Chapter 16 Homework Flashcards
Countries tend to export goods that make intensive use of the factors of production that the country possesses in relative abundance according to the Heckscher-Ohlin theorem.
True
Specialization bestows the opportunity to gain from trade.
True
When a country’s imports are greater then its exports, there is a trade surplus.
False
Foreign-exchange markets are very different from other markets.
False
The United States has a lower savings rate than many Asian countries
True
One partner always benefits while the other partner does not in voluntary trade agreements.
False
If a country sells goods for less in another country than it does in its own country, it is called dumping.
True
Wealthy countries have relatively low stocks of capital and high stocks of labor.
False
Who will experience short-term losses from the specialization that is caused by trade?
Domestic producers of imports
If the exchange rate is 1 = $2 for the U.S. and the UK and the U.S. sells cashmere sweaters and leather vests for $200 and the UK sells sweaters for 90 and vests for 150, which of the following will happen?
US imports sweaters and exports vests
Which of the following will eventually happen to trade between two countries, according to the theory of comparative advantage?
It permits each partner to use its resources most efficiently
Which of the following will happen to the world’s production possibility frontier without trade?
World production would be inside the world production possibility frontier
By focusing on _____________ for the first time, the Heckscher-Ohlin theorem explains the pattern of trade.
Relative factor endowments
If the resource is used from ________ economy, there will be ___________ advantage, according to Heckscher-Ohlin
Abundant; comparative
Who is the world’s largest importer of goods?
USA
