A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
The ratio of a country's exports divided by its GDP.
Financial assets including, stocks, bonds, deposits, and currencies.
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
Absolute 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.
The Product Life Cycle Theory of 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.
The Heckschler-Ohlin Model → A country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.
Capital Abundant → the situation where a country has a high capital-to-labor ratio relative to another country.
Intra-industry trade → Occurs when a country imports and exports the same good.
Gains from trade → 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.