International Economics Flashcards

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 60 flashcards covering International Economics

Protectionism
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The use of tariffs, quotas or subsidies to give domestic producers a competitive advantage over foreign producers. Meant to protect domestic production and employment from foreign competition.

Protectionism
Floating exchange rate
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When a currency’s price relative to other currencies is determined by the free interaction of supply and demand in international forex markets.

Floating exchange rate
Trade surplus
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When a country’s sale of exports exceeds its spending on imports. Another term for a current account surplus in the balance of payments.

Trade surplus
Improvement in terms of trade
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When the price of a nation’s exports rises relative to the price of its imports. May result in an improvement in the current account balance if demand for the country’s exports is inelastic relative to its import demand, or a worsening in the current account balance if export demand is elastic relative to import demand.

Improvement in terms of trade
Opportunity cost
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What must be given up to have anything else. Not necessarily monetary costs, rather include what you could do with the resources you use to undertake any activity or exchange.

Opportunity cost
Expenditure-switching policies
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Measures undertaken by a government to reduce a deficit in the country’s current account balance. Involve increased barriers to trade (tariffs, quotas or protectionist subsidies) aimed at switching the expenditures of domestic consumers from imported goods and services to domestically produced goods and services.

Expenditure-switching policies
Imports
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Spending on goods and services produced in foreign nations. Counts as a leakage from a nation’s circular flow of income.

Imports
Preferential trade agreement
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A free trade agreement in which member states agree to remove protectionist measures on certain goods or services traded between them. The lowest level of economic integration, since only particular goods are included in the agreement.

Preferential trade agreement
Devaluation
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When a government or a central bank intervenes in the market for its own currency to weaken it relative to another currency or currencies. May be achieved through measures such as reducing domestic interest rates, selling the currency on foreign exchange markets, or imposing foreign exchange controls that limit the amount of foreign investment in the country, reducing demand for the currency abroad.

Devaluation
Globalization
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The emerging inter-connectedness of the world’s national economies and cultures

Globalization

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