AP Microeconomics Flashcards: International Trade And Public Policy

What this deck covers

This deck focuses on International Trade And Public Policy, giving you a quick way to review the definitions, rules, and examples that matter most for AP Microeconomics.

How to use these flashcards

Work through these flashcards in short sessions. Try to answer each prompt before flipping the card, then revisit any cards you miss until the explanation feels automatic.

Flashcard 1: What is a non-tariff barrier?

Answer: Trade restrictions other than tariffs, like quotas. Regulatory barriers beyond tariffs.

Flashcard 2: Which organization helps resolve trade disputes?

Answer: World Trade Organization (WTO). International arbitrator for trade conflicts.

Flashcard 3: What is the impact of tariffs on consumer surplus?

Answer: Consumer surplus decreases. Higher prices reduce consumer benefit.

Flashcard 4: What is a customs union?

Answer: A group of countries with common tariffs on non-members. Unified external trade policy among members.

Flashcard 5: Identify the term for a government payment to encourage production.

Answer: Subsidy. Financial aid to boost domestic production.

Flashcard 6: What is the infant industry argument?

Answer: Protection for new industries to help them grow. Temporary protection until industry matures.

Flashcard 7: What does the term 'trade surplus' mean?

Answer: Exports exceed imports. Positive net exports indicate competitive economy.

Flashcard 8: What is the balance of trade?

Answer: Difference between exports and imports value. Net flow of goods in international trade.

Flashcard 9: Define dumping in international trade.

Answer: Selling goods below production cost to capture market share. Predatory pricing to eliminate competition.

Flashcard 10: What does the term 'trade deficit' mean?

Answer: Imports exceed exports. Negative net exports show trade imbalance.

Flashcard 11: State the formula for calculating opportunity cost.

Answer: $\frac{\text{Loss in Good Y}}{\text{Gain in Good X}}$. Measures what must be sacrificed to gain one unit.

Flashcard 12: Identify the term for a legal ban on trade with a particular country.

Answer: Embargo. Complete prohibition of trade relations.

Flashcard 13: What is the impact of tariffs on consumer surplus?

Answer: Consumer surplus decreases. Higher prices reduce consumer benefit.

Flashcard 14: What is the infant industry argument?

Answer: Protection for new industries to help them grow. Temporary protection until industry matures.

Flashcard 15: Identify the effect of tariffs on government revenue.

Answer: Government revenue increases. Tariff collections increase public funds.

Flashcard 16: Which policy tool can lead to trade wars?

Answer: Tariffs. Retaliatory tariffs escalate between countries.

Flashcard 17: Identify the effect of a quota on domestic prices.

Answer: Domestic prices increase. Limited supply raises equilibrium price.

Flashcard 18: Define absolute advantage.

Answer: Ability to produce more of a good with the same resources. Higher productivity with identical inputs.

Flashcard 19: What is the main goal of trade liberalization?

Answer: To reduce trade barriers. Promotes free market competition globally.

Flashcard 20: What is the effect of quotas on producer surplus?

Answer: Producer surplus increases. Limited imports raise domestic producer profits.

Flashcard 21: State one benefit of free trade.

Answer: Increased economic efficiency. Specialization leads to optimal resource allocation.

Flashcard 22: State the formula for calculating opportunity cost.

Answer: $\frac{\text{Loss in Good Y}}{\text{Gain in Good X}}$. Measures what must be sacrificed to gain one unit.

Flashcard 23: What is a trade bloc?

Answer: A regional group of countries with a formal trade agreement. Economic partnership with preferential terms.

Flashcard 24: What is the difference between a tariff and a subsidy?

Answer: Tariff is a tax; subsidy is a government payment. One restricts imports, other supports exports.

Flashcard 25: State one benefit of free trade.

Answer: Increased economic efficiency. Specialization leads to optimal resource allocation.

Flashcard 26: Define dumping in international trade.

Answer: Selling goods below production cost to capture market share. Predatory pricing to eliminate competition.

Flashcard 27: What is the purpose of trade barriers?

Answer: To protect domestic industries. Shield local firms from foreign competition.

Flashcard 28: What is the purpose of anti-dumping policies?

Answer: To prevent foreign firms from selling below cost. Counter unfair pricing practices.

Flashcard 29: What is economic integration?

Answer: Unification of economic policies between different states. Coordination of trade and economic policies.

Flashcard 30: What is the WTO?

Answer: World Trade Organization. International body governing global trade rules.

Flashcard 31: Identify a common reason for imposing tariffs.

Answer: Protect domestic employment. Preserve jobs from foreign competition.

Flashcard 32: Identify a common reason for imposing tariffs.

Answer: Protect domestic employment. Preserve jobs from foreign competition.

Flashcard 33: Which organization helps resolve trade disputes?

Answer: World Trade Organization (WTO). International arbitrator for trade conflicts.

Flashcard 34: What is a tariff?

Answer: A tax on imported goods. Raises import prices to protect domestic producers.

Flashcard 35: Identify the term for a government payment to encourage production.

Answer: Subsidy. Financial aid to boost domestic production.

Flashcard 36: What is the effect of subsidies on domestic producers?

Answer: Increased production and competitiveness. Lower costs boost domestic market position.

Flashcard 37: What is the main goal of trade liberalization?

Answer: To reduce trade barriers. Promotes free market competition globally.

Flashcard 38: What is a trade agreement?

Answer: A treaty between two or more nations to outline trade terms. Formal contract reducing trade barriers.

Flashcard 39: Which policy tool can lead to trade wars?

Answer: Tariffs. Retaliatory tariffs escalate between countries.

Flashcard 40: Identify the effect of a tariff on the quantity of imports.

Answer: Quantity of imports decreases. Higher prices reduce import demand.

Flashcard 41: What is a customs union?

Answer: A group of countries with common tariffs on non-members. Unified external trade policy among members.

Flashcard 42: Identify the term for a legal ban on trade with a particular country.

Answer: Embargo. Complete prohibition of trade relations.

Flashcard 43: State the formula for net exports.

Answer: Net Exports = Exports - Imports. Measures country's trade balance.

Flashcard 44: What is a trade agreement?

Answer: A treaty between two or more nations to outline trade terms. Formal contract reducing trade barriers.

Flashcard 45: What is a trade bloc?

Answer: A regional group of countries with a formal trade agreement. Economic partnership with preferential terms.

Flashcard 46: Identify the term for restrictions on the quantity of goods imported.

Answer: Quota. Limits physical amount, not price.

Flashcard 47: What is the purpose of anti-dumping policies?

Answer: To prevent foreign firms from selling below cost. Counter unfair pricing practices.

Flashcard 48: Identify the term for restrictions on the quantity of goods imported.

Answer: Quota. Limits physical amount, not price.

Flashcard 49: What is the WTO?

Answer: World Trade Organization. International body governing global trade rules.

Flashcard 50: Define a trade embargo.

Answer: A government order to restrict trade with a country. Complete ban on trade for political reasons.

Flashcard 51: Identify the effect of a tariff on the quantity of imports.

Answer: Quantity of imports decreases. Higher prices reduce import demand.

Flashcard 52: What is an import license?

Answer: A permit allowing the importation of certain goods. Legal permission for specific imports.

Flashcard 53: Identify the effect of a quota on domestic prices.

Answer: Domestic prices increase. Limited supply raises equilibrium price.

Flashcard 54: Define a trade embargo.

Answer: A government order to restrict trade with a country. Complete ban on trade for political reasons.

Flashcard 55: Identify the term for a tax on exports.

Answer: Export tariff. Tax on goods leaving the country.

Flashcard 56: What does the term 'trade surplus' mean?

Answer: Exports exceed imports. Positive net exports indicate competitive economy.

Flashcard 57: Identify the effect of tariffs on government revenue.

Answer: Government revenue increases. Tariff collections increase public funds.

Flashcard 58: What is the difference between a tariff and a subsidy?

Answer: Tariff is a tax; subsidy is a government payment. One restricts imports, other supports exports.

Flashcard 59: What is a non-tariff barrier?

Answer: Trade restrictions other than tariffs, like quotas. Regulatory barriers beyond tariffs.

Flashcard 60: State the formula for net exports.

Answer: Net Exports = Exports - Imports. Measures country's trade balance.

Flashcard 61: What is economic integration?

Answer: Unification of economic policies between different states. Coordination of trade and economic policies.

Flashcard 62: What is a tariff?

Answer: A tax on imported goods. Raises import prices to protect domestic producers.

Flashcard 63: What is the purpose of trade barriers?

Answer: To protect domestic industries. Shield local firms from foreign competition.

Flashcard 64: Define absolute advantage.

Answer: Ability to produce more of a good with the same resources. Higher productivity with identical inputs.

Flashcard 65: Identify the term for a tax on exports.

Answer: Export tariff. Tax on goods leaving the country.

Flashcard 66: What is protectionism?

Answer: Economic policy of restraining trade to protect domestic industries. Uses barriers to shield domestic markets.

Flashcard 67: What is the definition of comparative advantage?

Answer: Ability to produce at a lower opportunity cost. Trade based on what you give up least to produce.

Flashcard 68: What is an import license?

Answer: A permit allowing the importation of certain goods. Legal permission for specific imports.

Flashcard 69: What is protectionism?

Answer: Economic policy of restraining trade to protect domestic industries. Uses barriers to shield domestic markets.

Flashcard 70: What is the balance of trade?

Answer: Difference between exports and imports value. Net flow of goods in international trade.

Flashcard 71: What is the effect of quotas on producer surplus?

Answer: Producer surplus increases. Limited imports raise domestic producer profits.

Flashcard 72: What is the effect of subsidies on domestic producers?

Answer: Increased production and competitiveness. Lower costs boost domestic market position.

Flashcard 73: What does the term 'trade deficit' mean?

Answer: Imports exceed exports. Negative net exports show trade imbalance.