gains from specialization

how trade increases the efficiency of production. By having ppl who specialize in a single job or activity, each member in an economy can produce more than if all members produced every good or service by themselves. doesnt work w/o trade

what a producer has in producing a good or service if the producer can make more units per hour compared to other producers.

comparative advantage

what a producer has in producing a good or service if the producer has lower opportunity cost compared to that of other producers.

opportunity cost of specializing

opportunity cost/ thing = opportunity cost of specializing lower = better

does not trade with rest of the world

trades freely with rest of the world

things like tariffs & other similar stuff done to not be a loser in international trade. can be low in industrialized countries & high for agricultural goods. developing countries may have high trade barriers to protect domestic producers & raise revenue

net exports (trade balance)

= exports - imports. when positive, called TRADE SURPLUS and when negative called TRADE DEFICIT

income based payments from foreigners

exports, factor payments from foreigners, transfers from foreigners

payments from the sale of goods and services to foreigners

factor payments from foreigners

income from assets that domestic residents own in foreign countries

transfers from foreigners

transfers from individuals who reside abroad or from foreign governments

income based payments to foreigners

imports, factor payments to foreigners, transfers to foreigners

payments to foreigners in exchange for goods or services

factor payments to foreigners

paying income on assets that foreign residents own in the domestic economy

transfers to foreigners

transfers to individuals who reside abroad or to foreign governments

the net flow of payments made to domestic residents from foreign residents on goods and services, factor payments, and transfers

the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically. defined so that the net flows in the financial account offset the net flows in the current account

the difference between investment by the US in foreign countries and foreign investment in the US. increases when net exports increase

foreign direct investment

investments by foreign individuals and companies in domestic firms and businesses. major conduit for technological transfer

what qualifies as foreign direct investment

capital flow must generate a large ownership stake in a local firm for the foreign investors.

gifts made to foreigners by domestic residents, nothing in return expected

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Ch 14 econ

Question	Answer
gains from specialization	how trade increases the efficiency of production. By having ppl who specialize in a single job or activity, each member in an economy can produce more than if all members produced every good or service by themselves. doesnt work w/o trade
absolute advantage	what a producer has in producing a good or service if the producer can make more units per hour compared to other producers.
comparative advantage	what a producer has in producing a good or service if the producer has lower opportunity cost compared to that of other producers.
opportunity cost of specializing	opportunity cost/ thing = opportunity cost of specializing lower = better
closed economy	does not trade with rest of the world
open economy	trades freely with rest of the world
trade barriers	things like tariffs & other similar stuff done to not be a loser in international trade. can be low in industrialized countries & high for agricultural goods. developing countries may have high trade barriers to protect domestic producers & raise revenue
net exports (trade balance)	= exports - imports. when positive, called TRADE SURPLUS and when negative called TRADE DEFICIT
income based payments from foreigners	exports, factor payments from foreigners, transfers from foreigners
exports	payments from the sale of goods and services to foreigners
factor payments from foreigners	income from assets that domestic residents own in foreign countries
transfers from foreigners	transfers from individuals who reside abroad or from foreign governments
income based payments to foreigners	imports, factor payments to foreigners, transfers to foreigners
imports	payments to foreigners in exchange for goods or services
factor payments to foreigners	paying income on assets that foreign residents own in the domestic economy
transfers to foreigners	transfers to individuals who reside abroad or to foreign governments
current account	the net flow of payments made to domestic residents from foreign residents on goods and services, factor payments, and transfers
financial account	the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically. defined so that the net flows in the financial account offset the net flows in the current account
net capital outflows	the difference between investment by the US in foreign countries and foreign investment in the US. increases when net exports increase
foreign direct investment	investments by foreign individuals and companies in domestic firms and businesses. major conduit for technological transfer
what qualifies as foreign direct investment	capital flow must generate a large ownership stake in a local firm for the foreign investors.
transfers	gifts made to foreigners by domestic residents, nothing in return expected

Created by: user-1742075

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