CH4-Other Theories Of International Trade

Question 1

Inflation-adjusted income, the amount of disposable income available to consumers.

Answer 1

Real income

Question 2

The sum of the value added by all the goods and services produced within a particular country.

Answer 2

Gross National Income

Question 3

Reasons why trade has an important influence upon the income distribution

Answer 3

1. Resources
2. Industries

Question 4

Any resource that is used by firms to produce goods and services.

Answer 4

Factor of production

Question 5

Model developed by David Ricardo, the first formal model of International trade.

Answer 5

Ricardian model of trade

Question 6

Model that is sometimes referred to as the Ricardo-Viner Model

Answer 6

SF Model

Question 7

Who are the two American economist who developed SF model.

Answer 7

Ronald Jones and Paul Samuelson

Question 8

Territory or terrain means?

Answer 8

Land, labor and capital

Question 9

It can be used in producing different products like labor.

Answer 9

Mobile Factor

Question 10

It can only be used for a particular product like steel.

Answer 10

Specific factor

Question 11

A theory in economics that predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output.

Answer 11

Law of Diminishing marginal returns

Question 12

It implies the existence of the relative global demand curve resulting from the different preferences for a certain good and relative global supply curve resulting from the different production possibilities.

Answer 12

The Standard Model of Trade

Question 13

It is determined by the intersection between the global demand curve and the global supply curve which is the equilibrium.

Answer 13

Exchange rate

Question 14

It refers to amount of money, which subjects (consumers) of an economy plan to spend on goods and services at the different size of income or at given prices in a given period.

Answer 14

Global demand

Question 15

It is consists of personal consumptions or households and individuals, gross private domestics investment by businesses, gross government spending, and net export.

Answer 15

Total Demand

Question 16

A measure of a nation’s total trade, is the value of a nation’s total export of goods and services minus the value of all the goods and services it imports.

Answer 16

Net exports

Question 17

The intersection of the global demand curve ans the global supply curve.

Answer 17

Market equilibrium

Question 18

It shows how many goods and services consumers can and are willing to buy at different total price levels, other conditions remaining the same.

Answer 18

Aggregate demand curve

Question 19

Represents the relationship between price and quantity supplied, with all other factors affecting supply held constant.

Answer 19

Supply curve

Question 20

A general model that includes the Ricardian model, the Ronald Jones and Paul Samuelson specific factors model, and the Heckscher-Ohlin (H-O) model.

Answer 20

Standard Trade Model

Question 21

These are the lines along which the market value of output is constant.

Answer 21

Isovalue lines

Question 22

It determines its relative supply function because it shows what the country is capable of producing.

Answer 22

Production possibility frontier (PPF)

Question 23

The world relative supply function and the world relative demand function determines the _______ under international trade.

Answer 23

Market equilibrium

Question 24

The price of a country’s exports divided by a country’s imports.

Answer 24

Terms of Trade (TOT)

Question 25

This theory states that a country rich in a particular resource should be exporting products that will use that resource and import products made from resources that the country lacks.

Answer 25

Heckscher-Ohlin theory (factor proportions theory)

Question 26

It showed that in the international division og labor, the US specialized in labor intensive rather than capital intensive goods.

Answer 26

Leontief paradox

Question 27

A seemingly absurd or self-contradictory statement or proposition that when investigated or explained may prove to be well-founded or true.

Answer 27

Paradox

Question 28

He received a Nobel Prize in 1973 for his contribution to the input-output analysis

Answer 28

Wassily Leontief

Question 29

The three students of Wassily Leontief who also received Nobel prizes.

Answer 29

Paul Samuelson, Robert Solow and Vernon Smith.