International Trade and Money summary Questions and Answers 2023

inflation - -A persistent increase in the average price level in the economy. -Unemployment - -People of working age who are without work, and are actively seeking employment -Structural Unemployment - -natural unemployment- change in the structure of the economy- domestic businesses go out, lack skills, long term, lack occupational/geographical mobility (as a result of low-cost labour in foreign countries) -Automatic stabilizers - -fiscal policy- government will receive less tax from high unemployment, and so will want to lower taxes to increase aggregate demand again -Gains from international trade - -lower prices, greater choice, differences in resources (do not have the necessary factor endowments), economies of scale (the bigger you get the less things cost, afford heavy machinery, lowering fixed costs, bigger network of people), increased competition: domestic firms compete with foreign, so more incentive to produce, more efficient allocation of resources, foreign exchange -Comparative Advantage - -CA in the production of a good at a lower opportunity cost than another country -Absolute Advantage - -AA in the production of a good if it can produce it using fewer resources than another country. -Wto - -international organization that sets rules for global trading ad resolves disputes between its member countries