Principles of Business, Marketing, & Finance Chapter 3 Review

A country is said to have an absolute advantage when it can produce a good or service at a higher cost than other countries. If a country specializes in the production of a good or service at which it is more efficient, it is said to have a comparative advantage.

• True

• False

Goods and services bought from another country.

• Exports

• Imports

• Quota

• Tariff

The difference between a country’s total payments to other countries and its total receipts from other countries.

• Balance of payments

• Balance of trade

• Exchange rate

• Embargo

The World Trade Organization was created to promote trade around the world. The International Monetary Fund helps to promote economic cooperation by maintaining a system of world trade and exchange rates. The World Bank provides economic assistance to less-developed countries.

• True

• False

A tax that a government places on certain imported products.

• Embargo

• Trade Barrier

• Tariff

• Exchange Rate

Balance of trade is the difference between a country’s exports and imports. The difference between a country’s total payments to other countries and its total receipts from other countries is the balance of payments.

• True

• False

Three formal barriers to international trade are quotas, embargoes, and tariffs. A quota is a limit set on the quantity of a product that may be imported or exported within a given period. A embargo is a tax placed on certain imported products. An tariff stops the import or export of a product completely.

• True

• False

A limit on the quantity of a product that may be imported and exported within a given period.

• Tariff

• Quota

• Embargo

• Trade Barrier

A nation’s transportation, communications, and utility systems.

• Exchange Rate

• Joint Adventure

• Infrastructure

• Balance of Trade

Actions to discourage international trade include free-trade zones, free-trade agreements, and common markets.

• True

• False