Exam 1

Question 1

foreign direct investment (FDI)

Answer 1

purchase of physical assets by a foreign company or individual -> Chinese trolleys in Boston

Question 2

trade to GDP ratio formula

Answer 2

(exports + imports) / GDP

Question 3

transaction costs

Answer 3

legal, marketing, insurance costs (additional costs)

Question 4

3 pieces of evidence for global trade

Answer 4

empirical historical evidence, evidence based on economic models and deductive reasoning, statistical comparisons of other countries

Question 5

International Monetary Fund (IMF)

Answer 5

lender of last resort

Question 6

World Bank

Answer 6

assists in development

Question 7

World Trade Organization

Answer 7

trade policies and discussions

Question 8

how economists measure globalization

Answer 8

world trade, intl. capital flows, intl. migration flows, price similarities

Question 9

who is the world’s largest consumer market

Answer 9

the US

Question 10

what are limits on utility?

Answer 10

time and scarcity (like a budget constraint)

Question 11

national treatment

Answer 11

once a good is in your country, you don’t treat it any differently

Question 12

nondiscrimination

Answer 12

national laws should not treat foreign firms different from domestic firms

Question 13

nonexcludable

Answer 13

everyone benefits even if they don’t pay

Question 14

nonrival / nondiminishable

Answer 14

not reduced by consumption (radio broadcast, youtube video)

Question 15

Doha Round

Answer 15

current round of negotiations, emphasis on developing countries, according to book not successful

Question 16

foreign exchange reserves

Answer 16

foreign assets held to settle foreign payments

Question 17

free trade area

Answer 17

free movement of outputs across borders within group

Question 18

MFN

Answer 18

treating all trading partners as you treat your most favored trading partner

Question 19

trade bloc

Answer 19

tariffs to outside nations

Question 20

public goods

Answer 20

nonexcludable and nonrival

Question 21

autarky

Answer 21

0 foreign trade

Question 22

competitive advantage

Answer 22

selling a good at the lowest price

Question 23

economic restructuring

Answer 23

a movement from one point to another along a country’s ppc

Question 24

relative price

Answer 24

price of one good in terms of another

Question 25

zero sum

Answer 25

costs and benefits of an activity cancel each other

Question 26

taa - trade adjustment assistance

Answer 26

gov. assistance programs for workers because of foreign trade or jobs moving abroad

Question 27

relative abundance

Answer 27

a factor’s relative cost is less than in countries where this factor is relatively scarce

Question 28

derived demand

Answer 28

demand for a good or service that is derived from demand for something else

Question 29

foreign affiliate

Answer 29

foreign-based operation owned by a firm in the home country

Question 30

off-shoring

Answer 30

movement of some or all of a firm’s activities to a different country

Question 31

quota rents

Answer 31

excess profits earned by foreign producers

Question 32

antidumping duty

Answer 32

a tariff levied on an import that is selling at a price below the product’s fair value

Question 33

countervailing duties

Answer 33

tariff imposed because trading partner (foreign form) has been engaging in unfair subsidies

Question 34

escape clause relief

Answer 34

harmful surge in inputs

Question 35

section 301 retaliation

Answer 35

USTR unfair trading practices