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International Trade and Absolute Advantage

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International Trade and Absolute Advantage

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Questions and Answers

What is the term for a situation where a country's exports are greater than its imports?

Free Trade

Balance of Trade

Trade surplus (correct)

Trade deficit

What is the primary purpose of a Protective Tariff?

To protect the environment

To reduce imports by increasing their price (correct)

To promote free trade

To generate revenue for the importing country

What is the name of the international organization established in 1995 to oversee trade?

IMF

GATT

WTO (correct)

What is the argument that free trade can lower the standard of living in the importing country?

Lower U.S. standard of living Signup and view all the answers

What is the term for a limit on the number of units of a particular good that can be imported into a country?

Quota Signup and view all the answers

What is the primary benefit of free trade according to the text?

All of the above Signup and view all the answers

What is the key concept of Absolute Advantage in international trade?

The ability to produce a specific product more efficiently than any other nation Signup and view all the answers

What happens when nations specialize and trade according to the concept of Absolute Advantage?

Both nations are better off Signup and view all the answers

What is the difference between Absolute Advantage and Comparative Advantage?

Absolute Advantage is about winning in one product, while Comparative Advantage is about winning in both products Signup and view all the answers

What is the concept of Opportunity Cost in international trade?

The value of the next best alternative or what we sacrifice in one area to obtain more in another area Signup and view all the answers

Why is it better for nations to produce what they produce well and trade?

To avoid wasting resources and use them efficiently Signup and view all the answers

What is the main question in international trade?

Do the benefits of international trade outweigh the costs? Signup and view all the answers