Economics Chapter 12
List the six causes of a trade deficits
1. Domestic inability to produce some goods. 2. Better quality of some foreign goods. 3. Cheaper foreign materials. 4. Lower foreign wages. 5. Lower foreign capital cost. 6. Foreign Subsidies.
Subsidy
A government's payment to a producer to help manufacturing costs
What is a quota
A limit on quantity of exports foreign nations can export to the USA
Give an example of each of the following: an intermediate good, a final good, a durable good, and a non durable good
A tire an auto producer buys to make a car is an intermediate good. A car is a final good and a durable good. Food is a non durable good.
What is a trade surplus
Dollar amount of exports is greater that the dollar amount of imports
What is a negative trade balance
Dollar amount of imports is greater that the dollar amount of exports
The GDP is the total dollar value of all __________ goods and services produced in one year
Final
Final goods
Goods that are sold to ultimate users
Durable consumer goods
Goods that have a life expectancy of more than one year
What spending accounts for the greatest total of purchases
Household Consumption
Your friend purchased an Italian sports car for his personal use. Under which GDP category would economists list this purchase
Household Consumption
Give an example of an unrecorded good
If a neighbor pays you to mow the lawn
Net Exports
The difference between the dollar amount a nation takes from he sale of exports and the dollar amount it pays for imports
Nominal GDP
The gross domestic product reported in current or nominal dollar values
Why do protectionists support tarrifs
To limit desirability of imports by making a domestic product price competitive
What do we call the difference between the dollar amounts a country receives for its exports and what it pays for imports
Trade deficit
How do economists reduce the effect of inflation on GDP statistics
Using the GDP deflator
What is a consumer durable good
Vehicles,furniture
Real GDP is GDP adjusted to take into account _________
The Nation's Taxpayers
Who do free traders believe is the most important in the economy
The believe the consumer is most important
Explain the difference between an economic good and an economic bad
An economic good is a productive transactions while an economic bad is a undesirable good, product, and services
Business investment
Another name for gross private domestic investment
Nondurable consumer goods
Are items that consumers expect to wear out or use up within one year
Identify the abbreviation in the GDP formula GDP= C+I+G+NX
C= Household Consumption, I= Buisness Investment, G=Govermental spending NX= Net Exports
A subsidy can make a foreign product than the same product produced domestically. Who ultimately pays the subsidy
Citizens
Intermediate goods
Items that are purchased either to be resold immediately or to be incorporated into other goods
When did the USA begin to experience a negative balance of trade
Mid 1970s
What term describes the measure of a nations wealth per person, and how do economists determine this measure
Per capital real GDP; GDP/GDP Deflator times 100
Who believes that restrictions on imported goods will preserve domestic jobs
Protectionist