7 Written questions
6 Multiple choice questions
- The acquisition of portfolio capital. Usually refers to such transactions across national borders and/or across currencies.
- the situation where a country has a high capital-to-labor ratio relative to another country.
- 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.
- A country has an absolute advantage in a good if it can produce that good by using fewer inputs than its trading partner
- Occurs when a country imports and exports the same good.
- A country has a comparative advantage in (and will export) that good which is intensive in the use of that country's abundant resource.
6 True/False questions
Foreign Direct Investment (FDI) → A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
Gains from trade → 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.
Explanations for Intra-industry trade → 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.
Adam Smith's Wealth of Nations → Wealth depends on productive capacity
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.
Explanations for Intra-industry trade → Dissimilar good with different factor intensities are lumped together in trade statistics.