Vecka 1 Föreläsningar del 2 Flashcards
What is Unit labour requirement?
Number of hours worked required to produce one unit of a good. High unit labour requirement means low productivity.
What does RS stand for?
Relative Supply
What does RD stand for?
Relative demand
What are the Empirical evidence of the Ricardian model?
- Productivity differences do not explain all trade.
- Productivity differences are an important cause of international trade.
- Comparative, not absolute, advantage determines trade.
What is The subject of international economics about?
How countries interact with each other through trade in goods and services, money flows and investments.
What does Globalization do?
It is increasing world trade, but this is not the first time in history that this has happened.
What does the gravity model show?
That economic size and physical distance are important for the importance of a Country as a trading partner.
Why is there resistance to trade?
- Resources are not always fully mobile (movable) between sectors.
- Different sectors use different factors of Production
- Structural changes can create winners and losers
- Some may lose from trade.
What are the assumptions of the Specific factor model?
- A country and the rest of the world.
- Two goods:
- Full competition in product and factor markets.
- Three factors of Production..
- Labour is the mobile factor.
- The other are specific factors.
What does The specific-factor model provide?
An explanation for why free trade is resisted.
Does all people win something from trade?
The country as a whole gains from free trade but some groups within the country may lose.
Which factors wins and loses from trade?
The factor specific to the export sector gains from free trade but the factor specific to the import sector loses.
What are the Assumptions and concepts of the Heckscher-Ohlin model?
- All countries have the same productivity
- Trade is happening due to differences in the availability of production factors.
What is Capital rich countries?
Countries that have a lot of capital Per person
What is Capital-intensive sectors?
Sectors that use a lot of capital per person.
