Ch. 5- Quiz Flashcards
Trade in services accounts for around 22 percent of total world trade. Although the importance of trade in services is growing for many nations, it tends to be relatively more important for the world’s ___________ countries.
Richest
Which agencies/departments/organizations in most countries record the destination of exports, the source of imports, and the physical quantities and values of goods crossing their borders?
Customs
Which one of the following statements BEST explains the benefits of international trade to nations?
International trade is an important engine for job creation.
There has been a persistent pattern of merchandise trade among nations. Trade between which economies of the world represents the highest level of total world merchandise trade?
Trade between the world’s high-income economies
As the world becomes even more like a global village, countries become dependent on trade with each other to sustain their own economies. However, the dangers of trade dependency become apparent when ________________.
a nation experiences economic recession or political turmoil
____________ advocates that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports.
Mercantilism
The main problem with mercantilism is that it views trade as a(n) ________.
zero-sum game
Which one of the following statements BEST expresses a pillar of mercantilism?
Nations should increase their wealth by increasing their exports and minimizing their imports.
The practice of mercantilism rested on three essential pillars. Which of the following sets identify these three pillars?
Trade surpluses, government intervention, and colonialism
Mercantilism advocates that governments should actively intervene in international trade to maintain a trade surplus. Which of the following tools have mercantilist nations used to support this policy?
Subsidize export, ban import, and impose tariff charges and quotas.
According to Adam Smith, a nation should concentrate on producing the goods in which it ________.
has an absolute advantage in producing the product
Which one of the following trade conditions occurs when a country is unable to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good?
Comparative advantage
Which one of the following describes the theory of absolute advantage?
It’s the ability of a nation to produce a good more efficiently than any other nation
Country X specializes in the production of corn more efficiently than any other nation and buys rice which it produces less efficiently than corn from Country Z, despite the fact that Country Z produces rice less efficiently than Country X. Which one of the following international trade theories agrees with Country X’s decision to buy rice from Country Z?
Comparative advantage
Which one of the following is TRUE with regard to the factor proportions theory?
Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.
The difference between the comparative advantage theory and the factor proportions theory is that the factor proportions theory ________.
states that a country specializes in producing and exporting goods using the factors of production that are most abundant and thus cheapest–not the goods in which it is most productive
International product life cycle theory says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle. Which of the following BEST defines the maturing product stage?
Exports begin to account for an increasingly greater share of total product sales.
________ says that a company will begin by exporting its product and later undertake foreign direct investment. The theory also says that, for a number of reasons, a country’s export eventually becomes its import.
The product life cycle theory
The international product life cycle theory follows the path of a good through its life cycle in order to determine where it will be produced. Which one of the following BEST defines the standardized product stage?
Competition pressures companies to lower prices in order to maintain sales levels
The ability of the theory of the product life cycle to accurately depict the trade flow of nations is being challenged. This is due to the fact that ________.
more companies are operating in international markets from their inception
Which of the following statements BEST describes the new trade theory?
There are gains to be made from specialization and increasing economies of scale.
Which one of the following trade theories indicates that government may play a role in assisting its home companies and that government involvement has always been widely accepted in undertakings such as space exploration for national security reasons?
New trade
Which one of the following is a component of Porter’s diamond?
Firm strategy, structure, and rivalry
Which one of the following represents the core of the national competitive advantage theory?
A nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
Which one of the following of Porter’s diamond components supports the concept that companies that belong to a nation’s internationally competitive industries do not exist in isolation, rather, supporting industries spring up to provide the inputs required by the industry?
Related and supporting industries
