International Trade Quiz & Flashcards

Comparative advantage allows countries to specialize in producing goods they can produce at a lower opportunity cost, increasing efficiency.

The World Trade Organization (WTO) is responsible for overseeing and facilitating international trade agreements and disputes.

Tariffs are taxes on imports that typically increase the price of imported goods, making them less competitive.

A trade deficit can lead to increased foreign debt as the country may need to borrow to finance its imports.

Import quotas set a maximum limit on the quantity of specific goods that can be imported, protecting domestic industries.

Currency depreciation makes a country's exports cheaper and more competitive in the international market.

Trade liberalization aims to reduce or eliminate barriers to trade to encourage free flow of goods and services.

Dumping refers to selling goods in a foreign market at prices lower than those in the domestic market, often considered unfair competition.

Globalization increases international trade by connecting markets and reducing barriers to the flow of goods and services.

Protectionism is often criticized for increasing consumer prices by limiting competition and reducing the variety of goods available.

Exchange rates determine how much one currency is worth in another currency, affecting the price and competitiveness of goods in international trade.

Trade blocs reduce barriers to trade among member countries, promoting economic cooperation and integration.

Multinational corporations facilitate global trade by establishing operations in multiple countries and integrating global supply chains.

Trade liberalization can lead to job losses in sectors that were previously protected from foreign competition.

Trade promotes cultural exchange by introducing new products, ideas, and customs across borders.

Trade embargoes restrict imports and exports, often causing shortages and price increases in the targeted country.

The Heckscher-Ohlin model suggests that countries will export goods that use their abundant and cheap factors of production.

Subsidies lower production costs, making domestic goods more competitive in international markets.

Trade can increase resource use and pollution, but it also spreads environmental technologies and standards.

MFN status ensures that a country receives equal trade advantages as the 'most favored' trading partner, promoting fairness in international trade.

Regional trade agreements can create trade diversion by redirecting trade flows from non-member countries to member countries.

Technology plays a crucial role in facilitating international trade by improving logistics, communication, and production processes.

High transportation costs can limit trade by making goods less competitive in foreign markets due to increased overall costs.

Trade diversification involves expanding the variety of goods exported and imported, reducing economic risks by not relying on a single market or product.

Trade policy can either protect domestic industries from foreign competition or expose them, impacting their growth and profitability.

Trade can widen income disparities by benefiting skilled workers and capital owners more than unskilled workers.

Free trade generally decreases consumer prices by increasing competition and providing access to a greater variety of goods and services.

Economic integration reduces trade barriers between countries, facilitating the free flow of goods, services, and capital.

The trade-to-GDP ratio indicates the extent to which a country's economy is dependent on international trade.

Trade restrictions can disrupt global supply chains, leading to delays and increased costs for businesses and consumers.

Developing countries benefit from international trade by gaining access to larger markets, advanced technologies, and increased investment opportunities.

Currency appreciation makes imports cheaper and more affordable for consumers in the appreciating currency's country.

Trade agreements strengthen alliances by promoting economic cooperation and reducing barriers to trade between countries.

The balance of payments records all economic transactions between residents of a country and the rest of the world.

Political stability, policy decisions, and diplomatic relations can significantly impact trade agreements and flows.

Trade fosters competition and knowledge exchange, encouraging innovation and technological advancement across borders.

Protectionist policies aim to shield domestic industries from foreign competition by increasing trade barriers like tariffs and quotas.

Globalization expands consumer choice by providing access to a greater variety of goods and services from around the world.

Currency depreciation can improve a country's trade balance by making exports cheaper and more competitive internationally.

International trade promotes economic growth by expanding markets, increasing efficiencies, and fostering innovation.

Import licenses control the quantity or value of goods that can be imported, often used for regulatory or protectionist purposes.

A trade surplus occurs when a country's exports are greater than its imports, indicating a positive trade balance.

A trade embargo is a government order that restricts or bans trade with a specific country, often for political reasons.

Trade can create jobs in export-oriented industries, although it may also lead to job losses in sectors competing with imports.

Economic integration aims to reduce trade barriers and coordinate monetary and fiscal policies among member countries.

Quotas limit the quantity of a good that can be imported, protecting domestic industries but reducing market efficiency.

Trade can reduce poverty by lowering prices, creating jobs, and increasing economic opportunities, although it may also increase income inequality.