International trade definitions

bella.calonje
Flashcards by bella.calonje, updated more than 1 year ago
bella.calonje
Created by bella.calonje about 7 years ago
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ib economics (international economics ) Flashcards on International trade definitions , created by bella.calonje on 04/01/2014.

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Question Answer
Aims of the WTO administer WTO trade agreements be a forum for trade negotiations handle trade disputes among member countries monitor national trade policies provide technical training and assistance for developing countries cooperate with other international organizations
Define free trade free trade takes place when there are no barriers to trade and goods and service are allowed to move freely between countries
Define Tariff A tax placed on imported goods
Define Quota a physical limit on the number/value of goods that can be imported into a country
Define subsidy A subsidy is an amount of money paid by the government to a firm per unit of output to decrease costs of production
Define dumping the selling by a country of large quantities of a commodity at a price lower than its production cost in another country
Define Exchange rate Is the value of one currency expressed in the value of another currency
Define a fixed exchange rate where the value of a currency is fixed or pegged to the value of another currency
Define a floating exchange rate where the value of the currency is allowed to be determined solely by the demand for and supply of the currency on the foreign exchange market
Define the balance of payments account is a record of the value of all the transactions between the residents of one country and the residents of all the other countries in the world over a given time period
define the current account a measure of the flow of funds from trade in goods and services plus other income flows
balance of trade in goods measure of the revenue received from the export of goods minus the expenditure on the imports of tangible goods
Balance of trade in services Measure of the revenue received from the exports of services minus the expenditure on the imports of services over a given time period
Expenditure switching Policies Policies implemented by the government that attempt to switch the expenditure of domestic consumers away from imports towards domestically produced goods and services
Expenditure reducing policies any policies implemented by the government that attempt to reduce overall expenditure in the economy
PTA a trading bloc that gives preferential access to certain products from certain countries
FTA agreement made between countries where the countries agree to trade freely among themselves but are able to trade with countries outside of the free trade area
Customs Unions agreement made between countries where the countries agree to trade freely amongst themselves and they adopt common external barriers against any country attempting to import
Common markets a common market is a customs union with common policies on product regulation, and free movement of goods, services, capital and labour
economic and monetary union common market with a common currency and a common central bank
Define trade creation occurs when the entry of a country into a customs union leads to the production of a good and service transferring from a high cost producer to a low cost producer
Define Trade diversion occurs when the entry of a country into a customs union leads to the production of a G or S transferring from a low cost producer to a high cost producer
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