International Trade
(Chap 7)
(Chap 7)
The principle of specialization applied to countries, like people, they should do what they do best.
Nations gain most when specializing in producing and exporting what it produces most efficiently
What is Comparative Advantage
This gives the investor a claim on some income, but no role in managing the investment.
What is portfolio investment
This is an important tool of national governments to influence broad macroeconomic conditions...
What is monetary policy?
These are basic structures for social activity.
What is infrastructure?
Economists generally believe that free trade is beneficial for the world economy because it promotes:
What are efficiency, innovation, and economic growth?
This advantage is when a country produces more of a particular good than other countries can produce with the same amount of effort and resources.
What is absolute advantage
This represents a sharp slowdown in the rate of economic growth, and this is a severe downturn in the business cycle.
(Two responses)
What is a recession and depression?
This is a formal or informal arrangement shared by most countries to govern relations among their currencies.
What is the international monetary regime?
A situation where a market or industry is dominated by few firms.
Both of these are cross-border flows that respond to economic incentives, are influenced by policy and regulation, and can generate both gains and tensions in host and source countries.
What are international finance and international immigration?
This trade belief is that nations should encourage exports and discourage imports.
What is Neo-Mercantilism?
An important international institution that provides loans at below-market interest rates to developing countries...
What is the World Bank
The monetary system used between 1870 and 1914 where States tied their currency to a precious metal.
What is the gold standard?
What are commodity cartles?
The value of [ ] is determined by a combination of market forces, economic fundamentals, and government policies.
What is currency (or a currency)?
This theorem states that if a country imports goods that make intensive use of its scarce factor, then limiting imports will help that factor.
What is the Stopler-Samuelson theorem?
This is one of the oldest international financial organizations.
What is the Bank of International Settlements?
Members of this regional monetary arrangement began in 1973 to limit exchange-rate fluctuations for countries trading and investing with one another regularly.
What is the Eurozone (or Euro)?
This can happen when there is a sudden and sharp increase in economic development (think China).
International finance is both beneficial and controversial because of...
What are risks, inequalities, and power dynamics?
What is the paradox of globalization?
A model of trade relations that emphasizes the sector in which factors of production are employed rather than the nature of the factor itself.
(It is the opposite of the Stolper-Samuelson theorem)
What is the Ricardo-Viner (specific-factors) model
2/3: What are reduced taxes, more government spending, more foreign borrowing, and increased consumption?
The collapse of this currency occurred in 1994, leading to the near financial collapse of this North American country.
What is the peso?
These agencies are alleged to have undertaken reform efforts to address some less developed countries' (LDC) criticism of the bias toward developed countries.
What are the World Bank and IMF?
Define this classical economic theory of trade: It explains trade patterns based on the amount of labor, capital, land, and other productive resources a country possesses.
Then note the country's trade behavior in this theory.
A country will export goods that use its abundant (cheap) factors intensively, and import goods that use its scarce (expensive) factors intensively.