Chapter 18 - International Trade and Public Policy

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20 Terms

1

Import restrictions

________ create an incentive to smuggle goods.

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2

Predatory Pricing

________ is a firm that sells a product at a price below its production cost to drive a rival out of business and then increases the price.

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3

Smoot Hawley

When the ________ tariffs were implemented in the 1930s, the average U.S. tariff was a whopping 59 % of a products price.

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4

alternative

A(n) ________ to a quota or a VER is an import tariff, which is a tax on an imported goods.

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5

APEC

In 1994, ________ signed a non- binding agreement to reduce trade barriers among nations.

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6

Canada

It eliminates all tariffs and other trade barriers between ________, Mexico, and other United States.

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7

international trade agreements

Dumping is a situation in which the price a firm charges in foreign market is lower than either the price it charges in its home markets or the production cost which is illegal under ________.

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8

productivity

Learning by doing is the knowledge and skills workers gain during production that increase ________ and lower cost.

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9

European Union

The ________ (EU) was designed to remove all trade barriers within Europe and create a single market.

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10

Import quota

________ is a government imposed limit on the Quinn of a good that can be imported.

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11

lower opportunity cost

The nation with the __________ has aĀ comparative advantageĀ in producing that good.

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12

comparative advantage

It is ___________ that matters for trade-notĀ absolute advantage, the ability of a nation to produce a particular good at a lower absolute cost than that of another nation.

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13

Learning by doing

_____________Ā is the knowledge and skills workers gain during production that increase productivity and lower cost.

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14

Infant

_________ industriesĀ are the industries that are at an early stage of development.

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15

General Agreement on Tariffs and Trade

TheĀ _______________________ (GATT)Ā is an international agreement established in 1947 that has lowered trade barriers between the United States and other nations.

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16

World Trade Organization

TheĀ ______________________(WTO)Ā is an organization established in 1995 that oversees GATT and other international trade agreements, resolves trade disputes, and holds forums for further rounds of trade negotiations.

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17

North American Free Trade Agreement

TheĀ __________________ (NAFTA)Ā took effect in 1994 and was implemented over a 15-year period. It eliminates all tariffs and other trade barriers between Canada, Mexico, and other United States.

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18

Terms of trade

____________Ā is the rate at which units of one product can be exchanged for units of another product.

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19

lower opportunity cost

The nation with the ______________ has aĀ comparative advantageĀ in producing that good.

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20

comparative advantage

It is ____________ that matters for trade-notĀ absolute advantage, the ability of a nation to produce a particular good at a lower

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