Final Exam Study

Question 1

Comparative advantage:

Answer 1

The ability of a country or firm to produce A particular good or service more efficiently than it can produce other goods or services such that each resource is more patiently employed in this activity. The comparison is to the efficiency of other economic activities that an actor might undertake given all the products it can produce — not the efficiency of other countries or firms

Question 2

Absolute advantage:

Answer 2

The ability of a country or firm to produce more of a particular good or service in other countries or firms can produce with the same amount of effort and resources (The ability to do something better than others)

Question 3

Neo-mercantilism

Answer 3

A belief that national economic policy should encourage exports and discourage imports and that the country should aim to run a trade surplus so-called in relationship to the classical mercantilism of the colonial powers, which aimed at running trade surpluses with their colonies

Question 4

Heckcher-Ohlin trade theory

Answer 4

The theory that a country will export goods that make intensive use of factors of production in which it is well endowed for example a rich labor country well export goods that make intensive use of labor

Question 5

Protectionism

Answer 5

the imposition of barriers to restrict imports

Question 6

Trade barriers

Answer 6

government limitations on international exchange of goods examples, include tarrifs, quantitative restrictions, import license requirement, the government, by only domestically produce goods and health and safety standards that discriminate against foreign goods

Question 7

Tariffs

Answer 7

a tax imposed on imports Tariffs, raise the domestic price of the imported goods and may be applied for the purpose of protecting domestic producers from foreign competition

Question 8

Quantitative restriction (quota)

Answer 8

a limit placed on the amount of a particular good that is allowed to be imported and sold domestically.

Question 9

Nontariff barriers to trade

Answer 9

obstacles to import other than tariffs and taxes. Examples include restrictions on the numbers of products that can be imported (quantitative restrictions, or quotas) regulations that favor, domestic over imported products, and other measures that discriminate against foreign goods or services by American laws that govern which state and local governments can buy, for example an implicit, but nontariff obstacle to purchase a Imports

Question 10

Stolper-Samuelson theorem

Answer 10

the theory that trade protection benefits the scarce factor of production. This view flows from the Heckscher-Ohlin theory: if a country, imported goods then limiting imports will help that factor, so in a labor, scarce country, labor benefits, from protection and losses from trade liberalization. → if there is an increase in the relative price of labor-intensive goods, this will benefit the laborer and worse off the capital of the economy and vice versa.

Question 11

Ricardo-Viner (specific-factors) mode:

Answer 11

A model of trade relations that emphasizes in which factors of production are employed rather than the nature of the factor itself. This differentiates it from the Heckscher-Ohlin theory, in which the nature of the factor - labor, land, capital, - is the principal consideration.

Question 12

Reciprocity

Answer 12

an international trade relation, mutual agreement to lower tariffs and other barriers to trade reciprocity involves an implicit or explicit arrangement for one government to exchange trade policy concessions with another

Question 13

Most-favored nation (MFN) status

Answer 13

a status established by most modern trade agreements guaranteeing that the signatories Tories will extend to each other, and any favorable trading terms offered in agreement with third parties

Question 14

World trade organization (WTO)

Answer 14

an institution created in 1995 to succeed the GATT and to govern international trade relations the WTO encourages the policies of multilateral reduction of barriers to trade and overseas the resolution of trade dispute

Question 15

General agreement on tariffs and trade (GATT)

Answer 15

an international institution created in 1947 in which members countries committed to reducing barrier to trade and providing similar trading conditions to all other members in 1995 the GATT was replaced by the WTO

Question 16

Regional trade agreements (RTAs):

Answer 16

agreement among three or more countries in a region to reduce barriers to trade among themselves

Question 17

Portfolio Investment

Answer 17

Investment in a foreign country via the purchase of stocks, bonds, or other financial instruments. Portfolio investors do not exercise managerial control of the foreign operation.

Question 18

Sovereign lending

Answer 18

loans from private financial institutions in one country to sovereign governments of other countries

Question 19

Foreign Direct Investment (FDI)

Answer 19

Investment of foreign countries via the acquisition of a local facility or the establishment of a new facility Direct investors maintain managerial control of the foreign operation.

Question 20

World Bank

Answer 20

An important international institution that provides loans at below-market interest rates to developing countries, typically to enable them to carry out development projects

Question 21

Recession

Answer 21

A sharp slowdown in the rate of economic growth and economic activity

Question 22

Depression

Answer 22

A severe Downturn in the business cycle, typically associated with major declines in economic activity, production, and investment, a severe contraction of credit: and sustained high unemployment.

Question 23

Default

Answer 23

To fail to make payments on a debt

Question 24

Austerity

Answer 24

The application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting wages

Question 25

Bank for International Settlements

Answer 25

One of the oldest international financial organizations, created in 1930. Its members included the world’s principal central banks, and under its spices, they attempted to cooperate in the funicular realm.

Question 26

International Monetary Fund (IMF)

Answer 26

A major international economic institution established in 1944 to manage international monetary relations. It has gradually reoriented itself to focus on the international funicular system, especially debt and currency crises

Question 27

Multinational Corporation

Answer 27

An enterprise that operates in a number of countries, with production or service facilities outside its country of origin

Question 28

Global Supply Chains

Answer 28

A network of customers and suppliers involved in the production and distribution of a product. Part of it may be inside a multinational corporation; Parts may be involved in links between corporations

Question 29

Bilateral Investment Treaty

Answer 29

an agreement between two countries about the conditions for a private investment across borders. Most of these treaties include provisions to protect an investment firm from government, discrimination, or expropriation, without compensation, as well as mechanisms to resolve disputes