What is a trade deficit?

The excess value of imports over exports.

What is a trade surplus?

The excess value of exports over imports.

What is balanced trade?

When export value equals import value.

What is mercantilism?

An economic theory that emphasizes the importance of accumulating gold and silver through exports.

What is the law of comparative advantage?

If each country specializes in the production of goods in which they have a comparative advantage, both countries can benefit from increased consumption possibilities.

What factors influence international trade?

Government policies, exchange rates, relative prices, national income, preferences for goods, and transportation costs.

What is the terms of trade (TOT)?

The ratio of a country's export prices to its import prices.

How do tariffs affect trade?

Tariffs increase the price of imports, reducing demand for them and improving net exports.

What is an export subsidy?

A payment by the government to domestic producers to encourage exports.

What is the impact of a strong currency on trade?

A strong currency makes exports more expensive and imports cheaper.

What is the role of government policies in international trade?

They can either limit free trade through tariffs and quotas or facilitate trade.

What is the significance of transportation costs in trade?

High transportation costs can reduce trade, while low costs facilitate it.

What is the impact of national income on imports?

As national income rises, citizens demand more imports for a greater variety of products.

What is the argument for trade liberalization?

It enhances comparative advantage and benefits all participants by improving welfare.

What is the argument against protectionism?

It can lead to higher prices for consumers and reduced competition.

What is dumping in international trade?

Selling products at below the cost of production to gain market share.

What is the infant industry argument?

Protection is needed for new industries until they can compete internationally.

What is the core industry argument?

Some countries protect core industries to preserve their comparative advantage.

What is the difference between tariffs and quotas?

Tariffs are taxes on imports, while quotas limit the amount of a good that can be imported.

What is the effect of economic development on terms of trade?

Economic growth can increase demand for imports, worsening the terms of trade.

What is the role of elasticity in terms of trade?

The relative elasticity of demand and supply influences the terms of trade.

What is the impact of exchange rates on terms of trade?

A strengthening exchange rate improves terms of trade by making exports more expensive.

What is the significance of mutual gains from trade?

All countries involved should experience benefits from engaging in trade.

What is the relationship between specialization and trade?

Specialization allows countries to produce efficiently and trade for goods they do not produce.

What is the impact of competition from foreign firms?

Increased competition can lower market prices for consumers.

What is the role of technology in international trade?

Access to technology can improve production efficiency and trade relations.

What is the significance of consumer preferences in trade?

Preferences for foreign or domestic goods can influence trade balances.

What is the impact of trade restrictions on local prices?

Trade restrictions can increase local prices and reduce consumer surplus.

What is the relationship between trade and economic growth?

Trade can enhance economic growth by providing access to larger markets.

What is the significance of the division of labor in trade?

It reduces costs as workers specialize in specific tasks.

What is the role of government revenue from tariffs?

Tariffs provide tax revenue for the government.

What is the impact of high transportation costs on trade?

High transportation costs can deter trade between countries.

What is the significance of export prices in terms of trade?

Higher export prices improve the terms of trade.

What is the relationship between trade and resource allocation?

Trade allows for more efficient allocation of resources based on comparative advantage.

What is the impact of trade on consumer choice?

Trade increases the variety of goods available to consumers.

What is the significance of trade balance?

It reflects the economic relationship between a country and its trading partners.

What is the role of international trade in economic development?

It provides access to resources, technology, and markets that can spur growth.

What is the impact of trade on employment?

Trade can create jobs in export industries but may displace workers in import-competing sectors.

What is the significance of trade agreements?

They facilitate trade by reducing barriers and promoting cooperation between countries.

What is the role of foreign direct investment in trade?

It can enhance trade by increasing production capacity and access to markets.

What is the impact of trade on innovation?

Trade encourages innovation by exposing firms to global competition.

What is the significance of trade in services?

It represents a growing area of international trade, contributing to economic growth.

What is the relationship between trade and environmental concerns?

Trade can have both positive and negative impacts on environmental sustainability.

Principles of Macroeconomics: International Trade Flashcards

Student preview

97 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What is trade?

Back

The exchange of goods and services between parties.

2.

FLASHCARD QUESTION

Front

What is intra-national trade?

Back

Trade between partners within the same country.

3.

FLASHCARD QUESTION

Front

What is international trade?

Back

The exchange of goods and services between countries.

4.

FLASHCARD QUESTION

Front

What is specialization in trade?

Back

The focus on producing certain goods to achieve economies of scale.

5.

FLASHCARD QUESTION

Front

What is absolute advantage?

Back

The ability of a country to produce a good using fewer inputs than another country.

6.

FLASHCARD QUESTION

Front

What is comparative advantage?

Back

The ability of a country to produce a good at a lower opportunity cost than another country.

7.

FLASHCARD QUESTION

Front

What are net exports?

Back

The value of exports minus the value of imports.

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