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What is the belief of people who promote free trade in international trade?
free trade leads to economic prosperity as measured by GDP
Free trade thinkers promote the idea that free trade is ______ of every country
in the best economic interest
Name three beliefs of Free Trade thinkers
- It will increase standard of living in the economy (higher income)
- It improves competition in the economy (innovation, selection, lower price)
- It makes the economy more efficient
How do Free Trade thinkers discredit those who believe in Protectionism?
they believe it is unjust (high prices affect lower class) and wasteful (less innovation, quality, variety that wastes scarce economic resources
What are the beliefs of those who prefer Protectionism over Free Trade in International trade?
At certain times, under certain conditions, and for a limited time, some degree of protectionism is justified
What are some areas the those who believe in Protectionism consider it to be justified?
- National Security/Sovereignty
- Infant or Mature Industry Protection
- Domestic Job Protection against Low-Cost Countries
- Anti-Dumping Measure and Formeasures
- Retaliation Against Unfair Trading Countries
_____ an explanation of a complex life phenomenon that has been tested and proven to hold true (describes and helps make predictions)
What are the International Trade Theories?
- Absolute Advantage
- Comparative Advantage
- Factor Proportions Theory
- International Product Life Cycle
- New Trade Theory
- National Competitive Advantage
International Trade Theory that believes in more exports than imports
Mercantilism (Classical view)
International Trade Theory that believes in producing goods more efficiently than other nations
International Trade Theory that believes in the ability to produce a good more efficiently than it does other goods
International Trade Theory that believes in producing and exporting goods that require resources that are abundant and importing goods that require resources in short supply
Factor Proportions Theory
International Trade Theory that believes in beginning by exporting its products and later undertaking foreign direct investments as the product moves through the life cycle (the exporter becomes the importer)
International Product Life Cycle
International Trade Theory that believes in first-mover advantage
New Trade Theory (Neo-Classical)
International Trade Theory that believes in a nation's competitiveness depends ont he ability to innovate and upgrade
National Competitive Advantage
What are benefits of international trade?
Countries that depend on exports are _______
What are the trade compositions?
- production specifications
- direction: from ____ to ____
- $ or physical volume
Name the comparative elements in an exporting case study.
- invoice price
- ad valorem tax
- specific tax
- Labor & Materials
the purchase, sale, or exchange of goods and services across national borders
Nations that embrace _____ are seeing trade grow in importance for their economies.
One way to measure the importance of trade is to examine __________
the volume of an economy's trade relative to its total output
Trade = (___ +____) / _____
(exports + imports)/ GDP
What are benefits to international trade?
- opens doors to new entrepreneurial opportunities
- provides a greater choice of goods and services
- important for job creation in many countries
Most of the world merchandise trade is composed of ________.
trade manufactured goods
Trade in services is relatively more important for _______.
the world's richest countries
Trade slows during recessions because people buy fewer ____ and ____ products.
The level of ______ influences the level of international trade
____ has consistently grown faster than output
Customs agencies in most countries record the ____ of exports, the ____ of imports, and the _____ and ______ of goods crossing the borders
- physical quantities
In international trade, the reporting of trade is sometime deliberately _____.
Trade between the world's high-income economies account for ___% of total world merchandise trade
Trade between high and low- and middle-income nations accounts for ____ % of total world merchandise trade
Trade between low- and middle-income nations accounts for ___ % of total world merchandise trade
The world's poorest nations have low ______.
Nations in Europe followed this economic philosophy from 1500 to the late 1700s.
trade theory that nations should accumulate financial wealth by encouraging exports and discouraging imports
The most prominent mercantilist nations included which countries?
Colonial trade was conducted for the benefit of mother countries, and the appeal of the colonies was their ______
How did countries implement mercantilism?
- trade surpluses
- government intervention
What is an ad valorem tax?
percentage of the stated price of an imported product (invoice price)
What is specific tax?
specific fee for each unit(number, weight) of an imported product