7 Written questions
6 Multiple choice questions
- 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.
- A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
- The 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.
- the situation where a country has a high capital-to-labor ratio relative to another country.
- Dissimilar good with different factor intensities are lumped together in trade statistics.
6 True/False questions
The Stolper-Samuelson Theory → states that as countries move towards free trade, each country's abundant factor receives a higher rate of payment, and each country's scarce factor is harmed by a lower rate of return.
o U.S example- Our abundant factor is highly skilled labor, which will benefit from expanded trade with China. Our scarce factor is unskilled labor which is harmed by trade with China.
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.
The importance of being unimportant → 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.
Intra-industry trade → Occurs when a country imports and exports the same good.
Comparative 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.