Exam 5: International Trade

Nearly 74 percent of Europe's exports are destined for other European nations.

The trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports is called ________.

According to the theory of factor proportions, a country will specialize in products that require land and capital if their cost is low relative to the cost of ________.

Discuss the limitations of the international product life cycle theory. How well does the theory explain current trade patterns?

The focus of the ________ and ________ theories is on the productivity of the production process for a particular good.

According to comparative advantage theory, trade is still beneficial even if one country is less efficient in the production of two goods, as long as it is less inefficient in the production of one of the goods.

Mercantilism is inherently flawed because it views competition for the world's wealth as a zero-sum game.

The U.S. Department of Commerce estimates that for every $1 billion increase in exports, around 23,000 jobs are created in the United States.

The paradox between the predictions of the comparative advantage theory and actual trade flows is called the Leontief paradox.

When a product's components are made in the country that can produce them at a high level of productivity and assemble them in another country where productivity in assembly is high, it resembles the theory of ________.

When a country is not able to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good, it is said to have a(n) ________.

One way to measure the importance of trade to a nation is to examine the volume of trade in an economy relative to its total output.

Which of the following is NOT an argument offered by the new trade theory?

Adam Smith believed that ________.

Scenario: Conquering International Fulfillment Jack Damon, a Boston-based entrepreneur, is determined to not make the same mistakes that hindered his former employer. Jack knows that to expand his international sales he must make some changes to how his orders are filled. -In reviewing his fulfillment process, Jack should review his fees and ________.

Trade among the world's high-income economies accounts for around 60 percent of total world merchandise trade.

Since trade-related jobs are service industry jobs, they tend to pay less than jobs not related to international trade.

The theory of absolute advantage destroys the mercantilist notion that international trade is a positive-sum game.

It is not necessary to have bilingual business cards when doing business in the Pacific Rim because most Asians speak English.

Wassily Leontief developed factor proportions theory.