ECON111 Final CH 19

quota

a limit on the quantity of a good that may be imported in a given time period

closed economy

a nation that doesn't engage in international trade

open economy

a nation that engages in international trade

embargo

a prohibition on exports or imports

tariff

a tax (duty) imposed on imported goods

over a given time period, if imports are greater than exports, the result is ___

a trade deficit

voluntary restrain agreement (VRA)

an agreement to reduce the volume of trade in a specific good; a voluntary quota

specialization in production and then trading with other countries does what to the output?

changes the mix of output for each country and increases total world output

when tariffs are imposed, the losers include ____

domestic consumers and foreign producers

what should happen to the equilibrium price and quantity in a market as a result of a tariff on imports?

equilibrium price should go up, and equilibrium quantity should go down

in terms of the world as a whole, why must imports must equal exports?

every good exports by one country becomes an import for another country

imports

goods and services purchased from international sources

exports

goods and services sold to foreign buyers

when a country imposes tariffs, it is likely to cause what?

higher prices for the import-competing goods

when a country has a lower opp cost in producing a good then another country, its consumption possibilities will do what?

increase with specialization and trade

when a country has a lower opportunity cost in producing a good than any other country, consumption possibilities will ____

increase with specialization in trade

if a country is completely self-reliant in producing goods for its own consumption needs, what will happen to its PP?

its consumption possibilities equal its production possibilities

the US exports mare than it imports in ___

only services

a principle objective of the World Trade Organization is to

reduce barriers to trade

increased trade restrictions ____

reduce total consumption possibilities

if exports are being excluded unfair from a market, the WTO may authorize what?

retaliatory tariffs

as trade restrictions are eliminated, increased imports ____

shift the allocation of resources away from import-competing industries

comparative advantage

the ability of a country to produce a specific good at a lower opportunity cost than its trading partners

absolute advantage

the ability of a country to produce a specific good with fewer resources (per unit out output) than other countries

consumption possibilites

the alternative combinations of goods and services that a country could consume in a given time

trade surplus

the amount by which the value of exports exceeds the value of imports in a given time period

trade deficit

the amount by which the value of imports excess the value of exports in a given time period

opportunity cost

the most desired goods or services that are forgone in order to obtain something else

equilibrium price

the prie at which the quantity of a good demanded in a given time period equals the quantity supplied

terms of trade

the rate at which goods are exchanged; the amount of good A given up for good B in trade

dumping

the sale of goods in export markets at prices below domestic prices