7 Written Questions
6 Multiple Choice Questions
- The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
- Occurs when a country imports and exports the same good.
- Different countries produce different varieties of the same product to sell to consumers in various countries with differences in preferences.
- A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
- Dissimilar good with different factor intensities are lumped together in trade statistics.
- 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
The Index of Openness → The ratio of a country's exports divided by its GDP.
Adam Smith's Wealth of Nations → 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.
The importance of being unimportant → the 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.
Foreign Direct Investment (FDI) → A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
The Stolper-Samuelson Theory → A country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.
Portfolio Capital → The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.