Exports
goods and services produced and sold to other nations.
Imports
goods or services that one country buys from another.
Absolute Advantage
the ability to produce a good using fewer inputs than another producer
Opportunity Cost
what is given up when you make one choice over another
Comparative Advantage
the ability to produce a good at a lower opportunity cost than another producer
Name at least 3 things the United States is good at manufacturing or producing.
trackers, iron and coal
Name 1 thing that Colombia is good at
Coffee!
Tariff
a government tax on imports or exports
Quota
a limitation on imports
Protective Tariff
A tax on an imported product instituted to protect local industries
Revenue Tariff
low tax on imports to provide income for the government
Dumping
selling goods in another country below market prices
Protectionists
favor trade barriers that protect domestic industries.
Free Traders
individual who favors fewer or even no trade restrictions
Infant Industries Argument
argument that new and emerging industries should be protected from foreign competition until they are strong enough to compete
Balance of Payments
the difference between the amount of money that comes into a country and the amount that goes out of it
Most Favored Nation Clause
a provision that allowed a country to receive the same teriff reduction that the United States negotiates with a 3rd country
WTO (World Trade Organization)
this international body organizes negotiations about trade rules and provides help to countries trying to develop their economies
NAFTA (North American Free Trade Agreement)
Agreement to liberate free trade by reducing tariffs among Canada, US and
How do protective tariffs and quotas affect prices
Tariffs and quotas drive prices up
National Security [protectionist]
without trade barriers a country can become too dependent on other countries.
Infant Industries Argument [free trade]
argument that new and emerging industries should be protected from foreign competition until they are strong enough to compete
Domestic Jobs [protectionist]
terrifs and quotas protect domestic jobs from cheep foreign labor.
Flow of Money [free trade]
limiting imports will keep money from leaving America
Balance of Payments [protectionist]
difference between money a country pays out to and receives from other nations.
Foreign Exchange
the system by which one currency is exchanged for another
Foreign Exchange rate
the price of one unit of a country's currency in terms of another country's currency
Flexible/Floating Exchange Rate
the forces of supply and demand establish the value of one country's
Trade Deficit
when a country imports more than it exports
Trade Surplus
when a country exports more than it imports
Trade Weighted Value of the Dollar
an index showing the strength of the dollar against a group of foreign currencies.