Tentafrågor Flashcards
Är handel genrellt sett skadligt om det råder stora skillnader i löner? Sant/falskt
Trade is not inherently harmful even when there are significant wage differences between countries.
Trade does not automatically lead to exploitation of labor or worsening conditions in low-wage countries, it’s the law or weak regulations that may cause such issues
Explain the example where there is a wage difference and it’s not the trade that is the problem?
Bangladesh and USA!
B have a comparative advantage in production of clothing, the demand increases due to exports which can lead to higher wages over time. It’s up to Bangladesh to improve its regulations
How many percent of the world production ( goods and services) are exported to different countries?
30%
What does the Ricardian model for trade show?
Trade between two countries can benefit both if both export the good where each country has a comparative advantage
True /false : According to the Ricardian model all trade between two countries will always benefit both of them
Too generalized, it depends on the trade and if it is based on comparative advantages and fair trading conditions
If the production possibilities curve for two goods is a straight line, the opportunity cost is…?
Constant
Because it means that for every good of A we produce, we lose the same amount of good B regardless of where we are on the curve (straight line in this case)
What does a production possibility curve show? ( PPC) where is it found?
The maximum combinations of two goods that a country can produce with its limited resources and technology. The curve reflects the opportunity costs that a rise when resources are reallocated between the production of these goods.
In all models
In the specific-factor model, what would increase the quantity of labor used in fabric production?
The quantity of labor increases as the price of cloth increases. Because when the price of one commodity rises relative to another, resources are shifted to the more profitable sector.
When there is equilibrium with international trade in the Heckscher-Öhrlings model, what will happen with the relative price of the capital- intensive good?
The relative price of the capital-intensive good will be the same in the capital-rich country as in the capital-poor country
Give examples on how the relative prices will be globally even?
A capital-rich country will export capital-intensive goods, which increases their globally available supply and the price will be pressed down
A labor-rich country exports labor-intensive goods, making those goods cheaper globally!
What does the Heckscher Ohlin model say?
Explains how trade leads to the equalization of goods prices and eventually, factor prices between countries.
What does “ terms of trade” refer to?
Describes the relation between the prices of a country’s export goods and import goods
TOT = Price of export goods / price of import goods
A higher TOT increases the country’s wealth
What does it mean when TOT increases?
Export goods rise in price relative to import goods. Thea country can the purchase more imports for each unit of export
What does it means when TOT decreases?
It means that import goods rise in price relative to export goods, which reduces the country’s purchasing power
What is the main focus in the standard model?
Trade allows an economy to consume beyond its PPC ( production possibility curve). Which means full resource utilization, often with specialization in the good of comparative advantage. Therefore the production is not evenly distributed.
