FM 116 Test CH. 3,4,10,14,15 Review Questions and Answers
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Course
FM 116
Institution
FM 116
Tariff Taxes levied against import
-Governments tend to use protective tariffs either to shelter fledgling industries that couldn't compete without help, or to shelter industries that are crucial to the domestic economy.
Embargo A complete ban on international trade of a certain item, or a total ...
FM 116 Test CH. 3,4,10,14,15 Review
Questions and Answers
Tariff ✅Taxes levied against import
-Governments tend to use protective tariffs either to shelter fledgling industries that
couldn't compete without help, or to shelter industries that are crucial to the domestic
economy.
Embargo ✅A complete ban on international trade of a certain item, or a total halt in
trade with a particular nation.
-nation. The intention of most embargoes is to pressure the targeted country to change
political policies or to protect national security.
Quota ✅Limitations on the amount of specific products that may be imported from
certain countries during a given time period.
Trade Deficit ✅Shortfall that occurs when the total value of a nation's imports is higher
than the total value of its exports.
-Although a trade deficit signals the wealth of an economy that can afford to buy huge
amounts of foreign products, a large deficit can be destabilizing. It indicates, after all,
that as goods and services flow into a nation, money flows out—a challenge with regard
to long-term economic health.
Trade Surplus ✅Overage that occurs when the total value of a nation's exports is
higher than the total value of its imports.
Balance of Trade ✅A basic measure of the difference in value between a nation's
exports and imports, including both goods and services.
Export ✅Selling products in foreign nations that have been produced or grown
domestically.
Import ✅Buying products domestically that have been produced or grown in foreign
nations.
Joint Venture ✅When two or more companies join forces— sharing resources, risks,
and profits, but not actually merging companies—to pursue specific opportunities.
, Strategic Alliance ✅An agreement between two or more firms to jointly pursue a
specific opportunity without actually merging their businesses. Strategic alliances
typically involve less formal, less encompassing agreements than partnerships.
World Trade Organization (WTO) ✅A permanent global institution to promote
international trade and to settle international trade disputes.
General Agreement on Tariffs and Trade (GATT) ✅International trade treaty designed
to encourage worldwide trade among its members.
North American Free Trade Agreement (NAFTA) ✅The treaty among the United
States, Mexico, and Canada that eliminated trade barriers and investment restrictions
over a 15- year period starting in 1994.
Opportunity Cost ✅Opportunity of giving up the second-best choice when making a
decision
Absolute Advantage ✅When a country produces more of a product than other nations
using the same amount of resources
Comparative Advantage ✅When a country makes products at a lower opportunity cost
than other countries
Balance of Payment ✅a measure of the total flow of money into or out of a country
Exchange Rates ✅measure the value of one nation's currency relative to the currency
of other nations
Foreign Outsourcing ✅contracting with foreign suppliers to produce products, usually
at a fraction of the cost of domestic production
Free Trade ✅is the unrestricted movement of goods and services across international
borders
Protectionism ✅National policies designed to restrict international trade
Voluntary Export Restrains (VERs) ✅Limitations on the amount of specific products
that one nation will export to another nation
International Monetary Fund (IMF) ✅An international organization that Promotes
international economic cooperation and stable growth
Trading Blocs ✅Groups of countries that have reduced or eliminated all tariffs, allowing
free flow of goods among the member nations
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