DOMAIN 4 International Economics Review EXPLAIN ABSOLUTE ADVANTAGE

DOMAIN 4 International Economics Review

EXPLAIN ABSOLUTE ADVANTAGE

IT SIMPLY MEANS THAT THE COUNTRY CAN PRODUCE MORE OF A GOOD THAN ANOTHER COUNTRY

EXPLAIN COMPARATIVE ADVANTAGE

EXISTS WHEN ONE INDIVIDUAL, FIRM, OR COUNTRY HAS THE LOWEST OPPORTUNITY COST FOR PRODUCING THE GOOD OR SERVICE

WHY DOES MOST TRADE TAKE PLACE BETWEEN COUNTRIES?

MOST TRADE TAKES PLACE BECAUSE OF COMPARATIVE ADVANTAGE IN THE PRODUCTION OF A GOOD OR SERVICE.

EXPLAIN BALANCE OF TRADE

RECORDS THE VALUE OF ALL GOODS AND SERVICES EXPORTED FROM A COUNTRY MINUS THE VALUE OF ALL GOODS AND SERVICES IMPORTED FROM OUTSIDE THE COUNTRY

EXPLAIN TRADE SURPLUS

EXPORTS EXCEED IMPORTS

EXPLAIN TRADE DEFICIT

IMPORTS EXCEED EXPORTS

WHAT ARE THE FIVE BARRIERS TO TRADE

TARIFF, QUOTA, EMBARGO, STANDARDS, SUBSIDY

EXPLAIN A TARIFFS

A TAX ON AN IMPORTED GOOD.

EXPLAIN A QUOTA

LIMITS THE AMOUNT OF A GOOD THAT IS ALLOWED INTO THE COUNTRY.

EXPLAIN EMBARGO

A GOVERNMENT COMPLETELY PROHIBITS THE IMPORT OF THAT ITEM FROM ANOTHER COUNTRY

EXPLAIN SUBSIDY

THE GOVERNMENT MAKES PAYMENTS TO A LOCAL SUPPLIER TO REDUCE THE PRODUCTION COSTS OF THE SUPPLIER.

EXPLAIN STANDARDS

FOR EXAMPLE, THE USE OF LEAD IN PAINT IS PROHIBITED IN THE UNITED STATES.

EXPLAIN TRADING BLOCS

TRADING BLOCS ARE FORMED IN ORDER TO REDUCE BARRIERS TO TRADE BETWEEN COUNTRIES

WHAT ARE THREE EXAMPLES OF TRADING BLOCS?

NAFTA, ASEAN, EUROPEAN UNION

WHAT COUNTRIES ARE PART OF NAFTA?

UNITED STATES, MEXICO, AND CANADA

WHAT COUNTRIES ARE PART OF ASEAN?

LAOS, VIETNAM, PHILIPPINES, MYANMAR, SINGAPORE, THAILAND, CAMBODIA, MALAYSIA, INDONESIA, BRUNEI

WHAT COUNTRIES ARE PART OF THE EUROPEAN UNION?

FINLAND, GREECE, FRANCE, SPAIN, PORTUGAL, IRELAND, GERMANY

WHICH OF THE FOLLOWING ARE COSTS OF FREE TRADE?

FREE TRADE HURTS DOMESTIC WORKERS. COMPANIES MAY MOVE OVERSEES TO UTILIZE CHEAPER LABOR AND INCREASE PROFITS, OR INFANT INDUSTRIES (NEW INDUSTRIES IN THE EARLY STAGE OF DEVELOPMENT) ARE PROTECTED BY TRADE BARRIERS. THIS ALLOWS INFANT INDUSTRIES TO GROW

WHICH OF THE FOLLOWING ARE BENEFITS OF FREE TRADE?

INCREASES COMPETITION, WHICH REDUCES COSTS FOR BUYERS AND IMPROVES QUALITY OF GOODS, AND ALLOWS THE COUNTRY TO EXERCISE COMPARATIVE ADVANTAGE THROUGH SPECIALIZATION

WHY DOES CURRENCY EXCHANGE OCCUR?

FOR PEOPLE TO DO BUSINESS WITH PEOPLE IN OTHER COUNTRIES, THEY MUST ACQUIRE THE CURRENCY ACCEPTED BY PEOPLE IN THOSE COUNTRIES.

DESCRIBE CURRENCY APPRECIATION?

AN INCREASE IN THE VALUE OF A CURRENCY RELATIVE TO ANOTHER

DESCRIBE CURRENCY DEPRECIATION

DECREASE IN VALUE OF ONE CURRENCY RELATIVE TO THE OTHER