Exam 5: International Trade and Factor-Mobility Theory

All of the following are features of the diamond of national advantage theory EXCEPT ________.

An objective of neomercantilism is to build up gold reserves.

According to the PLC theory,at an early stage of a product's life cycle the product is likely to be made in a more ________ method than in its later stages.

In the text,Costa Rica devised a strategic trade policy to accomplish what goals?

The combination of free trade and free movement of production factors offers maximum production efficiency.

Trade occurs more between culturally dissimilar countries than between culturally similar countries.

In this example,assume that both trade and production factors are internationally mobile.Using domestic labor,the labor cost per silicon chip is $.10 in Japan and $.20 in the United States.Using domestic capital,the capital cost per chip is $.10 in Japan and $.05 in the United States.Chip transportation in either direction is $.10.Japanese labor is willing to work in the United States for $.15 per chip including the workers' transport cost.U.S.capital will go to Japan at a cost of $.08 per chip including transaction costs.Which silicon chips will the United States buy?

Which of the following statements most likely undermines the arguments for a strategic trade policy?

Countries with large land areas are generally less dependent on trade than countries with small land areas.

One way that developed countries specialize in order to gain acquired advantages is by ________.

Many products' location of production will shift internationally as the products go through their life cycle.

The inability of a company to gain foreign production factors to use in its domestic operations most likely ________.

A strategic trade policy is one that develops industries to lessen dependence on foreign military goods.

Which of the following best supports a nation's decision to implement a strategic trade (industrial)policy?

Companies and individuals transfer capital internationally primarily because of expectations of earning higher returns.

What are the arguments for and against nations developing and implementing strategic trade policies?

According to Adam Smith's theory of absolute advantage,specialization allows countries to increase their efficiency for each of the following reasons EXCEPT ________.

El Salvador has a population density of about 620 people per square mile and neighboring Honduras a population density of about 115 people per square mile.According to the factor proportions theory of trade,one would expect El Salvador's exports to Honduras to ________.

Countries with large land areas are generally less dependent on trade than countries with small land areas because of ________.

Most world trade takes place between raw material exporters and manufacturing exporters.