BUAD Final Exam with Accurate
Solutions
international trade - ANS-the import and export of goods or services from or to other
countries by individuals, firms, or governments
imports - ANS-goods or services that are purchased from abroad
exports - ANS-goods or services that are sold to citizens abroad
free trade regime - ANS-a system in which imports and exports of goods or services
take place voluntarily, without government restrictions and based on a principle of free
markets
by providing... a greater amount of choice in the availability of goods and services, lower
prices for goods and services consumed, higher living standards - ANS-how does
international trade benefit consumers?
domestic firms can import raw materials and final goods as well as use services from
abroad, which also allowed an increase in choices that domestic consumers have -
ANS-when a country opens up to international trade, what results?
it enhances consumer satisfaction and welfare - ANS-what results from an increase in
choices for the domestic consumer?
level of competition - ANS-because of imports, the ... in the domestic market increase
since the level of competition rises, this helps keep a lid on price increases, and it leads
to better quality products - ANS-how do imports benefit consumers?
increase production overseas generates new jobs as well as higher wages at home -
ANS-how does international trade raise people's living standards
absolute advantage - ANS-the ability of one country to produce a good or service more
efficiently than another
comparative advantage - ANS-the ability of one country that has an absolute advantage
in the production of two or more goods (or services) to produce one of them relatively
more efficiently than the other
, foreign direct investment - ANS-an overseas investment in plant and equipment to
produce goods or services for local consumption or for exports
protection - ANS-the government practice of imposing trade barriers to shield domestic
producers from international competition
negative effects - ANS-protectionist policies in developed countries have severe ... on
developing countries' production, employment, and economic growth
tariffs - ANS-taxes on imports
the consumer - ANS-who bears the cost of tariffs?
quantitative restrictions - ANS-quotas that limit the amount of imports that can come into
a country
a high cost for the domestic consumer and profits for the domestic producers and
importers - ANS-what do quotas result in?
voluntary restraints - ANS-self-imposed export quotas on specific sensitive products to a
specific country or countries for a set period of time
counter trade - ANS-a barter system of exchange in which trade between specific
countries is conducted without the use of monetary transactions
embargoes - ANS-trade sanctions that are imposed on a country and that restrict trade
with that country
foreign exchange markets - ANS-financial centers where a network of international
banks and currency traders (people who buy, sell, or speculate on currencies) transact
business
exchange rate - ANS-the price of one currency compared to that of another currency
floating exchange rate system - ANS-the system in which currency values are
determined by the demand for and supply of currencies in a foreign exchange market
managed floating exchange rate system - ANS-a floating exchange rate system in
which the values of some currencies are partly determined by active government
intervention (central bank purchases and sales of their own currencies)
fixed exchange rate system - ANS-the system in which a country pegs (fixes) its
currency value (formally or de facto) at a fixed rate to a major currency or a basket of
currencies
in a free market system, price is determined by.. - ANS-demand and supply
Solutions
international trade - ANS-the import and export of goods or services from or to other
countries by individuals, firms, or governments
imports - ANS-goods or services that are purchased from abroad
exports - ANS-goods or services that are sold to citizens abroad
free trade regime - ANS-a system in which imports and exports of goods or services
take place voluntarily, without government restrictions and based on a principle of free
markets
by providing... a greater amount of choice in the availability of goods and services, lower
prices for goods and services consumed, higher living standards - ANS-how does
international trade benefit consumers?
domestic firms can import raw materials and final goods as well as use services from
abroad, which also allowed an increase in choices that domestic consumers have -
ANS-when a country opens up to international trade, what results?
it enhances consumer satisfaction and welfare - ANS-what results from an increase in
choices for the domestic consumer?
level of competition - ANS-because of imports, the ... in the domestic market increase
since the level of competition rises, this helps keep a lid on price increases, and it leads
to better quality products - ANS-how do imports benefit consumers?
increase production overseas generates new jobs as well as higher wages at home -
ANS-how does international trade raise people's living standards
absolute advantage - ANS-the ability of one country to produce a good or service more
efficiently than another
comparative advantage - ANS-the ability of one country that has an absolute advantage
in the production of two or more goods (or services) to produce one of them relatively
more efficiently than the other
, foreign direct investment - ANS-an overseas investment in plant and equipment to
produce goods or services for local consumption or for exports
protection - ANS-the government practice of imposing trade barriers to shield domestic
producers from international competition
negative effects - ANS-protectionist policies in developed countries have severe ... on
developing countries' production, employment, and economic growth
tariffs - ANS-taxes on imports
the consumer - ANS-who bears the cost of tariffs?
quantitative restrictions - ANS-quotas that limit the amount of imports that can come into
a country
a high cost for the domestic consumer and profits for the domestic producers and
importers - ANS-what do quotas result in?
voluntary restraints - ANS-self-imposed export quotas on specific sensitive products to a
specific country or countries for a set period of time
counter trade - ANS-a barter system of exchange in which trade between specific
countries is conducted without the use of monetary transactions
embargoes - ANS-trade sanctions that are imposed on a country and that restrict trade
with that country
foreign exchange markets - ANS-financial centers where a network of international
banks and currency traders (people who buy, sell, or speculate on currencies) transact
business
exchange rate - ANS-the price of one currency compared to that of another currency
floating exchange rate system - ANS-the system in which currency values are
determined by the demand for and supply of currencies in a foreign exchange market
managed floating exchange rate system - ANS-a floating exchange rate system in
which the values of some currencies are partly determined by active government
intervention (central bank purchases and sales of their own currencies)
fixed exchange rate system - ANS-the system in which a country pegs (fixes) its
currency value (formally or de facto) at a fixed rate to a major currency or a basket of
currencies
in a free market system, price is determined by.. - ANS-demand and supply
