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UCC > EC2008 > Flashcards

EC2008 Flashcards

1
Q

What factors influence trade patters ?

A

distance, cultural affinity, and trade agreemets

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2
Q

What is the gravity model?

A

The gravity model is a mathematical model that predicts and explain trade relationships

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3
Q

What can impact on the volume and nature of international trade

A

government policies such as: tariffs, quotas, and trade agreements

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4
Q

what does international trade focus on?

A

the exchange of goods nad sevices between countries

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5
Q

What does international finance focus on?

A

financial transactions, monetary exchange and investments

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6
Q

what is the Ricardian model

A

it examines the difference in the productivity of labour [due to differences in technology] between countries

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7
Q

what is the specific factors model?

A

Also known as the Heckscher-ohlin model, it examines difference in labour, labour skill, physical capital land or other factors of PRODUCTION between countries

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8
Q

how is comparative advantage defined?

A

it is defined by comparing the opportunity cost across countries

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9
Q

what are the key concepts in the definition of the Ricardian model

A

Comparative advantage and opportunity cost

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10
Q

what is the production possibility frontier [PPf]

A

THe PPF of an economy shows the maximum amount of goods that can be produced for a fixed amount of resources

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11
Q

what are relative wages

A

they are the wages of the home country relative to the wages in the foreign country

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12
Q

what is economies of scale

A

it is the cost advantge that come from producing on a larger scale

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13
Q

two types of economies of scale

A

internal and external

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14
Q

what is interna economies of scale

A

when the cost per unit of output depends on the size of the firm

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15
Q

what is external economies of scale

A

when the cost per unit of output depends on the size of the industrywh

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16
Q

what are the different forms of external economies of scale

A

knowledge spillover
specialised supplies
labour pooling

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17
Q

what is the learning curve

A

it is a graphical representaion of dyanamic increasing returns to scale

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18
Q

what can the learning curve justify

A

protectionism

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19
Q

what is dumping

A

it is the practice of charging a lower price for exported goods than for goods sold
domestically

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20
Q

what is dumping an example of

A

price discrimination

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21
Q

when can price discrimination and dumping occur

A
  • imperfect competition exist
    market are segmented so that goods are not easily bought in one market and resold in another
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22
Q

what do movements in factors of production include?

A
  • labour
  • the transfer of financial assets through international borrowing and lending
  • transactions of multinational corporations involving direct ownership of foreign firms
23
Q

what is free trade

A

refers to the exchange of goods and services between countries without the imposition of barriers such as tariffs, quotas, or other restrictions.

24
Q

what does the Ricardo model analyse

A

it analyses how international trade relates to labour productivity

25
Q

how many factores does the heckscher-ohlin model have?

A

two factors

26
Q

what is the terms of trade

A

it refers to the price of exports relative to the price of imports

27
Q

what is usually biased?

A

growth

28
Q

what is export biased growth?

A

it is the growth that expands a country’s production possibilities disproportionately in that country’s export sector

29
Q

what is the import-biased growth?

A

it is the growth that expands a country’s production possibilities disproportionately in that country’s import sector

29
Q

export-biased growth

A

reduced a country’s terms of trade, reducing its welfare and increasing the welfare of foreign contries

29
Q

what is a tariff

A

it is a tax levied when a good is imported

30
Q

import biased growth

A

it increases a country’s terms of trade, increasing its welfare and decreasing the welfare of foreign contries

31
Q

what are the types of tariffs

A

-specific tariff
- ad valorem tariff

32
Q

what is an import demand curve?

A

it is the difference between the quantity that home consumers demand minus the quantity that home consumers supply at each price

33
Q

what is a export supply curve?

A

it is the difference between the quantity that foreign producers supply minus the quantity that foreign consumers demand at each price

34
Q

what is consumer surplus?

A

it measures the amount that consumers gain from purchases by computing the difference in the price actually paid and their willingness to pay for each unit consumed

35
Q

what is producer surplus

A

measures the amount that producers gain from sales by computing the difference in the price received from the minimum price at which they are willing to sell

36
Q

what is a specific subsidy

A

it is a payment per unit exported

37
Q

what is an ad valorem subsidy?

A

it is a payment as a proportion of the value exported

38
Q

what is an import quota

A

it is a restriction on the quantity of a good that may be imported

39
Q

what do we call the revenue from selling imports at high prices which will be given to quota license holders

A

quota rents

40
Q

what is a voluntary export restraint

A

it works like an import quota except that the quota is imposed by the exporting country rather than the importing country

41
Q

what is local content requirement

A

it is a regulation that requires a specified fraction of a final good to be produced domestically

42
Q

what are export subsidies

A

a subsidized loan to exporters

43
Q

what is govermnet procurement

A

they are government agencies that are obligated to purchase from home suppliers, even when they charge higher prices compared to foreign suppliers

44
Q

what are Bureaucratic regulations?

A

safety, health, quality, or customs regulations can act as a form of protection and trade restriction

45
Q

what does free trade allow firms or industry to take advantage of?

A

economies of scale

46
Q

what does free trade provide?

A

competition and opportunities for innovation

47
Q

how does world trade organization negotiations address trade restricitons?

A

in three ways
1) Reducing tariff rates
2) binding tariff rates
3) eliminating non-tariff barries

48
Q

what agreements are based on the WTO

A
  • general agreement on tariffs and trade
  • general agreement o tariffs and services
  • agreement on trade-related aspects of intellectual property
49
Q

what is the dispute settlement procedure?

A

a formal procedure where countries in a trade dispute can bring their case to a panel of WTO experts to rule upon

50
Q

what are preferential trading agreemetns

A

they are trade agreement between countries in which they lower tariffs for each other but not for the rest of the world

51
Q

what are the two types of preferential trading agreements in which tariff rates are set at or near zero

A

—a free trade area- an agreement that allows free trade among members, but each member can have its own trade policy towards non-member countries
— a custom union - an agreement that allows free trade among member and require a common external trade policy towards non-member countries

52
Q
A

UCC (19 decks)

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