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7 Written questions

6 Multiple choice questions

  1. 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.
  2. A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
  3. 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.
  4. Wealth depends on productive capacity
  5. 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.
  6. A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner

6 True/False questions

  1. MercantilismThe economic doctrine that contends a country's wealth is determined by its holdings of precious metals and espouses trade policies that promote the accumulation of gold and silver.
    *The school of thought that advocated policies designed to generate trade surpluses, so as to increase a country's holdings of gold.

          

  2. Capital Abundantthe situation where a country has a high capital-to-labor ratio relative to another country.

          

  3. Intra-industry tradeare 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.

          

  4. Comparative AdvantageA 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.

          

  5. The Product Life Cycle Theory of TradeThe 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.

          

  6. Explanations for Intra-industry tradeDissimilar good with different factor intensities are lumped together in trade statistics.