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Microeconomics CH 5
Vocab
21
Economics
Undergraduate 1
01/21/2009

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Term
Multinational Corporations
Definition
Firms that own production facilities in two ore more countries and produce and sell their products globally.
Term
Comparative Advantage
Definition
A lower relative opportunity cost than that of another producer or country.
Term
Terms of Trade
Definition
The rate at which units of one product can be exchanged 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 one unit of another good or service.
Term
Foreign Exchange Market
Definition
A market in which the money (currency) of one nation can be used to purchase (can be exchanged for) the money of another nation; currecny market
Term
Exchange Rates
Definition
The rate of exchange of one nation's currency for another nation's currency.
Term
Depreciation
Definition
A decrease in the value of the dollar relative to another currency, so a dollar buys a smaller amount of the foreign currency and therefore of foreign goods.
Term
Appreciation
Definition
An increase in the value of the dollar relative to the currency of another nation, so a dollar buys a larger amount of the foreign currency and thus of foreign goods
Term
Protective Tariffs
Definition
A tariff designed to shield domestic producers of a good or service from the competition of foreign producers
Term
Import Quotas
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 Barriers
Definition
All barriers other than protective tariffs that nations erect to impede international trade, including import quotas, licensing requirements, unreasonable product-quality standards, unnecessary bureaucratic detail in customs procedures, and so on.
Term
Export Subsidies
Definition
Government payments to domestic producers to enable them to reduce the price of a good or service to foreign buyers.
Term
Smoot-Hawley Tariff Act
Definition
Legislation passed 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
Reciprocal Trade Agreements Act
Definition
A law that authorized the president to negotiate up to 50 percent lower tariffs with foreign nations that agreed to reduce their tariffs on U.S. goods.
Term
Most-Favored-Nation Clauses
Definition
An agreement by the US to allow some other nation's exports into the US at the lowest tariff level levied by the US, then or at any later time.
Term
General Agreement on Tariffs and Trade (GATT)
Definition
The international agreement where multiple nations agreed to give equal and nondiscriminatory tretment to one another, to reduce tariff rates by multinational negotiations, and to eliminate import quotas. Now the WTO
Term
World Trade Organization (WTO)
Definition
An organization of many nations that oversees the provisions of the current world trade agreement, resolves trade disputes stemming from it, and holds forums for further rounds of trade.
Term
Doha Round
Definition
The latest, uncompleted sequence of trade negotiations by members of the WTO named after Doha, Qatar.
Term
European Union (EU)
Definition
An associateion of European nations that has eliminated tariffs and quotas among them, established common tariffs for imported goods from outside the member nations, eliminated barriers to the free movement of capital, and created otehr common economic policies.
Term
Trade Bloc
Definition
A group of nations that lower or abolish trade barriers among members. Examples include the European Union and the nations of the NAFTA.
Term
Euro
Definition
The currency unit used by 12 European nations in the Euro zone.
Term
North American Free Trade Agreement (NAFTA)
Definition
An agreement establishing, over a 15-year period, a free-trade zone composed of Canada, Mexico, and the US
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