Econ

Front 1

Derived Demand

Back 1

The demand for an input derived from consumers' demand for the good or service produced with that input

Front 2

Exchange Rate

Back 2

The price of one unit of a country's currency in terms of another country's currency

Front 3

Balance of Trade

Back 3

The net surplus or deficit resulting from the level of exportation and importation of merchandise

Front 4

Balance of Payments

Back 4

The record of international transactions in which a nation has engaged over a year

Front 5

Capital Account

Back 5

Records the foreign purchases or assets in the domestic economy (a monetary inflow) and domestic purchases of assets abroad (a monetary outflow)

Front 6

Comparative Advantage

Back 6

Occurs when a person or a country can produce a good or service at a lower opportunity cost than others

Front 7

Consumer Surplus

Back 7

The difference between the price a consumer is willing and able to pay for an additional unit of a good and the price the consumer actually pays; for the whole market, it is the sum of all the individual consumer surpluses

Front 8

Current Account

Back 8

A record of a country's imports and exports of goods and services, net investment income, and net transfers

Front 9

Deflation

Back 9

A decrease in the overall price level, which increases the purchasing power of money

Front 10

Derived Demand

Back 10

The demand for an input derived from the consumers' demand for the good or service produced with that input

Front 11

Dirty Float System

Back 11

A description of the exchange rate system that means that fluctuations in currency values are partly determined by government intervention

Front 12

Efficiency

Back 12

When an economy gets the most out of its scarce resources

Front 13

Exchange Rate

Back 13

The price of one unit of a country's currency in terms of another country's currency

Front 14

Import Quota

Back 14

A legal limit on the imported quantity of a good that is produced abroad and can be sold in domestic markets

Front 15

Marginal Cost

Back 15

The change in total costs resulting from a one unit change in output

Front 16

Open Economy

Back 16

A type of model that includes international trade effects

Front 17

Opportunity Cost

Back 17

The value of the best forgone alternative that was not chosen

Front 18

Predatory Pricing

Back 18

Setting a price deliberately low in order to derive out competitors

Front 19

Producer Surplus

Back 19

The difference between what a producer is paid for a good and the cost of producing that unit of the good; for the market, it is the sum of all the individual sellers' producer surpluses- the area above the market supply curve and below the market price

Front 20

Production Possibilities Curve

Back 20

The potential total output combinations of any two goods for an economy

Front 21

Rent Seeking

Back 21

Efforts by producers to gain profits from government protections such as tariffs and import quotas

Front 22

Specialization

Back 22

Concentrating in the production of one, or a few, goods

Front 23

Tariff

Back 23

A tax on imports

Front 24

Total Cost

Back 24

The sum of the firm's total fixed costs and total variable costs

Front 25

Variable Cost

Back 25

Costs that vary with the level of output

Front 26

Imports > Exports

Back 26

Balance of payments deficit

Front 27

Exports > Imports

Back 27

Balance of payments surplus

Front 28

Determinants of Demand for Foreign Currency ("derived" demand)

Back 28

1. Increased taste for foreign goods

2. Relative income increases or reduces in US tariffs

3. Changes in real interest rates

4. Changes in real inflation rates

5. Expectations and speculation

Front 29

Xenophobia

Back 29

Undue fear of foreigners

Front 30

Jengoism

Back 30

Vehement support of a country especially with a belligerent foreign policy

Front 31

Absolute Advantage

Back 31

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service

Front 32

Ad Valorem Tax

Back 32

A tax based on the assessed value of real estate or personal property; can be property tax or duty on imported items

Front 33

Autarky

Back 33

A nation or entity that is self sufficient

Front 34

Black Market

Back 34

Economic activity that takes place outside government-sanctioned channels

Front 35

Bretton Woods

Back 35

A landmark system for monetary and exchange rate management established in 1944; developed at the UN monetary and financial conference held in Bretton Woods, New Hampshire; major outcomes included the formation of the IMF and the International Bank for Reconstruction, and the proposed introduction of an adjustable foreign exchange rate system

Front 36

Closed Economy

Back 36

An economy in which no activity is conducted with outside economies; self sufficient- no imports brought in and no exports taken out

Front 37

Demand

Back 37

An economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service

Front 38

Dumping

Back 38

In international trade, the export by a country or company of a product at a price that is lower in the foreign market than the price charged in the domestic market; also offloading a stock with little regard for its price

Front 39

Embargo

Back 39

A government order that restricts commerce or exchange with a specified country

Front 40

Which of the following would be recorded as a credit in the US balance of payments accounts?

Back 40

The purchase of a US Treasury bond by a French investment company

Front 41

What is the difference between the balance of merchandise trade and the balance of payments?

Back 41

Only the value of goods imported and exported is included in the balance of merchandise trade, while the balance of payments includes the value of all payments to and from foreigners

Front 42

If consumers in Europe and Asia develop strong preferences for US goods, the US current account will:

Back 42

Move toward surplus, because purchases of US goods are recorded as credits on our current account

Front 43

Which of the following will enter as a credit in the US balance of payments capital account?

Back 43

The sale of an American baseball team to a Japanese industrialist

Front 44

If the value of a nation's merchandise exports exceeds merchandise imports, then the nation is running a:

Back 44

Merchandise trade surplus

Front 45

If the price in dollars of Mexican pesos changes from $0.10 per peso to $0.14 per peso, the peso has:

Back 45

Appreciated

Front 46

If the exchange rate between the dollar and the euro changes from $1 = 1 euro to $2 = 1 euro then:

Back 46

European goods will become more expensive for Americans, and imports of European goods to the US will fall

Front 47

If the dollar appreciates relative to other currencies, which of the following is true?

Back 47

It takes more of the other currency to buy a dollar

Front 48

Suppose that the dollar rises from 100 to 125 yen. As a result,

Back 48

US consumers will be more likely to buy Japanese-made automobiles

Front 49

A depreciation in the US dollar would:

Back 49

Encourage foreigners to buy more US goods

Front 50

Which of the following is most likely to favor the appreciation of the American dollar?

Back 50

An American professor on extended vacation in Paris

Front 51

If the dollar appreciates relative to other currencies, which of the following is true?

Back 51

It takes more of the other currency to buy a dollar

Front 52

If the US experiences a sharp increase in exports, what will happen to demand for the US dollar?

Back 52

It will decrease

Front 53

If fewer British tourists visit the Grand Canyon, what is the effect in the exchange market?

Back 53

It will decrease the demand for British pounds

Front 54

Suppose that the dollar rises from 100 to 125 yen. As a result,

Back 54

US consumers will be more likely to buy Japanese-made automobiles

Front 55

Other things being constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?

Back 55

Higher domestic interest rates

Front 56

A depreciation in the US dollar would:

Back 56

Encourage foreigners to buy more US goods

Front 57

In foreign exchange markets, the effect of an increase in the demand for dollars on the value of the dollar is the same as that of:

Back 57

An increase in the supply of foreign currencies

Front 58

If a dollar is cheaper in terms of a foreign currency than the equilibrium exchange rate, a ______ exits at the current exchange rate that will put ______ pressure on the exchange value of a dollar

Back 58

Shortage of dollars; upward

Front 59

Which of the following statements is true?

Back 59

Changing exchange rates can change both a country's exports and its imports

Front 60

Which of the following statements is true?

Back 60

All of the above: world trade has expanded under flexible exchange rates; an increased exchange value of the US dollar would tend to reduce American net exports; under fixed exchange rates, rates change less frequently but by larger amounts than under flexible exchange rates; currency shortages can arise under fixed exchange rates, but not under flexible exchange rates

Front 61

Which of the following statements is true?

Back 61

Flexible exchange rates can contribute to inflationary pressures

Front 62

Which of the following countries are important export markets for the US?

Back 62

Canada, Mexico, China and Japan

Front 63

Which of the following statements is true?

Back 63

The importance of international trade varies greatly from place to place; the volume of international trade has increased tremendously; the composition of America's international trading partners has changed over time; and international capital flows have increased over time

Front 64

Which of the following countries are important import markets for the US?

Back 64

China, Canada, Mexico, and Japan

Front 65

Comparative Advantage

Back 65

Means that nations or areas that export goods will necessarily be able to produce those goods or services more cheaply than other nations in an absolute sense

Front 66

If a nation does not have an absolute advantage in producing anything, it:

Back 66

Will have a comparative advantage in the activity in which its disadvantage is the least

Front 67

In Samoa the opportunity cost of producing one coconut is four pineapples, while in Guam the opportunity cost of producing one coconut is five pineapples. In this situation:

Back 67

If trade occurs, both countries will be able to consume beyond the frontiers of their original production possibilities

Front 68

Compared to the no-trade situation, when a country imports a good:

Back 68

Domestic consumers gain, domestic producers lose, and the gains outweigh losses

Front 69

Compared to the no-trade situation, when a country exports a good:

Back 69

Domestic consumers gain and domestic producers lose by an equal amount

Front 70

The infant industry argument for protectionism claims that an industry must be protected in the early stages of its development so that:

Back 70

Domestic producers can attain the economies of scale to allow them to compete in world markets

Front 71

After the US introduces a tariff on the market for steel, the price of steel in the US will:

Back 71

Increase