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Current account of balance and payments - Coggle Diagram
Current account of balance and payments
Trade in goods
: it covers exports and imports of goods
Trade in goods deficit:
if there are more imports revenue than there are exports revenue
Trade in good surplus
: the value of exported goods exceeds import revenue
Trade in service:
It involves trade in service between residents on a country and non-resident
exchange rates
Tariff
: a tax imposed on imported products
Embargo
: a ban on imports/exports
Exchange control
: limiting the amount of foreign currency available
Quota
: a limit placed on imports/exports
Quality standards
: requiring imports to reach ridiculously high standards
Expensive paperwork
: requiring foreign firms who wish to sell to the country to first fill out time-consuming paperwork
Voluntary export restraints
: agreements with other governments to restrict their exports
Subsidies
: government giving out finance to help domestic firms sell at lower prices
Specialisation
Absolute advantage
- uses fewer resources to produce the good
comparative advantage
- can produce at a lower opportunity cost
Determinants of comparative advantage:
Geographic location
Natural resource endowments
Political factors
Historical influences
Other productive capabilities
Arguments for protection methods
Protect infant industry
Protect declining industry
Protect strategic industry
Raise employment and improve the trade position
Protect against low wage competitors
Protect against dumping
Protect against unfair competition