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7 Cards in this Set
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Tariff |
A tariff is a tax imposed by a government on goods and services imported from other countries that serves to increase the price and make imports less desirable versus domestic goods and service. |
Tax on importsEcono |
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Economic growth |
The economic growth is a long-term expansion of the productive potential of the economy, measured through GDP. |
Expansion impact |
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Impact of increase in a tariff |
Shift upward of the world supply curve Gain government revenue Less imports-> loss of foreign producers Price increases -> consumers loss Foreign producers will suffer Producer surplus increase Allocative and productive inefficiency |
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Increasing returns to scale |
An increase in all inputs leads to a |
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Absolute advantage |
A country has absolute advantage in trade when it produces more of a good than another country does, given the same volume of inputs.
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Comparative advantage |
The theory of comparative advantage states that two countries will gain from trade if they choose to specialise in the production of the good with the lowest opportunity cost |
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Deflation |
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