Card Set Information
why do people/countries/buisnesses trade?
because they believe they will benefit from the trade
in order to maximize trade, each country specializes in goods it produces most cheaply, (example China in electronics, US in furniture?)
What are the largest categories of US exports?
services and capital goods
What is the largest category for US imports?
industrial supplies and materials i.e. oil
What is a trade surplus?
value of exports exceeds value of imports in a given period of time
What is a trade deficit?
value of imports exceeds value of exports in a given period of time
The value of US imports and exports has steadily ________ (increased/decreased) over time.
The US faces a trade ________ (surplus/deficit)
actions by gov't to limit trade
tax on imports. Increases price of imports to put foreign producers at disadvantage.
limit gov't puts on amount of product that may be imported.
Quotas target imports from ____________ __________.
What are two problems with trade restrictions?
slowing of introduction of new goods
Overall the trend has been toward _______ (lower/higher) tariffs
international trade with no restrictions made by gov'ts
free trade leads to ____________ (decreased/ increased) competition among buisnesses.
What do buisnesses have to do to compete when there is free trade?
1) increase productivity
2) pay workers less
How can free trade be achieved?
gov'ts can join other countries to create common markets or sign mutilateral agreements
What are fixed exchanged rate systems?
exchange rates fixed by gov'ts
What are flexible exchange rate systems?
exchange rate determined by supply and demand
Are fixed or flexible exchange rates more common today?
What are three reasons US citizens might need foreign currency?
1) to buy foreign goods
2) to invest in another country (stock market)
3) to buy and sell (speculate) foreign exchange to make a profit
demand for american products increases, demand for USD increases, so value of USD increases
demand for american products decreases, demand for USD decreases, so value of USD decreases