Econ Ch 6

Front 1

Comparative advantage

Back 1

When a nation can produce a product at a lower domestic opportunity cost than can a potential trading partner

Front 2

Terms of trade

Back 2

The rate at which units of one product can be exchanged for units of another product

Front 3

Foreign exchange market

Back 3

A market in which various national currencies are exchanged for one another

Front 4

Exchange rates

Back 4

Equilibrium prices in the foreign exchange market

Front 5

Depreciation

Back 5

International value of the dollar has declined

Front 6

Appreciation

Back 6

International value of the dollar has increased

Front 7

Protective tariffs

Back 7

Excise taxes or duties placed on imported goods; designed to shield domestic producers from foreign competition.

Front 8

Import quotas

Back 8

Limits on the quantities or total value of specific items that may be imported.

Front 9

Smoot-Harley Tariff Act

Back 9

Established very high tariffs. Its objective was to reduce imports and stimulate domestic economy, but it resulted only in retaliatory tariffs by other nations

Front 10

Most-favored-nation clauses

Back 10

An agreement by the U.S. to allow some other nation's exports into the U.S. at the lowest tariff level levied by the U.S., then or at any later time

Front 11

General Agreement on Tariffs and Trade (GATT)

Back 11

Provided a forum for the negotiations of reduced trade barriers. Based on three principals: 1) equal, nondiscriminatory trade treatment for all member nations 2) the reduction of tariffs by multilateral negotiation 3) the elimination of import quotas

Front 12

World Trade Organization (WTO)

Back 12

Oversees trade agreememts reached by the member nations and rules on a trade disputes among them. Also provides forums for further rounds of trade negotiations

Front 13

European Union (EU)

Back 13

Association of 25 European nations including 10 nations that has eliminated tariffs and quotas among them, established common tariffs for imported goods from outside the member nations, eliminated barriers to the free movement of capital, and created other common economic policies

Front 14

Trade bloc

Back 14

A group of countries having a common identity, economic interests, and trade rules

Front 15

Euro

Back 15

Common currency unit used by 12 Europeam nations in the Euro zone

Front 16

North American Free Trade Agreement (NAFTA)

Back 16

Free-trade zone that has about the same combined output as the EU but encompasses a much larger geographic area. Has greatly reduced tariffs and other trade barries.