OUTLINE CHAPTER 5 - ECONOMICS OUTLINE CHAPTER 5 International Linkages Goods and service flows(trade flows Capital and labor flows(resource flow

OUTLINE CHAPTER 5 - ECONOMICS OUTLINE CHAPTER 5...

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ECONOMICS OUTLINE CHAPTER 5 International Linkages- Goods and service flows (trade flows), Capital and labor flows(resource flow), Information and technology flows, Financial flows. Tariffs- excise taxes (duties) on imported products. Comparative advantage- A situation in which a person or country can produce at a lower opportunity cost than some other person or country; the basis for specialization or trade. Terms of trade- The rate at which units of one product can be exchanged for another product; the price of a good or service; the amount of one good or service that must be given up to obtain 1 unit of another good or service. Foreign exchange market- A market in which the money(currency) of one nation can be used to purchase (can be exchanged for) the money of another nation; (to eliminate a payments deficit. Exchange rates- The rate of exchange of one nations currency for another nations currency. Depreciation-(of the dollar)- A decrease in the value of the dollar relative to another currency, so a dollar buys a smaller amount of the foreign currency and therefore of foreign goods.

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