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Definition
| productinos requiring relatively large amounts of labor to produce |
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| products requiring relatively large amounts of land to produce |
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| products that require relatively large amounts of capital to produce |
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Term
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Definition
| an equivalency showing the number of units of 2 products that can be produced with the same resources; the cost 1 corn = 3 olives shows that the resources required to produce 3 olives must be shifted to corn production to produce 1 unit of corn |
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Term
| principle of comparative advantage |
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Definition
| the proposition that an individual, region, or nation will benefit if it specializes in producing goods for which its own opportunity costs are lower than the opportunity costs of a trading partner, and then exchanging some of the products in which it specializes for other desired products produced by others |
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Term
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Definition
| the rate at which units of one product can be exchange for units of another product; the price of a good or service; the amount of one good or service that must be given up to obtain 1 unit of another good or service |
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Term
| trading possibilities line |
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Definition
| a line that shows the different combinations of two products that an economy is able to obtain (consume) when it specializes in the production of one product and trades (exports) it to obtain the other product |
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| the extra output that trading partners obtain through specialization of production and exchange of goods and services |
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| the international market price of a good or service, determined by world demand and supply |
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| the price of a good or service within a country, determined by domestic demand and supply |
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| an upward-sloping curve that shows the amount of a product that domestic firms will export at each world price that is above the domestic price |
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Definition
| a downsloping curve showing the amount of a product that an economy will import at each world price below the domestic price |
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Term
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Definition
| the price of an internationally traded product that equates the quantity of the product demanded by importers with the quanitty of the product supplied by exporters; the price determined at the intersection of the export supply and import demand curves |
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Term
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Definition
| a tax imposed by a nation on an imported good |
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Definition
| a tariff designed to produce income for the Federal government |
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Term
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Definition
| a tariff designed to shield domestic producers of a good or service from the competition of foreign producers |
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Term
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Definition
| a limit imposed by a nation on the quantity (or total value) of a good that may be imported during some period of time |
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Definition
| all barriers other than protective tariffs that nations erect to impede interational trade, including import quotas, licesning requirements, unreasonable product-quality standards, unnecessary bureaucratic detail in customs procedures, and so on |
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Term
| voluntary export restriction (VER) |
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Definition
| voluntary limitations by countries or firms of their exports to a particular foreign nation to avoid enactment of formal trade barriers by that nation |
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Term
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Definition
| the use of trade barriers to reduce teh risk inherent in product development by doemstic firms, particularly that involving advanced technology |
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Definition
| the sale of a product in a foreign country at prices either below cost or below the prices commonly charged at home |
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Definition
| legislation passed in 1930 that established very high tariffs. Its objective was to reduce imports and stimulate the domestic economy, but it resulted only in retaliatory tariffs by other nations |
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Term
| World Trade Organization (WTO) |
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Definition
| an organization of 153 nations that oversees the provisions of current world trade agreement, resolves trade disputes stemming from it, and holds forums for further rounds of trade negotiations |
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Term
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Definition
| the latest, uncompleted sequence of trade negotiations by members of the WTO, named after Doha, Quatar, where the set of negotiations began |
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Term
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Definition
| a summary of all the transactions that took place between the individuals, firms, and government units of one nation and those of all other nations during a year |
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Term
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Definition
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Term
| balance on goods and services |
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Definition
| the exports of goods and services of a nation less its imports of goods and services in a year |
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Term
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Definition
| the amount by which a nation's imports of goods (or goods and services) exceed its exports of goods (or goods and services) |
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Term
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Definition
| the amount by which a nation's exports of goods and services exceed its imports of goods and services |
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Term
| balance on current account |
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Definition
| the exports of goods and services of a nation less its imports of goods and services plus its net investment income and net transfers in a year |
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Term
| capital and financial account |
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Definition
| the section of a nation's international balance of payments that records 1) debt forgiveness by and to foreigners and 2) foreign purchases of assets in the US and US purchases of assets abroad |
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Term
| balance on capital and financial account |
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Definition
| the sum of the capital account balance and the financial account balance |
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Term
| balance-of-payments deficits |
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Definition
| the amount by which inpayments from a nation's stock of official reserves are required to balance that nation's capital and financial account with its current account (in its balance of payments) |
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Term
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Definition
| foreign currencies owned by the central bank of a nation |
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Term
| flexible- or floating-exchange-rate system |
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Definition
| a rate of excahnge determined by the international demand for and supply of a nation's money; a rate free to rise or fall (to float) |
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Term
| fixed-exchange-rate system |
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Definition
| a rate of exchange that is set in some way and therefore prevented from rising or falling with changes in currency supply and demand |
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Term
| purchasing-power-parity theory |
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Definition
| the idea that exchange rates between nations equate the purchasing power of various currencies. Excahgne rates between any two nations adjust to reflect the price-level differences between the countries |
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Term
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Definition
| a government's buying and selling of its own currency or foreign currencies to alter international exchange rates |
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Term
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Definition
| the control a government may exercise over the quantity of foreign currency demanded by its citizens and firms and over the rates of exchange in order to limit its outpayments to its inpayments (to eliminate a payments deficit) |
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Term
| managed floating exchange rates |
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Definition
| an exchange rate that is allowed to cahnge (float) as a result of cahnges in currency supply and demand but at times is altered (managed) by governments via their buying and seeling of particular currencies |
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Term
| balance-of-payments surplus |
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Definition
| the amount by which outpayments to a nation's stock of official reserves are required to balance that nation's capital and financial account with its current account (in its international balance of payments) |
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