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econ ch 37 and 38
Terms and definitions
41
Economics
12th Grade
12/02/2010

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Term
labor-intensive goods
Definition
productinos requiring relatively large amounts of labor to produce
Term
land-intensive goods
Definition
products requiring relatively large amounts of land to produce
Term
capital-intensive goods
Definition
products that require relatively large amounts of capital to produce
Term
opportunity cost-ratio
Definition
an equivalency showing the number of units of 2 products that can be produced with the same resources; the cost 1 corn = 3 olives shows that the resources required to produce 3 olives must be shifted to corn production to produce 1 unit of corn
Term
principle of comparative advantage
Definition
the proposition that an individual, region, or nation will benefit if it specializes in producing goods for which its own opportunity costs are lower than the opportunity costs of a trading partner, and then exchanging some of the products in which it specializes for other desired products produced by others
Term
terms of trade
Definition
the rate at which units of one product can be exchange for units of another product; the price of a good or service; the amount of one good or service that must be given up to obtain 1 unit of another good or service
Term
trading possibilities line
Definition
a line that shows the different combinations of two products that an economy is able to obtain (consume) when it specializes in the production of one product and trades (exports) it to obtain the other product
Term
gains from trade
Definition
the extra output that trading partners obtain through specialization of production and exchange of goods and services
Term
world price
Definition
the international market price of a good or service, determined by world demand and supply
Term
domestic price
Definition
the price of a good or service within a country, determined by domestic demand and supply
Term
export supply curve
Definition
an upward-sloping curve that shows the amount of a product that domestic firms will export at each world price that is above the domestic price
Term
import demand curve
Definition
a downsloping curve showing the amount of a product that an economy will import at each world price below the domestic price
Term
equilibrium world price
Definition
the price of an internationally traded product that equates the quantity of the product demanded by importers with the quanitty of the product supplied by exporters; the price determined at the intersection of the export supply and import demand curves
Term
tariffs
Definition
a tax imposed by a nation on an imported good
Term
revenue tariff
Definition
a tariff designed to produce income for the Federal government
Term
protective tariff
Definition
a tariff designed to shield domestic producers of a good or service from the competition of foreign producers
Term
import quota
Definition
a limit imposed by a nation on the quantity (or total value) of a good that may be imported during some period of time
Term
nontariff barrier (NTB)
Definition
all barriers other than protective tariffs that nations erect to impede interational trade, including import quotas, licesning requirements, unreasonable product-quality standards, unnecessary bureaucratic detail in customs procedures, and so on
Term
voluntary export restriction (VER)
Definition
voluntary limitations by countries or firms of their exports to a particular foreign nation to avoid enactment of formal trade barriers by that nation
Term
strategic trade policy
Definition
the use of trade barriers to reduce teh risk inherent in product development by doemstic firms, particularly that involving advanced technology
Term
dumping
Definition
the sale of a product in a foreign country at prices either below cost or below the prices commonly charged at home
Term
Smoot-Hawley Tariff Act
Definition
legislation passed in 1930 that established very high tariffs. Its objective was to reduce imports and stimulate the domestic economy, but it resulted only in retaliatory tariffs by other nations
Term
World Trade Organization (WTO)
Definition
an organization of 153 nations that oversees the provisions of current world trade agreement, resolves trade disputes stemming from it, and holds forums for further rounds of trade negotiations
Term
Doha Round
Definition
the latest, uncompleted sequence of trade negotiations by members of the WTO, named after Doha, Quatar, where the set of negotiations began
Term
balance of payments
Definition
a summary of all the transactions that took place between the individuals, firms, and government units of one nation and those of all other nations during a year
Term
current account
Definition
Term
balance on goods and services
Definition
the exports of goods and services of a nation less its imports of goods and services in a year
Term
trade deficit
Definition
the amount by which a nation's imports of goods (or goods and services) exceed its exports of goods (or goods and services)
Term
trade surplus
Definition
the amount by which a nation's exports of goods and services exceed its imports of goods and services
Term
balance on current account
Definition
the exports of goods and services of a nation less its imports of goods and services plus its net investment income and net transfers in a year
Term
capital and financial account
Definition
the section of a nation's international balance of payments that records 1) debt forgiveness by and to foreigners and 2) foreign purchases of assets in the US and US purchases of assets abroad
Term
balance on capital and financial account
Definition
the sum of the capital account balance and the financial account balance
Term
balance-of-payments deficits
Definition
the amount by which inpayments from a nation's stock of official reserves are required to balance that nation's capital and financial account with its current account (in its balance of payments)
Term
official reserves
Definition
foreign currencies owned by the central bank of a nation
Term
flexible- or floating-exchange-rate system
Definition
a rate of excahnge determined by the international demand for and supply of a nation's money; a rate free to rise or fall (to float)
Term
fixed-exchange-rate system
Definition
a rate of exchange that is set in some way and therefore prevented from rising or falling with changes in currency supply and demand
Term
purchasing-power-parity theory
Definition
the idea that exchange rates between nations equate the purchasing power of various currencies. Excahgne rates between any two nations adjust to reflect the price-level differences between the countries
Term
currency interventions
Definition
a government's buying and selling of its own currency or foreign currencies to alter international exchange rates
Term
exchange controls
Definition
the control a government may exercise over the quantity of foreign currency demanded by its citizens and firms and over the rates of exchange in order to limit its outpayments to its inpayments (to eliminate a payments deficit)
Term
managed floating exchange rates
Definition
an exchange rate that is allowed to cahnge (float) as a result of cahnges in currency supply and demand but at times is altered (managed) by governments via their buying and seeling of particular currencies
Term
balance-of-payments surplus
Definition
the amount by which outpayments to a nation's stock of official reserves are required to balance that nation's capital and financial account with its current account (in its international balance of payments)
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