BU 208-001 Spring 2025 Flashcards

Flashcards covering key vocabulary from Chapters 6 & 7 of BU 208-001, focusing on Theories of Trade and Government Policy in International Trade.

Absolute Advantage

When A country is more efficient at producing a product than any other country in producing it.

Comparative Advantage

Even when one country has an absolute advantage in the production of all goods, that country should specialize in production of goods that it produces most efficiently and buy goods that it produces less efficiently from other countries.

World Trade Organization (WTO)

Deals with the global rules of trade between nations, working to lower trade barriers for goods and services and create a predictable environment that makes trade less risky.

Free Trade

Absence of barriers to the free flow of goods and services between countries.

Protectionism

Government policies that restrict international trade to help domestic industries.

Tariffs

A tax levied on imports that effectively raises the cost of imported products relative to domestic products.

Subsidy

A government payment to a domestic producer.

Import Quota

A direct restriction on the quantity of some good that may be imported into a country.

Local Content Requirement (LCR)

Demands that some specific fraction of a good be produced domestically, either in physical or value terms.

Administrative Trade Policies

Rules perceived or designed to make it difficult for imports to enter a country.