When A Country Specializes In Producing A Product At Which It Is Relatively More Efficient?

When a country is spending more on foreign trade than it is earning?

when a country spends more on imports than it earns from exports.

when a country earns more from exports than it spends on imports.

the value of a country’s exports minus the value of all its imports.

When the result of this calculation is a negative number, the country has a trade deficit..

What is it when a country imports more than it exports?

If a country exports more than it imports is has a trade surplus. When a country imports more than it exports it’s considered a trade deficit.

Which countries were merged by Nafta?

The North American Free Trade Agreement (NAFTA) was implemented in order to promote trade between the U.S., Canada, and Mexico. The agreement, which eliminated most tariffs on trade between the three countries, went into effect on January 1, 1994.

Should a country produce everything it wants?

No a country should produce items for which it has a comparative advantage and trade for other items. … Yes just because a country has an absolute advantage does not mean it should produce the item. A country should specialize in whatever it has a comparative advantage in.

What determines which goods a country should produce and export?

What determines which goods a country should produce and export? goods for which its residents have a high demand—exceeding its domestic capacity to produce the good efficiently. … The large scale can lead to lower average costs and create a comparative advantage in that good.

Are products that are bought from one country for use in another?

Exports are the goods and services produced in one country and purchased by residents of another country. … Exports are one component of international trade. The other component is imports. They are the goods and services bought by a country’s residents that are produced in a foreign country.

How does international trade help the economy?

Trade is central to ending global poverty. Countries that are open to international trade tend to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people. Open trade also benefits lower-income households by offering consumers more affordable goods and services.

How do imports affect the economy?

A high level of imports indicates robust domestic demand and a growing economy. If these imports are mainly productive assets, such as machinery and equipment, this is even more favorable for a country since productive assets will improve the economy’s productivity over the long run.

What happens when imports increase?

Readers Question: How does an increase in imports cause inflation in the economy? (AD = C+I+G+X-M). Therefore if consumers spend more on imports it will, ceteris paribus, reduce domestic demand. Therefore, we get lower growth of AD and lower inflation.

When a country is the most efficient producer of an item?

absolute advantage. This is an example of absolute advantage, which exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item. You just studied 40 terms!

When a country specializes in the production of a good?

When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other.

What if one country has absolute advantage in both goods?

Even if one country is more efficient in the production of all goods (has an absolute advantage in all goods) than another, both countries will still gain by trading with each other. More specifically, countries should import goods if the opportunity cost of importing is lower than the cost of producing them locally.

When a country can create products at a lower cost than other countries this is an advantage?

In international trade, no country can have a comparative advantage in the production of all goods or services. In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners.

Who is the largest trading partner of United States?

U.S. trade with other nations is worth $4.9 trillion per year. China, Canada and Mexico are the country’s largest trading partners, accounting for nearly $1.9 trillion worth of imports and exports.

What happens if the cost difference is the same in two countries?

If the cost different between two countries are equal or if opportunity cost are same between two different countries then there would be nothing to gain from gaining expertise, the countries are alike and there is no advantage from producing the good overseas rather than at home.