UNIT 9- INTERNATIONAL TRADE Flashcards
1
Q
What is expanding industry?
A
An industry that produces goods that can be sold abroad
2
Q
Explain what it that means to have free trade in a economy
A
What economy has free trade when the government does not have time to either reducer, increase the levels of exports and imports that occur naturally
3
Q
What are the effects of tariffs?
A
- increase in domestic production
- creates government revenue
- creates deadweight loss
- consumer surplus is down
- producer surplus is up
- world price is increased
4
Q
What is an import quota?
A
A legal limit in the quantity of a good that can be imported
5
Q
What is an exchange rate?
A
Price at which currencies trade
6
Q
What is purchasing power parity?
A
The normial exchange rate at which a basket of goods and services would cost the same amount in each country
