1.Developed by David Ricardo in the early 19th century, the concept of comparative advantage contends that specialization and trade are mutually beneficial between countries even if one country finds that it is more ________ at producing everything than its trade partners.
2.Standard economic theory predicts that comparative advantage will be in activities that make intensive use of the country's relatively abundant factors of __________.
3.A nation's terms of trade is the ratio of :____________________________.
an index of export prices to an index of import prices
4.In the US, trade based on comparative advantage tends to increase returns to the abundant factors of production -capital and high-skilled workers in the US- and decrease return to the less-abundant factor - _____________.
low-skilled labor in the US
5.The evidence on whether or not trade has contributed to the growing income inequality in the US is mixed and ___________.
6.__________trade occurs when countries import and export within the same industry.
7._______ ___ ________ exist when a production process is more efficient the larger the scale at which it takes place.
Economies of scale
8.From 1990 to 2007, gross capital flows to and from the US leaped by _______% compared to a 248% rise in the trade of goods and services.
9.In 2014, _______ was the largest exporter of goods and services and the ____ was the largest importer of goods and services.
10.US imports and exports of goods and services as a proportion of GDP is (smaller/larger) than other major trading countries. US exports and imports of goods and services as a percent of GDP in 2014 were ____%.
11.From 1960 to 2014, US share of global merchandise exports has ____ from ___% in 1960 to ___% in 2014.
decreased; 15.1; 8.8
12. A trade deficit occurs when a country's ____________________________________.
imports are greater than its exports
13.The US usually runs a deficit in trade of ______ and a surplus in trade of _______.
14. The decline in the US trade deficit from a high of $807 billion in 2006 to $411 billion in 2014 has been attributed to:1)_______________;2)________________
global economic crisis; decline in US oil imports
15.The US trade deficit reflects the fact that US citizens consume more than they produce. The most significant cause of the US trade deficit is the low rate of US domestic ________ relative to its investment needs causing the US to borrow money from other countries.
16.In 2014, US public debt was $ _____________.
17.The countries with the largest trade surpluses as a percent of GDP are:_______(7.8);________(3.2);________(2.1).
Germany; Russia; China
18.The largest economies with the biggest trade deficits as a percent of GDP are:________(5.2);__________(3.9);________(2.4)
UK; Brazil; US
19._______has the highest ratio of national savings to investment.
20.Other factors remaining stable, if the US increased its exports without increasing its ________ (which decreases the need for imports), the US trade deficit would be little affected.
21.The currency exchange rate is affected by a trade deficit. For instance, an excess of US imports causes more of US currency to flow abroad. The surplus of US dollars abroad lowers their value relative to other ______.
22.The largest foreign holder of US debt in the form of US treasury bonds is__________..
23.America's largest trading partner of merchandise is ________, followed by China, Mexico, and Japan.
24. The largest source of US imports is ______.The largest destination for US exports is_________.
25.US trade data may show where a final product is imported from, but the beneficiary may be another country. Explain the Apple, Inc. example. Such data may thus exaggerate the US trade deficit.
Apple products are developed in California but made in China. The final product will be imported from China but the money will be going back to California.
26.From the 1980's to the present, US manufacturing became more _____ as labor productivity rose 132%. The value of US manufacturing real output also increased by 67.7%.
27.The 1944 Bretton Woods accords created the International Monetary Fund and the _________.
28.In 1947, the GATT(______ __________ __ _______ __ _______) was signed by 23 countries who agreed to the principles of lower _____, open economies, and freer trade. From 1947 to 1986, global import tariffs on goods fell from over 30 percent to __%.
General Agreement on Tariffs and Trade; tariffs; 5%
29.Initiated by President Reagan in 1986, the ______ round of negotiations resulted in the formation of the World Trade Organization. While GATT focused on trade in goods, the WTO has increased the scope of interest to include intellectual property, services, agriculture, and cross border ______.
30.The latest round of world trade negotiations began in Doha,Qatar in 2001, have not reached an agreement, largely over disagreement about _________ policy.
31.Every postwar US trade agreement has been passed with TPA(Trade Promotion Authority) which allows the US Congress to give trade deals an expedited up or down vote with no amendments. Otherwise known as "_____ _____", this authority expired in 2007, but was renewed in ______ for another 6 years.
fast track; 2015
32.In 2014, global economic growth was ___%.
33.In 2014,three-fourths of economic growth came from _____ ______ and ______ _________.
emerging markets; developing countries
34.In 2014, lower oil and commodity prices contributed to lower inflation in many countries with the notable exception of _______, whose currency experienced a sizable exchange rate depreciation.
35.From September 2014 to March 2015, oil prices fell 45%. Two factors contributing to the decline are ______ than expected supply of oil and decreased demand due at least in part to increased _______ efficiency.
36.Increase in oil supply can be attributed to :1_______________;2.________________ and ;3.______________________.
Steady rise in production; faster than expected recovery; OPEC's decision to maintain oil production levels
37.According to an IMF simulation, countries that allow the price of oil to pass through without government management of oil prices have a (greater/lesser) increase in GDP than those countries whose governments manage the oil prices.
38.In 2014, which countries experienced appreciation of their currency: US, China, Japan, Russia, Norway, Canada, India, Switzerland
US, China, India, Switzerland
39. In advanced economies, the yield on long-term government bonds has continued to (increase/decline).
40.Which of the following have fallen since the drop in oil prices in 2014?
41.The large fall in oil prices can be attributed to which of the following?
increases in oil production by OPEC countries, production of oil by other countries, OPEC decision to continue production at current rates, global decline in oil consumption
42.Because the prices of _______goods has fallen, developing countries are trying to produce and export more ________ goods.
43.Developing countries trade mainly among themselves.(t/f)
44.Developing countries import from OECD countries mainly _________ goods.
45.Global economic growth is expected to be 2.8% for 2015, lower than expected. Developing economies are facing two transitions: 1)appreciation in the US dollar has led to decreased _______ flows to developing countries; 2)in oil-producing countries, the lower price of oil is reducing economic activity.
46.Low oil prices should generally help the poor as ___% of the world's poor live in oil-importing countries.
47.In the two decades before the global financial crisis of 2008, the annual growth of world trade (measured in imports in volume) as on average twice the growth of WGP(_______ ________ _______).
World Gross Product
48.World trade can grow faster the WGP for a sustained time only if the prices of _______ goods and services continue to decline relative to the prices of _______ goods and services. These relative price declines can occur because of new trade agreements to reduce trade and tariff barriers and because of technological innovation resulting in decreased costs of _______ _______.
international; domestic; international transportation
49.Since 2009, exports from EU countries to extra EU countries has been (less/more)than exports to other EU countries.
50.South Asian economies of Iran, India, Bangladesh and Sri Lanka recorded strong ____ growth of 8.6% in 2014.
51.Which of the following are true? a)developed countries export most of their goods to other developed countries; b)developing countries are exporting a larger share of their exports to other developing countries
a)developed countries export most of their goods to other developed countries; b)developing countries are exporting a larger share of their exports to other developing countries
52.The EU is still the leading global manufacturing exporter, but East ____ will soon overtake them.
53.In 2013, exports of services grew at 5.5%, driven mainly by developing countries whose share of trade exports rose from 23% in 2000 to ___% in 2013.
54.Between 2008 and 2013, the most dynamic trade services in both developing countries and least developed countries were in ______ __ _______ ______.
computer and information services
55.In 2013,developing countries excluding LDC export services were led by exports of ____________________ followed by _____________.
computer and information; transportation
56. In 2013, the least developed countries (LDC) export services were led by exports of _____________ followed by ___________________.
construction; computer and information
57.In 2013, international tourism increased by 5%. Export earnings from international tourism reached $1.4 trillion. Tourism accounts for 30% of the worlds' services exports.(t/f)
58.Export services include which of the following categories: a)travel b)construction c)financial services d)transport e)communications f)insurance g)computer and information
a)travel b)construction c)financial services d)transport e)communications f)insurance g)computer and information
59.In 2014, prices for tropical beverages (rose/fell) led by demand for coffee and cocoa.
60.Of ores and minerals, ________ has the highest price followed by nickel.
61.In 2014, oil demand growth (increased/decreased) and oil supply has (increased/decreased).
62.Mega - RTA's(regional trade associations) like TTP and TTIP could adversely affect incentives for a multilateral trade system. One principle MTA embraces is the __________principle
63.Developing countries send ___% of their merchandise exports to other developing countries and ____% of their merchandise exports to developed countries.
64.Developed countries sent ___% of their total exports to developing countries.
65.In 2013, 17% of the total exports of developing countries went to the BRICS countries which include:_________,________________,_____________,_________,___________.
Brazil, Russia, India, China, South Africa
66.In 2013, of total world merchandise exports, developing countries contributed ____% and developed countries ___%.
67.In 2013, _______was the world's largest merchandise trader followed by the US and then Germany.
68.In 2013, the worldwide growth rate of commercial services rose 6%, largely the result of an increase in _______ trade.
69.In 2013, the highest growth rate was in the _______ __ _______ ______.
Commonwealth of Independent States
70.In 2013, growth of exports of commercial services was highest in __________(12%) followed by France (10%) and Germany (8%).
71.Since 2000, the LDC's growth rate of exports of commercial services has grown by 14%, a higher growth rate than any other region. However, in 2013, the LDC's participation in the world's export of commercial services remained ____%.
72.The high growth rate in LDC export of commercial services has been fueled by the ______ industry in Cambodia, the _______________ in Bangladesh, and the increase in ___________ in Afghanistan.
tourism; technology; construction
73.From 2005 to 2013, Europe's contribution to total world export of commercial services fell from 51.8% to 47.2% while Asia's contribution (rose/fell) from ____% to _____%,
rose: 21.7: 26.2
74.The recent oil industry boom was due to two new oil drilling technologies:__________ and ___________.
horizontal drilling and hydraulic fracking
75.In the US, the boom in the oil industry occurred in the Bakken Formation which is in ______ _______. The increased demand for ______ was difficult to meet.
North Dakota; labor
76.If a country can produce a good or service with fewer resources, it has an _______ ________ over other countries in the production of that good or service.
77.The principle of _______ _______causes countries to specialize in the production of goods and services which they can make or provide at a lower opportunity cost.
78.Immigrants(foreign born) make up 13% of the US population. Most Americans (72%) and most economists believe immigration is a (good/bad) thing.
79.An influx of low-skilled workers initially tends to (raise/lower)wages for low-skilled workers. If this effect leads to lowered production costs and hence increased demand, the demand for higher skilled workers and goods may rise. When foreign workers are _______ for low-skilled American worker, the wages drop. When foreign workers are _______ to American workers, job opportunities and wages for American workers can rise.
lower; substitutes; complements
80.Forty percent of US Ph.D's and engineers are foreign born. Highly educated immigrants receive patents at ______ the rate of highly educated native born Americans.
81.High-skilled immigrants create a fiscal surplus. Low-skilled immigrants create a fiscal _____ because they earn low wages, pay little in taxes , and benefit from taxpayer supported education, medical and other means-tested services.
82.Winners from immigration include: 1.____________________ 2.____________________ 3.____________________
employers who benefit from low labor costs; complementary workers who benefit from increased job oppurtunities and higher wages; consumers who benefit from lower prices for goods and services
83.Losers from immigration include: 1.__________________ 2.__________________
suitable workers who compete for the same job as immigrant workers; taxpayers
83.In 2016, the G20 summit will be hosted by _______. One sceptic calls this decision the choice of ________ smog winning over _______radioactivity.