IB Economics — The Global Economy flashcards
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Gains from trade, protection and its arguments, economic integration, exchange rate systems, the balance of payments, sustainable development, HDI and other development measures, barriers to development and strategies.
Learn deck · part of IB Economics · written against: IB Diploma Programme IB Economics current subject guide; SL and HL in one deck, HL-only cards under subtopic tags starting HL. Updated 2026-10-10.
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Besides lower prices, what benefits can free trade bring to an economy?Greater choice, economies of scale from selling to larger markets, stronger competition and efficiency, access to resources and technology, and earnings of foreign exchange.The Global Economy › Benefits of Trade
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What decides which of two countries has the comparative advantage in a good?The country that produces it at the lower opportunity cost — giving up less of other goods — has the comparative advantage, even if it is less productive at everything in absolute terms.The Global Economy › HL Trade and Exchange Rate Extensions
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Why might comparative advantage give a poor guide to real trade patterns? Give two limitations of the theory.It assumes constant costs, no transport costs and perfectly mobile factors; in reality workers displaced by imports may face long structural unemployment, and specialising can lock a country into a narrow, volatile export base.The Global Economy › HL Trade and Exchange Rate Extensions
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What does the World Trade Organization do?It sets and enforces rules for international trade, hosts negotiations to liberalise trade, and settles disputes between members, based on principles such as non-discrimination.The Global Economy › Benefits of Trade
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What is the most-favoured-nation principle in WTO rules?A member must give every other member the same, most favourable tariff treatment it gives any one of them; exceptions allow free trade areas, customs unions and preferences for developing countries.The Global Economy › Benefits of Trade
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Apart from tariffs and quotas, what forms can trade protection take?Production subsidies for domestic firms, export subsidies, and administrative barriers such as strict product standards, slow customs procedures or import licensing.The Global Economy › Trade Protection
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How does a production subsidy to domestic firms protect them from imports, and who pays for it?It lowers domestic firms' costs, shifting domestic supply right, so domestic output rises and imports fall while consumers still pay the world price. Taxpayers fund it, and inefficient producers may be kept in business.The Global Economy › Trade Protection
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Why are administrative barriers harder to challenge than tariffs?They are presented as health, safety or environmental standards with legitimate purposes, so it is hard to prove that their real aim is to keep imports out.The Global Economy › Trade Protection
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What is the infant industry argument for protection, and what is its main weakness?A new industry may need temporary protection to grow and reach economies of scale before it can compete. The weakness is that protection is often hard to remove, and sheltered firms have little incentive to become efficient.The Global Economy › Trade Protection
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What is dumping, and what response do WTO rules permit?Dumping is exporting at a price below the cost of production or below the price charged at home. If it injures a domestic industry, the importing country may impose anti-dumping duties.The Global Economy › Trade Protection
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About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- OpenStax Principles of Economics 3e, consulted as a reference; no text copied.
- Checked against UNDP Human Development Report technical notes (reference only; no text copied).
- IB Diploma Programme subject guide (topic outline only; no text copied): Economics guide for first assessment 2024 (published February 2020, updated October 2022).
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