exam 6

Question 1

Comparative Advantage

Answer 1

The ability to make something at a lower opportunity cost than other producers face.

Question 2

Absolute Advantage

Answer 2

The ability to make something using fewer resources than other producers use.

Question 3

Tariffs

Answer 3

A tax on imports.

Question 4

Import Quotas

Answer 4

A legal amount on the amount of a commodity that can be imported.

Question 5

Bilateral Agreement

Answer 5

Trade agreement between two countries.

Question 6

Multilateral Agreement

Answer 6

Trade agreement among more than two countries.

Question 7

Dumping

Answer 7

Selling a product abroad for less than charged in the home market or for less than the cost of production.

Question 8

U.S. Exports Composition

Answer 8

(Most) Services- 34%
Capital goods- 24%
Industrial supplies- 18%
Consumer goods- 9%
Autos- 7%
Food- 6%
(Least) Other- 3%

Question 9

U.S. Imports Composition

Answer 9

(Most) Consumer goods- 22%
(Most) Capital goods- 22%
Services- 19%
Industrial supplies- 16%
Autos- 13%
Food- 5%
(Least) Other- 3%

Question 10

U.S. Trading Partners (Exports)

Answer 10

(Most important) Canada
Mexico
China
Japan
The United Kingdom
Germany
South Korea
The Netherlands
France
(Least important) Brazil

Question 11

U.S Trading Partners (Imports)

Answer 11

(Most important) China
Canada
Mexico
Japan
Germany
South Korea
The United Kingdom
France
India
(Least important) Ireland

Question 12

Differences In Resource Endowments

Answer 12

A reason for International Specialization. It often creates differences in the opportunity cost of production across countries.

Question 13

Economies Of Scale

Answer 13

A reason for International Specialization. These are forces that reduce a firm’s average cost as the scale of operation expands in the long run.

Question 14

Differences In Tastes

Answer 14

A reason for International Specialization. This is the differences of usage and consumption patterns along different countries.

Question 15

More Variety

Answer 15

The last reason for International Specialization. This allows for people to have choices within the market.

Question 16

U.S. Consumption Percentages

Answer 16

(Most) Cotton- 505%
Wheat- 160%
Oil Seeds- 160%
Coal- 110%
Coarse Grains- 105%
Natural Gas- 90%
Zinc- 82%
Sugar- 79%
Cooper- 65%
Crude Oil- 55%
Aluminum- 42%
(Least)Coffee- 3%

Question 17

GATT (General Agreement on Tariffs and Trade)

Answer 17

An international trade treaty adopted in 1947 by 23 countries, including the United States. Each member agreed to reduce tariffs through multinational negotiations, reduce import quotas, and treat all members equally with respect to trade.

Question 18

World Trade Organization (WTO)

Answer 18

The legal and institutional foundation of the multilateral trading system that succeeded GATT in 1995.

Question 19

The Arguments For Trade Restrictions

Answer 19

National Defense Argument
Infant Industry Argument
Antidumping Argument
Jobs and Income Argument
Declining Industries Argument

Question 20

Industrial Market Countries

Answer 20

Economically advanced capitalist countries also known as developed countries and high-income economics.

Question 21

Developing Countries

Answer 21

Low-income and middle-income economies; most are known as emerging market economies. They have higher rates of illiteracy, higher unemployment, faster population growth, and their exports mostly consist of agricultural products and raw materials. Challenges they face are poor health (a result of malnutrition and disease), high infant mortality rate, high birth rates, and low incomes.

Question 22

High-Income Economies(Developed Countries)

Answer 22

Examples of these are the United States($58,030)(Infant Mortality rate; 5.6)(Birth rate; 1.8), Germany($49,5300)(Infant Mortality rate; 3.1)(Birth rate;1.5), Japan($42,870)(Infant Mortality rate; 2.0)(Birth rate;1.5), and the United Kingdom($42,100)(Infant Mortality rate; 3.5)(Birth rate;1.8). They have a 16% share of the world population. They also have a 64% share of the world’s output.

Question 23

Middle-Income Economies(Developing Countries)

Answer 23

Examples of these are Mexico($17,740)(Infant Mortality rate; 11.3)(Birth rate; 2.2), China($15,500)(Infant Mortality rate; 9.2)(Birth rate; 1.6), Brazil($14,810)(Infant Mortality rate; 14.6) (Birth rate; 1.8), and India($6,490)(Infant Mortality rate; 37.9)(Birth rate; 2.4). They have a 75% share of the world population. They also have a 35% share of the world’s output.

Question 24

Low-Income Economies(Developing Countries)

Answer 24

Examples of these are Bangladesh($3,790)(Infant Mortality rate; 30.7)(Birth rate; 2.1), Kenya($3,130)(Infant Mortality rate; 35.5)(Birth rate; 4.3), Ethiopia($1,730)(Infant Mortality rate; 41.4)(Birth rate; 4.3), and Congo($730)(Infant Mortality rate; 74.5)(Birth rate; 5.9) . They have a 9% share of the world’s population. They also have a 1% share of the world’s output.

Question 25

Gross National Income

Answer 25

The market value of all goods and services produced by resources supplied by the countries’ residents and firms, regardless of the location of the resources.

Question 26

Women In Developing Countries

Answer 26

They head households, they often worked in homes and as well as in the labor market, they also tend to be less educated, and have less access to resources like land, capital, and technology.

Question 27

The Reasons For Low Labor Productivity

Answer 27

Poor countries with unstable governments with some wealthy minority tend to invest their money in more stable foreign economies, leaving less to invest domestically in human or physical capital. Without sufficient capital, workers are less productive. Businesses also run poorly.

Question 28

Migration

Answer 28

It plays an important role in the economies of developing countries. A major source of foreign exchange is the money sent home by these workers who found jobs in industrial countries. Often the bright people of poor countries will do this to developed countries.

Question 29

Brain Drain

Answer 29

The emigration of highly trained or intelligent people from a particular country.

Question 30

Import Substitution

Answer 30

A development strategy that emphasizes domestic manufacturing of products that have been imported.

Question 31

Export Promotion

Answer 31

A development strategy that concentrates on producing for the export market.

Question 32

Foreign Aid

Answer 32

An international transfer made on especially favorable terms for the purpose of promoting economic development.