariffs and quotas?
Tariffs are taxes on imports, while quotas are specific limits on the amount of goods that can be imported
Fill in the blank: A _______ is an agreement between the importing country and the exporting country for a restriction on the volume of exports.
Voluntary Export Restraint (VER)
What are antidumping laws designed to prevent?
Predatory pricing by foreign producers
What is the purpose of a subsidy?
A benefit given to an individual, business, or institution, usually by the government
What is the role of the World Trade Organization (WTO)?
Sets rules governing trade between members and provides a panel for trade dispute resolution
True or False: The WTO allows member countries to have equal representation in discussing trade issues.
True
What are some arguments for protectionism?
- Protection of an infant industry
- Maintenance of employment
- National defense
What happens during a global trade collapse?
World trade decreases significantly, often due to retaliatory tariffs
What is a quota?
A specific unit or dollar limit applied to a particular type of good
What is the main argument against protectionism?
It can cost consumers and does not lead to renewed growth in declining industries
What are nontariff barriers?
- Quotas
- Boycotts
- Monetary barriers
- Market barriers
What is a boycott?
An absolute restriction against the purchase and importation of certain goods and/or services from other countries
What is the significance of the Uruguay Round?
It established rules for trade-related investment measures and intellectual property rights
Fill in the blank: The _______ is the first multilateral legally enforceable agreement covering trade and investment in the services sector.
General Agreement on Trade in Services (GATS)
What is predatory pricing?
Selling products below cost to undermine competition
What is the effect of blocked currency?
Cuts off all importing or limits importing above a certain level
