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Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Terms of trade (TOT) is a measure of how much imports an economy can get for a unit of exported goods. For example, if an economy is only exporting apples and only importing oranges, then the terms of trade are simply the price of apples divided by the price of oranges — in other words, how many oranges can be obtained for a unit of apples.
This is because in the short run, prices of imports rise due to the depreciation and also in the short run there is a lag in changing consumption of imports, therefore there is an immediate jump followed by a lag until the long run prevails and consumers stop importing as many expensive goods and along with the rise in exports cause the current ...
This represents GDP because all the production in an economy (the left hand side of the equation) is used as consumption (C), investment (I), government spending (G), and goods that are exported in excess of imports (NX). Another equation defining GDP using alternative terms (which in theory results in the same value [citation needed]) is
In a direct-import program, the retailer bypasses the local supplier (colloquial: "middle-man") and buys the final product directly from the manufacturer, possibly saving in added cost data on the value of imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade ...
The notion of the balance of trade does not mean that exports and imports are "in balance" with each other. If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.
It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the resources of a trading region. The model essentially says that countries export the products which use their relatively abundant and cheap factors of production, and import the products which use the countries' relatively ...
If the long-run export and import elasticities equal .5 and -.5, exports will rise 5% to $63 million and imports will fall 5% to $104.5 million. The long-run result is a trade deficit of $41.5 million, smaller than the short-run deficit but bigger than the original deficit of $40 million before the depreciation.