International Trade and Money Questions and Answers (Level A+) 2023

Specialization - -when countries produce the things they do best in exchange for the things that other people do best -Exports - -Goods and services that a country produces and sells to other nations -Imports - -Good and services that a country buys from another country -Absolute Advantage - -When a country produces more of a product than another country -Comparative Advantage - -The ability to produce a product relatively more efficiently or at a lower opportunity cost -Gains of Trade - -The concept of comparative advantage is based on the assumption that everyone will be better off specializing in the products they produce best. Specialization and trade increases the total world output -Tariff - -A tax placed on imports to increase their price in the domestic market -Quota - -Limit on the quantities of a product that. An bd imported -Protective Tariff - -Tariff that is high enough to protect less efficient domestic industries -Revenue Tariff - -Tariff high enough to generate revenue for the government without actually prohibiting imports -Other Barriers of Trade - -Health inspections and licenses -Protectionists - -People who favor trade barriers to protect domestic industries -Free traders - -Prefer fewer or even no trade restrictions