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Chapter 5 summary
Terms in this set (31)
goods and services purchased from other countries.
goods and services sold to other countries.
the phenomenon of growing economic linkages among countries.
Ricardian model of international trade
a model that analyzes international trade under the assumption that opportunity costs are constant.
a situation in which a country does not trade with other countries.
the difference in the ratio of factors used to produce a good in various industries. For example, oil refining is capital-intensive compared to clothing manufacture because oil refiners use a higher ratio of capital to labor than do clothing producers.
a model of international trade in which a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that country.
domestic demand curve
a demand curve that shows how the quantity of a good demanded by domestic consumers depends on the price of that good.
domestic supply curve
a supply curve that shows how the quantity of a good supplied by domestic producers depends on the price of that good.
the price at which a good can be bought or sold abroad.
industries that produce goods and services that are sold abroad.
industries that produce goods and services that are also imported.
trade that is unregulated by government tariffs or other artificial barriers; the levels of exports and imports occur naturally, as a result of supply and demand.
policies that limit imports.
an alternative term for trade protection; policies that limit imports.
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All else held constant, an increase in U.S. imports will cause the U.S. current account to:
When several countries jointly impose common external tariffs, eliminate tariffs on each other, and eliminate barriers to the movement of labor and capital among themselves, they have formed a/an