2.8 International Trade and Public Policy

    Cards (57)

    • What is the primary role of international trade in the global economy?
      Enhances efficiency and promotes growth
    • International trade fosters economic growth by allowing nations to specialize in their most efficient industries
    • Comparative advantage is determined by absolute productivity rather than opportunity cost.
      False
    • What is the fundamental driver of international trade according to the study material?
      Comparative advantage
    • In the example provided, Country A can produce 10 wheat or 20 textiles, meaning one unit of wheat costs 2 textiles.
    • In the example, neither country has a comparative advantage in wheat or textiles.
    • What are the two primary benefits of international trade for consumers?
      Increased choice and lower prices
    • Match the benefit of international trade with the corresponding beneficiary.
      1️⃣ Increased product variety
      2️⃣ Expanded markets
      3️⃣ Lower prices
    • International trade leads to a more competitive and efficient global economy.
    • What does comparative advantage refer to in the context of international trade?
      Lower opportunity cost
    • In Country A, producing 1 unit of wheat costs 2 textiles.
    • Which of the following is a benefit of international trade for consumers?
      Lower prices
    • Economies of scale reduce costs and improve profitability for producers in international trade.
    • What is the purpose of trade barriers such as tariffs, quotas, and embargoes?
      Restrict or control trade
    • Tariffs are taxes imposed on imported goods, increasing their cost.
    • Match the type of trade barrier with its definition.
      Tariffs ↔️ Taxes on imported goods
      Quotas ↔️ Quantitative limits on imports
      Embargoes ↔️ Complete trade bans
    • Consumers gain from increased product variety and lower prices
    • What is the primary purpose of trade barriers?
      Restrict international trade
    • The WTO oversees global trade rules and resolves disputes.
    • The U.S.-Mexico-Canada Agreement replaced the NAFTA
    • International trade enhances efficiency and promotes economic growth worldwide.
    • What is the opportunity cost for Country A to produce one unit of wheat?
      2 textiles
    • Neither Country A nor Country B has a comparative advantage in wheat or textiles because their opportunity costs are the same.
    • Consumers benefit from lower prices due to foreign competition
    • What is the overall effect of international trade on the global economy?
      More competitive and efficient
    • Match the trade barrier with its purpose:
      Tariffs ↔️ Protect domestic industries
      Quotas ↔️ Reduce foreign competition
      Embargoes ↔️ Apply political or economic pressure
    • Trade barriers are measures governments implement to restrict or control international trade
    • What are tariffs in international trade?
      Taxes on imported goods
    • A 10% tariff on imported cars raises their price for consumers.
    • Quotas are quantitative limits on the number of imported goods
    • What is an embargo in international trade?
      Complete trade ban
    • Embargoes can lead to trade disruption and market instability.
    • What is the primary purpose of trade agreements?
      Reduce trade barriers
    • The World Trade Organization (WTO) oversees global trade rules
    • What does NAFTA aim to eliminate?
      Trade barriers in North America
    • NAFTA facilitates cross-border trade in goods, services, and investments.
    • What are subsidies in international trade?
      Financial support to domestic producers
    • Free Trade Agreements (FTAs) are agreements to eliminate or reduce trade barriers
    • Match the trade policy with its impact on domestic industries:
      Tariffs ↔️ Protects domestic producers
      Quotas ↔️ Restricts supply
      Subsidies ↔️ Lowers production costs
      FTAs ↔️ Provides access to larger markets
    • What is the impact of U.S. tariffs on imported steel?
      Protects domestic steel producers
    See similar decks