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7 Written Questions

6 Multiple Choice Questions

  1. The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
  2. Occurs when a country imports and exports the same good.
  3. Different countries produce different varieties of the same product to sell to consumers in various countries with differences in preferences.
  4. A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
  5. Dissimilar good with different factor intensities are lumped together in trade statistics.
  6. A country has a comparative advantage in the production of a good if the relative cost (opportunity cost) of producing that good is lower than that of its trading partner.

6 True/False Questions

  1. The Index of OpennessThe ratio of a country's exports divided by its GDP.

          

  2. Adam Smith's Wealth of NationsThe gains from trade that occur over time because trade causes an increase in a country's economic growth or induces greater efficiency in the use of existing resources.

          

  3. The importance of being unimportantthe smaller of two trading economies receives the greatest gains from trade.
    Trade benefits both trading countries
    Gains due to differences in absolute advantage between countries.

          

  4. Foreign Direct Investment (FDI)A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.

          

  5. The Stolper-Samuelson TheoryA country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.

          

  6. Portfolio CapitalThe acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.

          

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