Unit 2 Econ

Customs

A government agency that examines goods entering a country and enforces trade restrictions

Embargoes

An official ban on trade with a particular country

Why are certain goods or services produced in a particular region as a result of absolute and comparative advantage?

Because absolute advantage refers to differences in productivity of nations, while comparative advantage refers to differences in opportunity costs. It all depends on how developed the country is and how specialized they are in trade.

What is the role of scarcity, choice, and opportunity cost on the decisions of individuals?

Because of scarcity/limited resources, we have to make a choice in what goods or services would be the best option to produce. We have to select the best way to use resources. When we choose something, the next best alternative that is left out is the opportunity cost.

Costs and benefits of globalization?

Benefits- main cause for reduction in extreme poverty, increases trade and investment by economic development. Costs- poor countries struggle to compete with developing countries, not good for the environment, most trade agreements only benefit rich countries, fossil fuels, carbon emissions, exploits natural resources

How does division of labor increase productivity?

By dividing up the individual tasks that make up a job so that people become experts at the specific tasks; an economy can produce more with the same inputs of land, labor, and capital when each person specializes in a specific task.

How does comparative advantage create gains from trade?

By focusing on one thing to specialize in and trading for other goods. Comparative advantage makes stuff cheaper to make so they make more money to export it for trade.

Absolute advantage

Doing a better job at producing a good or service while using fewer resources

Human development

Enlarging people's freedoms, opportunities, and improving their wellbeing

Exports

Good and services that countries ship out

Imports

Goods and services that countries bring in

Globalization

Growing and expanding to all parts on the world

Voluntary export restraint

Limits on the quantity of a good that can be exported from a country

United Nations

Makes policy recommendations but has no formal power.

International monetary fund

Manages debt disputes, international funding, and attempts to settle foreign debts by loaning money to countries

World trade organization

Manages global trade relationships by settling trade disputes and reducing trade restrictions around the world.

Quotas

Maximum amount of a resource that is allowed

Globalization Index

Measures a country's outlook on trade, investment, personal contacts, technological connectivity, and political links

Comparative advantage

Producing a good or service at a lower opportunity cost than someone else

How does specialization lead to a strong economy and higher standard of living?

Specialization leads to success because it's the development of skills or knowledge in a particular aspect of a job. This leads to a person becoming an expert in an activity. All in all, specialization is the root of success.

Tariffs

Taxes on imports

Voluntary exchange

The act of willingly trading one item or service for another

Economic interdependence

The characteristic of a society in which people rely on others for most of the goods and service that they want

Specialization

The development of skills or knowledge in one aspect of a job. People become experts at the particular activity

Balance of trade

The difference between the value of a countries exports and the value of its imports

Economic development

The process by which a country makes economic progress and raises its standard of living

How and why do countries conduct trade in the global economy?

To profit from and be involved in the global economy, which is the system of markets and trade that links all countries together.