7 Written questions
6 Multiple choice questions
- The ratio of a country's exports divided by its GDP.
- 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.
- The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
- 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.
- Occurs when a country imports and exports the same good.
- 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.
6 True/False questions
Portfolio Capital → Financial assets including, stocks, bonds, deposits, and currencies.
Capital Abundant → the situation where a country has a high capital-to-labor ratio relative to another country.
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.
The Stolper-Samuelson Theory → A country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.
Absolute Advantage → A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
The Heckschler-Ohlin Model → 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.