International Trade and Money summary Questions and Answers 2023

international trade - -buying and selling goods across borders -absolute advantage - -occurs when a country can produce a good or service utilizing less resources than another country -comparative advantage - -occurs when a country can produce a good or service at a lower opportunity cost than another country -balance of trade - -rate of trade with other countries, favorable or unfavorable -balance of payments - -the value of money coming into the country from trade minus the value going out, exports minus imports -current account - -the part of balance of payments that includes payments in and out of a country for goods and services; does not create liabilities -capital account - -the part of the balance of payments that includes foreign investments and assets; creates liabilities -trade barriers - -government policies that restrict trade -protectionism - -government policies that help domestic industries face foreign competition -free trade - -international trade that is unrestricted by trade barriers -imports - -goods and services a nation buys from other countries; outgoing payments -exports - -goods and services a nation sells to other countries; incoming payments -trade surplus - -happens when the value of exports exceeds imports -trade deficit - -happens when the value of imports exceeds exports -tariffs - -taxes on goods coming into a country from another country