International trade


Kartei Details

Karten 99
Sprache English
Kategorie VWL
Stufe Universität
Erstellt / Aktualisiert 09.10.2017 / 10.04.2018
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What is the market demand?

Sum of the quantities by all buyers at each price

What happens when the price changes?

Movement along the demand curve

what happens when the demand changes?

shift in the demand curve

What is the substitution effect?

Price is lower comparedto similar products-->Demand increases-->D-Curve moves to the right

what is the income effect?

Income remains the same but price falls-->demand increases-->d-curve moves to the right

name other examples than price that can lead to a shift in the demand curve

Income, prices of related good(substitutes and complements), tastes and fashion, number of buyers (population), expectations of consumers

what is the law of supply?

claim that the quantity supplied of a good rises when the price of the good rises.

what happens when the supply curve moves to the right?

increase in supply

what is a market equilibrium?

Point at which the supply and demand curve intersect

what is a surplus?

supplied quantity is bigger than quantity demanded(above equilibrium)

what is a shortage?

supplied quantity is smaller than demanded quantity(below equilibrium)

how can you measure the consumer surplus?

area below demand curve and above the price (amount that buyer is willing to pay - amount they actually paid)

what is the producer surplus?

amount that seller is paid for a good - seller's cost

what does absolute advantage mean?

producer that needs a smaller amount of intputs to produce a good

what does comparative advantage mean?

the producer with smaller opportunity cost of producing a good has a comparative advantage in producing that good

what is protectionism?

Restricting trade by applying tariffs, export subsidies, customs and entry procedures, quotas

what is an import quota?

limit how much can be imported of a good

what is a tariff?

tax on an imported good

what are the advantages of international trade on a microeconomic level?

- Increased viariety of goods, lower costs through econoies of scale, higer productivity through increased competition, echanced flow of know-how, "democratisation" through opening of markets

what are the disadvantages of international trade on a microeconomic level?

-increase in gap between the rich and the poor, exploitation of workers and growers, increase in pollution and waste of natural ressources, dominance of global trade by the rich, northern hemisphere countries, lack of opportunities for the poor to be able to have3 access to global markets

what is the main goal of the WTO?

International trade. (at the end of the 19th century trade had reached remarkable levels due to colonialism, but dropped due to wars and isolationist policies. GATT was founded after WWll and WTO in 1995

what are the functions of the WTO?

-Administering WTO trade agreements

-forum for trade negotiations

-handling trade disputes,

-monitoring national trade policies

-technical assistance and training for d3eveloping countries

-cooperation with other international organizations

what are the 5 principles of the WTO to ensure free trade?

-Non-Discrimination

-Reciprocity (lower trade barriers through negotiations

-Binding and enforceable commitments

-Transperacy

-Safety values

What do the loosers from international trade lobby for?

-tarrifs on imported goods

-Import quotas

-Exports subsidies

what are the reasons governments build up trade barriers?

-protect local jobs (no foreign competitors)

-encourage local production te replace imports

-protect infant industries

-reduce reliance on foreign suppliers

-encourage local investment and FDI

What does appreciation and depreciation mean when it comes to exchange rates?

Appreciation: Increase in the exchange rate

Depreciation: decrease in the exchange rate

how can you calculate the REAL exchange rate?

realer exchange rate=(nominal exchange rate x price of swiss goods in CHF) : Price of european goods in euros

What are the 3 goals of the Central Bank?

1. stable exchange rate

2. capital mobility

3. Monetary policy autonomy

What does PPP mean?

purchasing power parity --> measures the purchasing power of one currency against another after taking into account their exchange rates

what does the PPP Theory tell us?

that price differentials between countries are not sustainable in the long run as market forces will equalize prices between countries and change exchange rates in doing so

how can you calculate the PPP exchange rate?

P*/P (price in euro/price in CHF)

What are the 5 goals of the IMF (International monetary system)

-Ensure price stability

-ensure the supply of cash

-provide cashless payment transactions

-manage investment of international reserves

-ensure stability of the financial system

What is the gold standard?

Valua of money directly linked to gold

What are the 5 jump-starts to growth?

-trade -productivity -inclusive growth -gender equality -debt management

What does GDP mean?

Gross domestic product --> market valua of all final goods and services produced within a country in a given period of time

what are the 3 ways to measure GDP?

-Production approach (Production value - purchases + taxes - subsidies)

-expenditure approach (Y= C+I+G+NX)

-Income approach

 

Why is the GDP a good measurement for the performance of a country?

-Best measurement of the ECONOMIC well-being of a society

-The data you need for GDP is available in many countries

-Higher GDP per capita = higher standard of living

what is the downside of GDP?

Can't measure welfare, happiness and quality of life

What are the 6 points of the magical hexagon to compare countries?

Economic growth - price stability - ecological quality - full employment - foreigh trade equilibrium - social welfare

what is the difference between nominal GDP and Real GDP?

Nominal --> at current prices

Real --> at constant prices