Chương 2 - 1

The purchase, sale, or exchange of goods and services across national borders is called __________.

International trade

A trade theory which holds that a government can improve the economic well-being of the country by encouraging exports and stifling imports to accumulate wealth in the form of precious metals is called __________.

mercantilism

__________ is the condition that results when the value of a nation's exports is greater than the value of imports.

Trade surplus

A condition that results when the value of a country's imports is greater than the value of its exports is called __________.

Trade deficit

Sending goods to another country for sale or trade is called __________.

Exporting

A trade theory which holds that nations can increase their economic well-being by specialising in goods that they can produce more efficiently than anyone else is called __________.

Theory of absolute advantage

Bringing in goods from another country for sale or trade is called __________.

Importing

__________ is a trade theory which holds that nations should produce those goods for which they have the greatest relative advantage.

Theory of comparative advantage

A trade theory which holds that nations will produce and export products that use large amounts of production factors that they have in abundance and will import products requiring a large amount of production factors that they lack is called __________.

Factor endowment theory

Financial assistance to domestic producers in the form of cash payments, low-interest loans, tax breaks, product price supports, or some other form is called __________.

subsidy

When a government guarantees that it will repay the loan of a company if the company should default on repayment, it is called a __________.

loan guarantee

A designated geographic region in which merchandise is allowed to pass through with lower customs duties and/or fewer customs procedures is called a __________.

foreign trade zone

__________ is a theory of the stages of production of a product with new "know-how"; it is first produced by the parent firm, then by its foreign subsidiaries, and finally anywhere in the world where costs are the lowest, it helps explain why a product that begins as a nation's export often ends up as an import.

International product life cycle (IPLC) theory

A complete ban on trade (imports and exports) in one or more products with a particular country is called an __________.

Embargo

The __________ between nations is the only international body dealing with rules of trade.

WTO

__________ is a trade theory which holds that a government can improve the well-being of the country by encouraging exports and stifling imports.

Neo-mercantilism

A treaty that was designed to promote free trade by reducing both tariffs and non-tariff barriers to international trade is called the __________.

GATT

__________ is a trade theory that extends the concept of comparative advantage by bringing into consideration the endowment and cost of factors of production and helps to explain why nations with relatively large labour forces will concentrate on producing labour-intensive goods, whereas countries with relatively more capital than labour will specialise in capital-intensive goods.

Heckscher-Ohlin theory

A finding by Wassily Leontief, a Nobel Prize-winning economist, which shows that the United States, surprisingly, exports relatively more labour-intensive goods and imports capital intensive goods is called __________.

Leontief paradox

Countries import some goods and services from abroad, and export others to the rest of the world. Trade in __________ is called visible trade in Britain and merchandise trade in the US.

commodities

The LDCs export a limited range of __________ such as foodstuffs, fuels and industrial raw materials, etc.

primary

__________ are the ratio of the unit price of exports to the unit price of imports.

Terms of trade