Question

cycle is increasing, it is in the _____________ phase, whereas when its decreas is in the _____________ phase.

1. the circular flow diagram shows how money is circulated in the economy. in the

_______________ market, households purchase goods from businesses. in the
_____________ market, households provide _____________ to businesses in
exchange for a _______________.

unit 4:
word bank: surplus, cars, absolute, rate, deficit, protectionism, all, production, exchange,
import quota, computers, comparative, tariff

1. international trade improves the standard of living in ________ countries. if country a

can produce more of a good than country b, it is said that country a has a(n)
_______________ advantage in producing that good. if country b can produce a good at
a lower opportunity cost, it is said that country b has a(n) _______________ advantage.
a country should only produce a good if it has a comparative advantage in making that good. if
it costs the us 10 computers to make one car and it costs japan 8 computers to make cars, the
us should make _____________ and japan should make _____________.

1. if one country imposes trade barriers against another, it is practicing a policy of

_____________. one such trade barrier is a(n) _____________, which limits
the amount of a good that is permitted into the country. another trade barrier is a(n)
_______________, which is simply a tax on imported goods.

1. if a country exports more than they import, it is running a trade _______________. if a

country imports more than it exports, it is running a trade _______________. one reason that
china exports more than it imports is that cost of _______________ is lower in china. the
_______________ measures the value of one nation’s currency in terms of another
nation’s currency.

Explanation:

For the first fill - in of the international trade question:

• "all" countries: International trade generally has the potential to improve the standard of living in all participating countries as it allows for specialization and access to a wider variety of goods.
• "absolute" advantage: Absolute advantage is defined as the ability of an entity to produce a greater quantity of a good or service than others using the same amount of resources. So if Country A can produce more of a good than Country B, Country A has an absolute advantage.
• "comparative" advantage: Comparative advantage is about having a lower opportunity cost in producing a good or service. If Country B can produce a good at a lower opportunity cost, it has a comparative advantage.
• For the production decisions: The US has a higher opportunity cost (10 computers per car) for making cars compared to Japan (8 computers per car). So the US should specialize in making "computers" (since its opportunity cost for computers is lower relative to cars) and Japan should make "cars" (as its opportunity cost for cars is lower).

For the trade barriers question:

• "protectionism": A policy of protectionism involves imposing trade barriers to protect domestic industries from foreign competition.
• "import quota": An import quota is a trade barrier that limits the quantity of a particular good that can be imported into a country.
• "tariff": A tariff is a tax imposed on imported goods.

For the trade surplus/deficit question:

• "surplus": When a country exports more than it imports, it has a trade surplus.
• "deficit": When a country imports more than it exports, it has a trade deficit.
• "production": One reason China exports more than it imports could be that the cost of production is lower in China, making its goods more competitive in the international market.
• "exchange rate": The exchange rate is the value of one nation's currency in terms of another nation's currency.

For the circular flow diagram question:

• In the "product" (or "goods and services") market, households purchase goods from businesses.
• In the "factor" (or "resource") market, households provide "resources" (such as labor, capital, land, entrepreneurship) to businesses in exchange for a "factor payment" (such as wages, interest, rent, profit).

For the business cycle question:

• When the business cycle is increasing, it is in the "expansion" phase.
• When the business cycle is decreasing, it is in the "contraction" (or "recession") phase.

Answer:

Unit 4 Question 1

1. all; absolute; comparative; computers; cars

Unit 4 Question 2

1. protectionism; import quota; tariff

Unit 4 Question 3

1. surplus; deficit; production; exchange rate

Question 4 (Circular Flow)

1. product (goods and services); factor (resource); resources (labor, capital, land, entrepreneurship); factor payment (wages, interest, rent, profit)

Business Cycle Question

(For the cycle question) expansion; contraction (recession)