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Key Factors in International Trade Flashcards

Key Factors in International Trade Flashcards
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Tariffs

A tax placed on goods that are imported into a country.

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Customs Union

We see this kind of economic integration between countries that share a trade policy. These countries also remove barriers to trade.

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Free Trade Area

A type of economic integration that focuses on taking away trade barriers like quotas and tariffs between member nations.

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Common Market

This kind of economic integration occurs when restrictions on foreign investment, immigration and emigration are taken away.

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Theory of Economic Integration

This theory asserts that as countries with labor and capital disparities trade with one another, the disparity will equalize, resulting in fair trade.

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Absolute Advantage

Countries have this kind of advantage if they are able to produce a specific good for less money and with greater efficiency than anyone else.

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Trade Surplus

Countries with total exports that have a higher value than total imports have this. Saudi Arabia maintains a high level of this.

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Trade Deficit

The balance of funds a country has if their total imports have greater value than their total exports.

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Opportunity Cost

The money you would get if you completed a task, but that you do not receive because you instead chose to work on a different task.

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Theory of Comparative Advantage

This theory argues that countries would be best served by specializing in the products that they can create with the lowest opportunity cost.

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21 cards in set

Flashcard Content Overview

Access these flashcards when you're ready to review comparative and absolute advantage. You can go over trade deficits and surpluses, as well as the benefits of free trade. Market and command systems are also addressed by this set, along with forces that impact the global market. Finally, you can go over the differences between important economic growth models.

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Theory of Comparative Advantage

This theory argues that countries would be best served by specializing in the products that they can create with the lowest opportunity cost.

Opportunity Cost

The money you would get if you completed a task, but that you do not receive because you instead chose to work on a different task.

Trade Deficit

The balance of funds a country has if their total imports have greater value than their total exports.

Trade Surplus

Countries with total exports that have a higher value than total imports have this. Saudi Arabia maintains a high level of this.

Absolute Advantage

Countries have this kind of advantage if they are able to produce a specific good for less money and with greater efficiency than anyone else.

Theory of Economic Integration

This theory asserts that as countries with labor and capital disparities trade with one another, the disparity will equalize, resulting in fair trade.

Common Market

This kind of economic integration occurs when restrictions on foreign investment, immigration and emigration are taken away.

Free Trade Area

A type of economic integration that focuses on taking away trade barriers like quotas and tariffs between member nations.

Customs Union

We see this kind of economic integration between countries that share a trade policy. These countries also remove barriers to trade.

Tariffs

A tax placed on goods that are imported into a country.

Command System

The state is in control of the majority of resources in this kind of economic system. These systems have a lot of barriers to entry.

Market System

In this type of economic system, most resources are owned by private citizens.

Physical / Environmental Forces

Factors that are related to the ecosystem of a country. Countries that are particularly difficult to navigate may experience a large impact from these forces on trade.

Economic Forces

The forces that relate to resource allocation and distribution in a culture.

Legal Forces

These forces are related to the way a country's laws impact its ability to trade.

Open Trade

Trade that does not face restrictions from the government. This is also called free trade. This kind of market could result in poor conditions for workers and damage to the environment.

New Growth Theory

An economic growth theory that focuses on money invested into research, human capital and knowledge. It argues that countries investing in these things grow more economically.

Classical Theory of Economic Growth

This theory on economic growth argues that GDP is steady and that any fluctuations will eventually pass.

The Neo-Classical Growth Model (Solow-Swan Growth Model)

A theory about economic growth that asserts that capital, labor and technological advances all have an effect on a country's economic development.

Comparative Advantage

Countries have this when their opportunity cost for producing a good is lower than anyone else's. This can be increased by free trade.

North American Free Trade Agreement (NAFTA)

A trade agreement set up between the United States, Mexico and Canada. This resulted in new jobs, but it also caused wage stagnation.

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