Chapter 5: The United States in the Global Economy

When a nation can produce a product at a lower domestic opportunity cost than can a potential trading partner

Mutually beneficial; trade goods in order to do better than through domestic production alone

A market in which various national currencies are exchanged for one another

The rate at which the currency of one nation can be exchanged for the currency of another

When the international value of a currency declines

When the international value of a currency increases

Excise taxes or duties placed on imported goods; shields domestic producers from foreign competition

Limits on quantities of specific items that may be imported

Onerous licensing requirements, unreasonable product quality standards, bureaucratic delays in customs procedures, etc.

Government payments to domestic producers of export goods

Meant to reduce imports + stimulate US production; caused other nations to retaliate with its own high tariffs

Aimed at reducing tariffs + started a downward trend of tariffs

Reduced US tariffs that result from negotiation apply equally to any nation that signed an original agreement

European Union (________)- Regional free- trade zone including several European nations.

Forum for negotiation of reduced trade barriers on a multilateral basis among nations

________ pay higher- than- world prices.

Oversees trade agreements reached by member nations + rules on trade disputes among them

Negotiations aimed at further reducing tariffs, quotas, and agricultural subsidies

Regional free-trade zone including several European nations

________ (NAFTA0- Free- trade zone between Canada, Mexico, and the US.

A group of countries having a common identity, economic interests, and trade rules

EU’s common currency; expected to raise standard of living for EU members over time

Free-trade zone between Canada, Mexico, and the US

Helps those hurt by shifts in international trade patterns

Shifting work previously done by American workers to workers located in other nations