7 Written questions
6 Multiple choice questions
- Different countries produce different varieties of the same product to sell to consumers in various countries with differences in preferences.
- 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.
- The ratio of a country's exports divided by its GDP.
- A corporation's purchase of real assets, such as production facilities and equipment, in a foreign country.
- 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.
- 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
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 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.
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 → Occurs when a country imports and exports the same good.
Capital Abundant → the situation where a country has a high capital-to-labor ratio relative to another country.
Explanations for Intra-industry trade → Dissimilar good with different factor intensities are lumped together in trade statistics.