Key Terms

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

Imports
Exports
Globalization
Ricardian model of international trade
Autarky
Factor intensity
Heckscher–Ohlin model
Domestic demand curve
Domestic supply curve
World price
Exporting industries
Import-competing industries
Free trade
Trade protection
Protection
Tariff
Import quota
Balance of payments accounts
Balance of payments on current account (current account)
Merchandise trade balance (trade-balance)
Balance of payments on financial account (financial account)
Foreign exchange market
Exchange rates
Appreciation
Depreciation
Equilibrium exchange rate
Real exchange rates
Purchasing power parity
goods and services purchased from other countries
transactions that don’t create liabilities; a country’s balance of payments on goods and services plus net international transfer payments and factor income
the difference in the ratio of factors used to produce a good in various industries. For example, oil refining is capital-intensive compared to clothing manufacture because oil refiners use a higher ratio of capital to labor than do clothing producers
industries that produce goods or services that are sold abroad
a rise in the value of one currency in terms of other currencies
a supply curve that shows how the quantity of a good supplied by domestic producers depends on the price of that good
a legal limit on the quantity of a good that can be imported
trade that is unregulated by government tariffs or other artificial barriers; the levels of exports and imports occur naturally, as a result of supply and demand
policies that limit imports; an alternative term for trade protection.
the market in which currencies can be exchanged for each other
(between two countries’ currencies) the nominal exchange rate at which a given basket of goods and services would cost the same amount in each country
goods and services sold to other countries
industries that produce goods or services that are also imported
a summary of a country’s transactions with other countries, including two main elements: the balance of payments on current account and the balance of payments on financial account
the difference between a country’s exports and imports of goods alone—not including services
international transactions that involve the sale or purchase of assets, and therefore create future liabilities
the price at which currencies trade, determined by the foreign exchange market
the exchange rate adjusted for international differences in aggregate price levels
a situation in which a country does not trade with other countries
a demand curve that shows how the quantity of a good demanded by domestic consumers depends on the price of that good
the phenomenon of growing economic linkages among countries
a tax levied on imports.
policies that limit imports; also known simply as protection
a model of international trade in which a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that country
a model that analyzes international trade under the assumption that opportunity costs are constant
the exchange rate at which the quantity of a currency demanded in the foreign exchange market is equal to the quantity supplied
the price at which a good can be bought or sold abroad
a fall in the value of one currency in terms of other currencies

Imports, p. 572

Exports, p. 572

Globalization, p. 572

Ricardian model of international trade, p. 573

Autarky, p. 574

Factor intensity, p. 579

Heckscher–Ohlin model, p. 579

Domestic demand curve, p. 582

Domestic supply curve, p. 582

World price, p. 582

Exporting industries, p. 586

Import-competing industries, p. 586

Free trade, p. 588

Trade protection, p. 588

Protection, p. 588

Tariff, p. 588

Import quota, p. 590

Balance of payments accounts, p. 592

Balance of payments on current account (current account), p. 594

Balance of payments on goods and services, p. 594

Merchandise trade balance (trade balance), p. 594

Balance of payments on financial account (financial account), p. 594

Foreign exchange market, p. 599

Exchange rates, p. 599

Appreciation, p. 599

Depreciation, p. 599

Equilibrium exchange rate, p. 600

Real exchange rate, p. 602

Purchasing power parity, p. 604