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19 True/False questions

  1. externalityselling a good or a service abroad below the price charged in the home market or at a price below its cost of production.

          

  2. trade deflectionmoving partially assembled products into a member nation of a regional trade bloc, completing assembly, and then exporting them to other nations within the bloc, so as to benefit from preferences granted by the trade bloc.

          

  3. optimal quantity of pollutionall costs associated with making, reaching, and enforcing agreements.

          

  4. common propertyproperty that is owned by everyone and therefore by no one. Air and water are examples of common property resources.

          

  5. quota systema government-imposed restriction on the quantity of a specific good that another country is allowed to sell in the united states. in other words, quotas are restrictions on imports. These restrictions are usually applied to one or several specific countries.

          

  6. private costscosts borne solely by the individuals who incur them. Also called internal costs.

          

  7. voluntary import expansion (VIE)an official agreement with another country that "voluntarily" restricts the quantity of its exports to the united states.

          

  8. rules of originshifting existing international trade from countries outside a regional trade bloc to nations within the bloc.

          

  9. regional trade bloca group of nations that grants members special trade privileges.

          

  10. social costscosts borne solely by the individuals who incur them. Also called internal costs.

          

  11. private property rightscosts borne solely by the individuals who incur them. Also called internal costs.

          

  12. trade diversionshifting existing international trade from countries outside a regional trade bloc to nations within the bloc.

          

  13. general agreement on tariffs and trade (GATT)An international agreement established in 1947 to further world trade by reducing barriers and tariffs. The GATT was replaced by the world trade organization in 1995.

          

  14. transaction coststhe full costs borne by society whenever a resource use occurs.. Social costs can be measured by adding external costs to private, or internal, costs.

          

  15. infant industry argumentthe contention that tariffs should be imposed to protect from import competition an industry that is trying to get started. Presumably, after the industry becomes technologically efficient, the tariff can be lifted.

          

  16. world trade organization (WTO)the successor organization to the GATT that handles trade disputes among its member nations.

          

  17. dumpingselling a good or a service abroad below the price charged in the home market or at a price below its cost of production.

          

  18. comparative advantageselling a good or a service abroad below the price charged in the home market or at a price below its cost of production.

          

  19. voluntary restraint agreement (VRA)an official agreement with another country that "voluntarily" restricts the quantity of its exports to the united states.