International Concepts Vocabulary

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Absolute advantage

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The ability of a country to produce more of a good using the same amount of resources as another country

Answer explanation

Absolute advantage refers to a country's ability to produce more of a good using the same resources as another country, making it more efficient in production compared to others.

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Comparative advantage

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The ability to produce a good at a lower opportunity cost than another country

Answer explanation

Comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than another country, allowing for more efficient trade and specialization.

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What is specialization?

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A focus on producing a limited range of goods and services efficiently

Answer explanation

Specialization refers to focusing on producing a limited range of goods and services efficiently, allowing for greater productivity and expertise in those areas, which is why this choice is correct.

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What is the balance of trade?

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The difference between a country’s exports and imports

Answer explanation

The balance of trade is defined as the difference between a country’s exports and imports. It indicates whether a country has a trade surplus (exports > imports) or a trade deficit (imports > exports).

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Trade Surplus

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When a country exports more than it imports

Answer explanation

A trade surplus occurs when a country exports more goods and services than it imports. This means the correct choice is 'When a country exports more than it imports', indicating a positive balance of trade.

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Trade Deficit

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When a country imports more than it exports

Answer explanation

A trade deficit occurs when a country imports more goods and services than it exports. This means that the correct choice is 'When a country imports more than it exports', as it accurately defines the term.

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What is free trade?

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Trade that occurs without government restrictions

Answer explanation

Free trade refers to trade that occurs without government restrictions, allowing goods and services to flow freely between countries. This contrasts with high tariffs and other trade barriers.

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What is a trade barrier?

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A government-imposed restriction on international trade

Answer explanation

A trade barrier is defined as a government-imposed restriction on international trade, which can take various forms such as tariffs or quotas, aimed at protecting domestic industries.

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What is a tariff?

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A tax on imported goods

Answer explanation

A tariff is specifically defined as a tax imposed on imported goods, making it the correct choice. The other options describe different trade restrictions or incentives, but do not accurately define a tariff.

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What is a quota?

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A limit on the quantity of a good that can be imported

Answer explanation

A quota specifically refers to a limit on the quantity of a good that can be imported into a country, making it the correct choice. The other options describe different trade concepts.