Module 13: International Trade Organizations

Chapter 19 in McGraw Hill

How is a county’s balance of trade calculated?

net exports or …… (exports- imports)

When a country’s exports exceed imports, the nation has a …….

TRADE SURPLUS

When a country’s imports exceed exports, the nation has a ………….

Trade Deficit

What is an international Asset Transaction?

The sale, trade, or transfer of ownership
rights to either real or financial assets, including currency, across international
borders.

Are trade deficits or surpluses distinct from international asset transactions?

Yes trade surplus/deficit have nothing to do with international asset transactions

What are major U.S. Exports

chemicals, agricultural products, software, and SERVICES

education is also a major export

What are major imports of the US

Petroleum, cars, metal, appliances, and computers

Does the U.S. import many of the same things it exports

Yes it does like many other industrialized nations do.

In the most simple terms why do nations trade?

It is mutually beneficial to do so

What are some benefits to trading?

• Capital resources are not spread out evenly among countries.

• Efficient production needs many different technologies, but not all countries have the same technical skills or knowledge

• Products often vary based on where they are made, and some countries tend to prefer buying goods and services from certain other countries.

What is absolute advantage?

A situation where a person or country can produce more of a specific product using the same amount of resources than another person or country.

What is comparative advantage?

A situation where a person or country can make a product by giving up less of other goods compared to someone else. This idea explains why countries specialize and trade with each other.

Who came up with the idea of absolute advantage?

Adam Smith

WHo cam up with the idea of Comparative Advantage

DAVID RICARDO

What are some barriers to trade?

Import quota

voluntary export restriction (VER)

Non Tariff Barriers (NTB).

Export Subsidy

What is an import quota?

A quota is a limit set by a country on how much of a certain good can be imported over a specific period of time.

What is Voluntary Export Restrictions? (VER)

when a country or company agrees to limit how much it exports to another country. This is usually done to avoid that country putting official trade barriers or restrictions in place

What is Non Tariff Barriers?

are any rules or policies (other than taxes on imports) that countries use to make it harder to trade with them. These include things like import limits, strict licensing rules, high product standards, or complicated customs procedures."

What is an export Subsidy?

An export subsidy is money the government gives to local producers so they can sell their products to other countries at lower prices

What is the World Trade Organization ?

Organization of 164 nations that oversees the current world trade agreement.

They resolve trade disputes and hold fourms for further round of trade negotiations

What was the world trade agreement preceded by

GATT GENERAL Agreement on Tariffs and Trade

What is the European Union

Association of 28 European Nations ( 2019) that has eliminated tariffs and quotas among them, established common tariffs for imported goods from outsde memeber nations

19 out of the 28 nations use the euro as their currency. True or False

TRUE

WHat is Nafta

North American Free Trade Agreement

1993

free trade agreement between US, Mexico, Canada

NAFTA was created to boost economic activity between Canada, the U.S., and Mexico. Supporters believed it would help all three countries by making trade easier and reducing tariffs between them