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Final_Review_Sheet_for_chapters_1-8

Pw s1 s2 d2 d1 m2 export vs production subsidies an

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PW S1 S2 D2 D1 M2
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Export vs. Production Subsidies An export subsidy is a payment to a firm for every unit exported. A production subsidy is when the government provides a subsidy of s dollars for every unit (for example, tons of sugar) that a Home firm produces. It is a subsidy to every unit produced, not just to units exported.
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Chapter 7 U.S. Commercial Policy The most-favored-nation (MFN) clause is an agreement between two nations to apply tariffs to each other at rates as low as those applied to any other nation. The GATT was established in 1947 to reduce barriers to trade between nations. The greatest achievement of the Uruguay Round was the creation of a new international institution, the World Trade Organization (WTO).
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WTO The WTO greatly expanded GATT by adding rules that govern an expanded set of global interactions through binding agreements. The WTO dispute settlements system is stronger and more effective than the previous GATT.
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Chapter 8 International Trade Agreements Free trade area A group of countries agreeing to eliminate tariffs (and other barriers to trade) between themselves, but keeping whatever tariffs they formerly had with the rest of the world. Customs Union In addition to eliminating tariffs among countries in the union, the countries within a customs union also agree to a common schedule of tariffs with each country outside the union.
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Regional Trade Agreements Trade Creation and Trade Diversion When trade agreements are made, the increased trade can be of two types. 1. Trade creation occurs when a member country imports a product from another member country that it made for itself before. It is welfare improving. 2. Trade diversion occurs when one member country imports a product from another member country that it was previously importing from an outside country. It is welfare reducing.
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