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7 Written questions

6 Multiple choice questions

  1. 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.
  2. Different countries produce different varieties of the same product to sell to consumers in various countries with differences in preferences.
  3. the situation where a country has a high capital-to-labor ratio relative to another country.
  4. As new products mature, comparative advantage shifts from one country to another. New products are intensive in highly skilled workers (inventors, engineers), giving highly educated countries a comparative advantage. As a product matures large scale production takes over, favoring capital abundant countries. Finally, production becomes routine, and labor abundant countries have the comparative advantage.
  5. A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
  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. The Heckschler-Ohlin ModelA country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.

          

  2. Gains from 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.

          

  3. The Stolper-Samuelson TheoryA country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.

          

  4. Explanations for Intra-industry tradeOccurs when a country imports and exports the same good.

          

  5. Comparative AdvantageA country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner

          

  6. Dynamic Gains from 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.