Exam 1

Question 1

globalization

Answer 1

international integration where goods move from a low costing countries to high costing countries

Question 2

Factor movement

Answer 2

labor and capital

Question 3

consumer surplus

Answer 3

the difference between the value of a good to consumers and the price they have to pay

Question 4

producer surplus

Answer 4

the difference between the minimum price a producer would accept to produce a given quantity and the prices it actually receives

Question 5

tariff

Answer 5

take imposed on imports

Question 6

quota

Answer 6

a numerical limit on the volume of imports

Question 7

competitive devaluation

Answer 7

a devaluation or depreciation in a currency with the intent to gain export markets

Question 8

Bretton woods

Answer 8

july 1944, in bretton woods, new hapshire, negotiations about the shape of the post war international economic order, between the united states and the united kingdom, let to the creation of the IMF and the IBRP, which later became the world bank

Question 9

World bank

Answer 9

a bretton woods institution, originally charged with the responsibility for providing financial and technical assistance to the war - torn economies of Europe. In the 1950s, the world bank began to shift its focus to developing countries

Question 10

IMF

Answer 10

international monetary fund began operations on Dec. 27, 1945, with a membership of 29 countries. The IMF provides loans to its members under different programs

Question 11

General agreement on tariffs and trade (GATT)

Answer 11

the main international agreement covering the rules f trade in most, but not all goods

Question 12

Trade creation

Answer 12

opposite of the trade diversion. occurs when trade policies cause a shift in production from a higher cost producer to a low cost producer

Question 13

trade diversion

Answer 13

the opposite of trade creation. trade diversion occurs when trade policies cause a shift in production and imports from a lower cost producer to a high cost producer

Question 14

absolute advantage

Answer 14

a country has an absolute productivity advantage in a good if its labor productivity is higher, that is, it is able to produce more output with an hour of labor than its trading partners can

Question 15

comparative advantage

Answer 15

achieved in a good when a country has lower opportunity costs of producing the good than those of its trading partner

Question 16

relative price

Answer 16

the price of one good in terms of another good. it is similar to a money price which expresses the price in terms of dollars and cents, but relative price is in terms of the quantity of the first good that must be given up in order to buy a second good

Question 17

production possibility curve

Answer 17

this curve shows the maximum amount of output possible, given the available supply of inputs. it also shows the trade off that a country must make if it wishes to increase the output of one of its goods.

Question 18

Autarky

Answer 18

the complete absence of foreign trade; total self - sufficiency of a national economy

Question 19

heckscher - ohlin

Answer 19

a trade theory that predicts the goods and services that countries export and import. the theory states that countries will export goods that require the intensive use of relatively abundant factors to produce, and import goods that require relatively scarce factors to produce

Question 20

stopper samuelson

Answer 20

a corollary of the heckscher - olin theory stating that changes in import or export prices lead to a change in the same direction of the income of factors used intensively in production of the imported or exported good

Question 21

internal economies of scale

Answer 21

the idea that an individual firm experiences a deadline in its average cost of production as it increases the number of units produced

Question 22

external economies o scale

Answer 22

scale economies that are external to a firm, but internal to an industry consequently, all the firms in an industry experience declining average costs as the size of the industry increase

Question 23

rent seeking

Answer 23

any activity by firms, individuals, or special interests that is designed to alter the distribution of income to their favor. political lobbying, legal challenges, and bribery are common forms of rent seeking behaviors, which use resources but do not add to national output. rent seeking is a net loss to the nation