7 Written questions
6 Multiple choice questions
- The ratio of a country's exports divided by its GDP.
- A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
- states that as countries move towards free trade, each country's abundant factor receives a higher rate of payment, and each country's scarce factor is harmed by a lower rate of return.
o U.S example- Our abundant factor is highly skilled labor, which will benefit from expanded trade with China. Our scarce factor is unskilled labor which is harmed by trade with China.
- Financial assets including, stocks, bonds, deposits, and currencies.
- are demonstrated by showing that each country moves to a higher CIC. OR, by showing that both countries can have higher levels of consumption of both goods.
- A country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.
6 True/False questions
Dynamic Gains from Trade → The 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.
Portfolio Investment → Financial assets including, stocks, bonds, deposits, and currencies.
Explanations for Intra-industry trade → Production is spread around the world with various countries producing components that are assembled and sold around the world. Each country specializes in a particular component in order to gain economies of large scale production.
Comparative Advantage → 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.
Foreign Direct Investment (FDI) → The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
Mercantilism → Financial assets including, stocks, bonds, deposits, and currencies.