Macroeconomics Chapter 37

Front 1

For what 3 reasons do nations trade?

Back 1

1) Differences in endowments of economic resources
2) Different technologies/combinations of resources
3) Differences in international quality

Front 2

What are examples of labor-intensive goods?

Back 2

Digital cameras, video game players, DVD players (large design and production needs)

Front 3

What are examples of land-intensive goods?

Back 3

Wheat, wool, meat (Need suitable environment for optimal preparation)

Front 4

What are examples of capital-intensive goods?

Back 4

Automobiles, chemicals, machinery (Fairly expensive ingredients)

Front 5

What does international trade enable nations to do?

Back 5

1) Specialization -Larger outputs of products and more efficient usage of world resources

Front 6

Comparitive Advantage allows Total World Output to be at its greatest when?

Back 6

Each good is produced by the nation that has the lowest domestic opportunity cost.

Front 7

Problem with specialization among nations?

Back 7

Opoprtunity costs rise as nations produce more of a particular good

Front 8

Domestic price?

Back 8

Price prevailing in a closed economy (aka no international trade)

Front 9

What are tariffs?

Back 9

Excise taxes on imported goods

Front 10

Revenue tariff?

Back 10

· Tariff designed to produce income for the Federal government
· Usually applied to product produced domestically

Front 11

Protective Tariff?

Back 11

· Tariff designed to shield domestic producers of G+S from foreign competition
· Do not stop importation of foreign goods but cause serious disadvantage

Front 12

Import Quota?

Back 12

Limit imposed by a nation on the quantity of a good that may be imported during some period of time

Front 13

Nontariff Barrier?

Back 13

ALL BARRIERS other than protective tariffs erected to impede internationnal trade including license requirements

Front 14

Voluntary Export Restriction?

Back 14

Trade Barrier by which Foreign Firms "voluntarily" Limit the Amount of their exports to a particular country.
· Avoids worse tariffs by country

Front 15

What are four direct effects for a raise in the price of imports b/c of a tariff?

Back 15

1) Decline in comnsumption (less people actually want the good now)
2) Increased domestic production
3) Decline in imports
4) Tariff revenue (Total revenue x Number of imports

Front 16

Protection raises the price of a product in what 3 ways?

Back 16

1) Price of Imported Product goes up
2) Higher Price of imports cause some consumers to shift purchases to higher-priced domestically produced goods
3) Prices of domestically produced goods rise because import competition has declined