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Monetary & Global 1

What is international trade? The movement of goods and services across borders
When a firm in an industrial country owns a plant in a developing country it is called: Vertical FDI
List the four cases of quota rents in a small country: Auction quota, licensing, rent-seeking, voluntary export restraint
What is the difference of exports and imports between two countries? Bilateral Trade Balance
What is a Free Trade area in which the countries also adopt identical tariffs between themselves and the rest of the world? Customs Union
What principle of GATT and WTO does a discriminatory country violate? The Most Favored Nation Principle
The WTO was established during what round of GATT? The Uruguay Round
What is a trade agreement between three or more countries? Multilateral Trade Agreement
What is a large country in international economics? A country able to influence the world price of a good
What country was the number 1 exporter of goods in 2012? China - $2 trillion in goods
On what date was the Smoot-Hawley Act signed into law? June 1930
A restriction on the amount of goods that can be imported into a country Import Quota
What type of tariff maximizes the welfare for large country importer? Optimal Tariff
What is the optimal tariff for a small country? 0
What can occur when a large country imposes an import tariff, but can never happen when a small country imposes an import tariff? Net gain in welfare because the price changed by the exporter has fallen; terms-of-trade gain for the importer
What was invented in 1956 that allowed goods to be moved by ships, rail, and trucks more cheaply than before? Shipping Containers
What route is shorter than the Suez Canal by 4,000 miles? Northern Sea Route
A product sold from one country to another Export
A product bought by one country from another Import
Countries that export more than they import, such as China in recent years Trade surplus
Countries that import more than they export, such as the United States Trade Deficit
Foods, feeds, beverages, and industrial supplies were ___% of imports in 1925, but represented ___% in 2010. 90; 40
Capital plus consumer goods plus automobiles have increased from ___% of exports in 1925 to ___% in 2010. 20;60
The largest amount of trade is the flow of goods within Europe, _____ trillion or ____% of world trade. 3.9 trillion; 23%
Why is trade between European countries high? Import tariffs are low
Give an example of a customs union European Union
Trade within the Americas is about ___ of trade within Europe, and about ___% of world trade. 1/3; 8
The vast majority of trade in the America is within the _____ _____ ___ ____ ____, consisting of Canada, the United States, and Mexico. North American Free Trade Agreement (NAFTA)
What country performs a wide range of services such as accounting, customer service, computer programming, etc. for the United States? India
The value of all final goods produced in a year Gross Domestic Product (GDP)
All factors that influence the amount of goods and services shipped across international borders Trade Barriers
The period from 1890-WWI is referred to as The Golden Age of International Trade
During the "golden age" there was dramatic improvements in _____ which allowed for a great increase in the amount of international trade. Transportation
What act raised tariffs as high as 60%, and were applied by the US to protect farmers and other industries? Smoot-Hawley Act
The ____ reduced tariffs and caused an improvement in transportation costs. General Agreement on Tariffs and Trade (GATT)
The European Union consisted of ___ countries in western Europe prior to 2004. 15
The majority of world flows of ____ ____ ___ occur between industrial countries. Foreign Direct Investment
When a firm from one industrial country owns a company in another industrial country. Horizontal FDI
When a developing country invests into a developed country. Reverse vertical FDI
The largest stocks of FDI are within _____. Europe
Was established to reduce trade barriers between nations GATT
Tariffs may be imposed in response to _____ trade practices such as dumping. Unfair
GATT/WTO is what type of trade agreement? Multilateral
How many countries are members of the WTO? 120
When was the first time agriculture was included in trade negotiations? GATT
Why was the WTO created? To settle disputes and review policy
The ___ ___ (or escape clause) says if a country feels that it is being treated unfairly by another country, they can raise tariffs. Safeguard Provision
A group of countries voluntarily agree to remove trade barriers between themselves Free trade areas
Free trade areas in which the countries also adopt identical tariffs between themselves and the rest of the world Customs Unions
Article I of GATT Most Favored Nation Principle
The ratio of export prices to import prices Terms of Trade
The world's largest exporter of goods and services combined in 2012 The United States
An American tourist spends 100 euros on a visit to the Eiffel Tower. This amount is included in France's service exports
Total world trade flows in 2010 were: 16.8 billion
In 2010 the trade in goods between the United States and Canada amounted to: 537 billion
Differences in wages help explain why the U.S. imports a great deal from: China
The percent of world trade accounted for by Africa’s exports in 2000 was 2%
The establishment of a car production factory in China by General Motors. Vertical FDI
In 2010 Mexico had an FDI stock of 265 billion
The acquisition of IBM’s PC unit by China’s Lenovo Group is an example of: Inflow of FDI into the US
The purchase of Smithfield Foods in the United States by China is an example of a: Reverse-vertical FDI
Ford Motor Company’s acquisition of Jaguar. FDI outflow from the US
What is the largest trade flow? International trade within Europe
An import tariff imposed by a small country will cause the domestic price of the good to: Rise by the amount of the tariff
The welfare effects of the imposition of a tariff on an imported good in a small country include: A rise in government revenue
The net effect of an increase in tariffs on an imported good by a small country is: A decrease in welfare
When a small country imposes a tariff on an imported good, domestic consumers will buy less of the good while domestic firms will Produce more of it
An import tariff in a small country will cause consumer surplus to: Decline
An import tariff in a small country will cause producer surplus to: Increase
When a large country imposes an import tariff, the world price of the good will: Decrease
A primary reason for governments to impose tariffs on imports is: To raise revenue
In the case of a large country, the imposition of an import tariff is likely to cause the domestic price to: Rise by less than the tariff
A large–country government imposes a tariff on an imported good and its domestic price rises. The attendant welfare effects will include: An increase in producer surplus
The net effect of an import tariff on a country’s welfare is: A possible increase if the country is large
The effects of imposing an import quota include: An increase in producer surplus
When a small country imposes an import quota, the domestic price of the good will: Increase
Consider two alternative trade policies that reduce imports by the same amount: the imposition of an import quota and the imposition of an import tariff. The effect in the two cases is that the government will: Earn zero revenue with the quota
A small country that imposes a tariff will: Always have a deadweight loss
The imposition of an import tariff by a large country will cause its terms of trade to: Increase
The optimal tariff, i.e. the tariff that maximizes an importing country’s welfare, is: Positive for a large country, zero for a small country
The U.S. policy of imposing quotas on sugar imports has the effect of: Raising the domestic price of sugar for consumers
The U.S. Trade Act of 1974 describes conditions under which tariffs can be applied in the US, it mirrors the provisions of the GATT and WTO. 2 sections of the Trade Act deal with the use of “safeguard” tariffs, but only 1 applies to a single country China
Created by: ellenc6



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