Flashcards on Globalization, International Trade, and Recruitment
Globalization, International Trade, and Recruitment: Student Guide
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International trade: Macroeconomic & policy
16 cards
Card 1
Question: What is a trade surplus and what are its typical effects?
Answer: A trade surplus occurs when a country exports more than it imports. It is favourable for producers but can lead to higher domestic prices.
Card 2
Question: What is a trade deficit and what are its typical effects?
Answer: A trade deficit occurs when a country imports more than it exports. It is favourable for consumers but may harm local producers.
Card 3
Question: What is trade equilibrium?
Answer: Trade equilibrium occurs when exports equal imports.
Card 4
Question: Define the Balance of Payments (BOP).
Answer: A record of all monetary transactions between a country and the rest of the world over a specific period (e.g., a quarter or a year).
Card 5
Question: What three main accounts make up the Balance of Payments and what does each track?
Answer: Current Account: day-to-day trade in goods & services plus cross-border income (goods, services, wages, dividends, remittances). Capital Account: one-
Card 6
Question: What items are typically recorded in the Current Account?
Answer: Goods, services, wages, dividends, and remittances — i.e., foreign trade and net income on investments and direct payments.
Card 7
Question: What kinds of transactions are recorded in the Capital Account?
Answer: One-off transfers that don’t affect economic output, such as debt forgiveness and transfers of non-produced assets.
Card 8
Question: What does the Financial Account describe and include?
Answer: The change in international ownership of assets, including foreign direct investment (FDI), portfolio flows, and foreign reserves.
Card 9
Question: What is a Balance of Payments surplus and its macroeconomic implication?
Answer: When incoming payments exceed outgoing payments (exports > imports), providing capital for domestic production and potentially allowing international
Card 10
Question: What is a Balance of Payments deficit and its macroeconomic implication?
Answer: When outgoing payments exceed incoming payments (imports > exports), the country must borrow from other countries to pay for its imports.