1. Chapter 16 Review
International Trade

2. Vocabulary Terms Exports Absolute advantage Protective tariff
Infant Industries Argument
Fixed exchange rate

3. Vocabulary Terms Most favored nation clause NAFTA Free Traders
Foreign exchange rate
Trade surplus

4. Concepts Tariffs and Quotas Trade Agreements Different type Reciprocal
What are their function/purpose
Trade Agreements
Reciprocal
NAFTA
What do they do?
Are they successful?

5. Concepts Exchange Rates How are exchange rates determined?
Reading an exchange rate table
Determine the value of a dollar against other currencies.
How does exchange rates effect the prices of goods and services?

6. Concepts WTO Traded Deficits/Surpluses What is it?
Does it help or hurt world trade?
How?
Why?
Traded Deficits/Surpluses
What causes them?
How are they remedied?

7. Concepts Comparative and Absolute Advantage How are determined?
What are the advantages to them?
Using a PPC, how would you know what is best fro a particular country?
How would Adam Smith resolve this dilemma?

8. U.S. Imports/Exports by Area
Page 443

9. Gains From Trade
Page 444

10. Exchange Rate Table (May 12, 2006)
Page 457

11. Flexible/Floating Exchange Rates
Page 459

12. Chapter 16-1 Visual Summary
Page 463

13. Chapter 16-2 Visual Summary
Page 463

14. Chapter 16-3 Visual Summary
Page 463

15. Essay
What conclusions can you make from the graph of exports and imports about the specialties of U.S. products relative to other countries? How can a country be both an importer and exporter of the same types of goods?

16. Essay
Twelve countries of the European Union have established a single currency, the Euro. How do this benefit those countries? How does a flexible exchange rate tend to correct trade “deficits” over time?

17. Essay
How does “comparative” advantage differ from “absolute” advantage? Why is international trade better for all countries than an attempt for each country to produce everything it needs?