WGU D080 - Module 3 with 100% correct answers + rationales

mercantilism

country's wealth is determined by gold and silver holdings. Trade surplus is only way to gain (export more than import)

absolute v comparative advantage

a: country uses fewer resources to create a good

c: country produces good at lowest opportunity cost

Global Strategic Rivalry Theory

multinational corporations efforts to gain competitive advantage against other global firms by setting barriers to entry

Hecksher-Ohlin Theory

a country will export goods that use its abundant factors and import goods that use its scarce factors.

specialization

a country uses all resources to create one good and import the rest

protectionism

shielding a country's domestic industries from foreign competition by taxing imports.

downsides of protectionism

consumers pay more

isolationism

job losses

tariff

tax on imports

protective tariffs

Taxes placed on imported goods to raise prices and thus protect domestic producers.

revenue tariffs

designed to raise money for the government

impacts of tariffs

increase cost of imported goods

minimize quality due to reduced competition in domestic market

reduce range of products to consumers

harms domestic innovation

quota

A limit placed on the quantities of a product that can be imported

tariff-rate quota

once the quota is surpassed, more of the good may be imported at a higher tariff rate.

voluntary export restriction

a trade barrier by which foreign firms "voluntarily" limit the amount of exports to a particular country

sanctions

laws that restrict trade with certain countries.

embargos

prohibition of trade with a specific country, state, or region.

antidumping

Extra taxes to neutralize the predatory pricing and bring the price closer to "normal value."