12 Questions
What is the term for a situation where a country's exports are greater than its imports?
Trade surplus
What is the primary purpose of a Protective Tariff?
To reduce imports by increasing their price
What is the name of the international organization established in 1995 to oversee trade?
WTO
What is the argument that free trade can lower the standard of living in the importing country?
Lower U.S. standard of living
What is the term for a limit on the number of units of a particular good that can be imported into a country?
Quota
What is the primary benefit of free trade according to the text?
All of the above
What is the key concept of Absolute Advantage in international trade?
The ability to produce a specific product more efficiently than any other nation
What happens when nations specialize and trade according to the concept of Absolute Advantage?
Both nations are better off
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
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
Why is it better for nations to produce what they produce well and trade?
To avoid wasting resources and use them efficiently
What is the main question in international trade?
Do the benefits of international trade outweigh the costs?
Test your understanding of international trade and absolute advantage, including the benefits of specialization and trade. Learn how nations can gain from producing and trading goods efficiently.
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