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