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

Tariff
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Taxes placed on goods imported from other countries. Meant to protect domestic producers from foreign competition.

Tariff
Infant Industry
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An industry that is emerging in a less developed country, but which has not achieved the economies of scale and other efficiencies that allow it to compete with larger producers in more developed countries. Sometimes used as a justification for protectionist policies.

Infant Industry
Comparative advantage
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When an individual, a firm or a nation is able to produce a particular product at a lower opportunity cost than another individual, firm or nation. Forms the basis on which nations trade with one another.

Comparative advantage
Official reserves
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Foreign currencies held by a nation’s central bank, resulting from accumulations in the current account and the financial account in the nation’s balance of payments. To balance the two accounts in the balance of payments, a country’s official foreign exchange reserves measures the net effect of all the money flows from the other accounts.

Official reserves
Exchange rate
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The price of one currency in terms expressed in terms of another currency, determined in the forex market.

Exchange rate
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
Appreciation
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An increase in the value of one currency relative to another, resulting from an increase in demand for or a decrease in supply of the currency on the foreign exchange market.

Appreciation
Customs union
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A free trade agreement under which member nations agree to remove all protectionist measures (tariffs, quotas, etc.) between member states, but maintain common external tariffs on imports from non-member states.

Customs union
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
Exports
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The spending by foreigners on domestically produced goods and services. Counts as an injection into a nation’s circular flow of income.

Exports

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