International Trade and Economics Review Flashcard

Front

What is comparative advantage?

Back

when relative costs of production differ between nations

Front

What does a trade deficit imply?

Back

imports of goods and services exceed exports of goods and services

Front

Which of the following is true if a nation does NOT have an absolute advantage in producing any good or service?
Options: it cannot have a comparative advantage either, It will have a comparative advantage in the production of the good or service in which it has a lower opportunity cost, It will export raw materials and import finished products, No country will want to trade with this nation because it is not cost effective to do so

Back

It will have a comparative advantage in the production of the good or service in which it has a lower opportunity cost

Front

Suppose two countries are each capable of individually producing two given commodities. Instead, each specializes by producing the commodity for which it has a comparative advantage and then trades with the other country. Which of the following is most likely to result?

Back

Both countries will become better off

Front

If other things are held constant, an increase in the United States imports will

Back

tend to cause the dollar to depreciate because the world supply of dollars will rise

Front

Tariffs and quotas can have all of the following effects EXCEPT: Promoting third-world development, Increasing prices consumers pay for goods, Protecting domestic industry, Reducing trade deficits

Back

Promoting third-world development

Front

A persistent trade deficit causes:

Back

Unemployment to increase in export industries

Front

The United States trade deficit causes

Back

The value of the dollar to fall in foreign exchange markets

Front

The price at which a currency can be bought or sold is its:

Back

Exchange Rate

Front

Which of the following is NOT an example of trade barriers? Quota, Tariff, Flat Tax, Embargo

Back

Flat Tax