Exam 5: International Trade

What is the Leontief Paradox? Explain why it is important to our understanding of trade patterns.

According to mercantilism, accumulation of wealth depended on expanding a nation's total volume of trade, not necessarily on creating a trade surplus.

The value of North American exports to Asia is less than one-half the value of Asian exports to North America.

Compare and contrast the theories of absolute and comparative advantage.

Scenario: Foodland and Drinkland Two countries, Foodland and Drinkland, produce food and drinks. In Foodland, one resource unit produces 20 tons of food and one resource unit produces 10 tons of drinks. In Drinkland, one resource unit produces 12 tons of food and one resource unit produces 24 tons of drinks. Food Drinks Foodland 20 10 Drinkland 12 24 -Which of the following is a true statement about the above scenario?

In mercantilism, a trade surplus meant that a country was taking in more gold on the sale of its exports than it was paying out for its imports.

The purchase, sale, or exchange of goods and services across national borders is called ________.

Most of the world merchandise trade is comprised of trade in ________.

The level of ________ between certain pairs of countries often reflects the amount of trade that occurs between a company's subsidiaries in two nations.

The purchase, sale or exchange of goods and services across national borders is called domestic trade.

Countries seen by others as trying to maintain a trade surplus and expand their national treasuries at the expense of other nations are ________.

Scenario: Foodland and Drinkland Two countries, Foodland and Drinkland, produce food and drinks. In Foodland, one resource unit produces 20 tons of food and one resource unit produces 10 tons of drinks. In Drinkland, one resource unit produces 12 tons of food and one resource unit produces 24 tons of drinks. Food Drinks Foodland 20 10 Drinkland 12 24 -If these two countries were to gain from trading with each other, this would support the notion that trade is a ________.

Trade among the world's high-income economies accounts for roughly ________ percent of total world merchandise trade.

The focus of factor proportions theory is on the ________.

Mercantilism states that measures of a nation's well being, such as living standards or human development, are irrelevant and that nations should only concern themselves with accumulating financial wealth.

Much production in the world today closely resembles what is predicted by the ________.

Scenario: Chuck Praeger, Global Entrepreneur Chuck Praeger has made a name for himself by being able to sell golf equipment to anyone, anywhere, anytime. Chuck would like to expand his business into Pacific Rim countries and has begun making inquiries into potential distributors. -Chuck is convinced that his golf equipment will sell itself. But Chuck is preparing his special "hard-sell" presentation for Asia because he wants to make a good first impression. As a Pacific Rim expert, what do you tell Chuck?

Which of the following statements is NOT true?

New trade theory is in line with the theory of ________ but at odds with ________ theory.

Which of the following is NOT a limitation of the absolute and comparative advantage theories?