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67 Cards in this Set
- Front
- Back
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"Openness" is best defined as?
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Relative importance of trade to a national economy
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The index of openness is computed using?
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(Exports + Imports) DIVIDE BY GDP
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To judge the degree of international integration, economists turn to information on?
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Flows of goods
similarity of prices in different markets flows of capital and people |
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Free trade in goods is predicted to?
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increase competition for workers and firms
provide consumers with greater variety and lower prices |
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What is deep integration?
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The elimination or reduction of trade barriers caused by non-trade-related domestic policies
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Cross-country empirical evidence shows that countries that are more open
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tend to grow faster than countries that are cloed
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countries such as the U.S. that have large populations tend to have?
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lower openness indicators
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Economists overwhelmingly support more open markets because?
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Trade leads to a better allocation of resources inside countries
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increasing free trade may?
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promote efficient allocation of resources
bring a variety of choices for consumers increase competition and innovation |
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which is an example of an institution whose primary concern is global stability?
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IMF (International Monetary Fund))
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what are Institutions?
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A set of rules governing behavior, Whether written or not.
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IMF conditionality refers to?
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The changes a country must make in order to receive IMF financial assistance.
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IMF quotas refer to?
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The IMF membership fee paid by countries
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what is the WTO?
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The international organization that serves as a forum for trade discussions and the development of trade rules
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When economists talk about the gains from trade they mean that?
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the benefits of trade outweigh the losses
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Adam smith was critical of trade barriers, since he believed that trade barriers?
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reduce specialization, technological progress and wealth creation
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The richardian trade model by David Ricardo is one that?
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Expounds principles still valid in today's world
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A nation gains from trade even though some individuals benefit while others are hurt because?
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The economic gains of the winners exceed the economic losses of the losers
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Wage differentials reflect?
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productivity differences
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What is trade about?
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Improving living standards through a more efficient allocation of resources
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IF a U.S firm moves some of its assembly to the firms foreign affiliate located in mexico then this is called?
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Off Shoring
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What are the examples of demand pull factors that influence international migration?
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Cost of moving
Probability of finding a job Wage a worker may earn |
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The "Resource Curse" refers to the idea that?
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Countries that focus on a resource, such as oil, may suffer from macroeconomic instability
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what happens When a country trades according to principles of comparative advantage?
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Some workers will be hurt due to dislocation, though their losses could be offset if the gains from trade were shared
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Since the Heckscher-Ohlin model involves multiple inputs, such as land labor and capital, the production possibility curve (PPC) is?
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Curved because production costs are increasing
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What is intraindustry trade?
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International trade in products made within the same industry
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What is interindustry trade?
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International trade in products made between different industry
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How is intraindustry trade for a single industry measured by?
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The Grubel-Lloyd index
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The gains from intraindustry trade differ from comparative advantage trade because?
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intraindustry gives consumers more choices
prices of export goods fall with intraindustry trade but not with comparative advantage intraindustry is less threatening to jobs then comparative advantage |
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Transparency refers to?
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Ability of all participants to easily discover and understand the rules
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Nontariff barriers tend to be less transparent than tariffs because?
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they often require careful and precise interpretation AND
they are associated with special circumstances known to only a few |
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Tariffs are perferred to quotas because?
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Tariffs cause a smaller net national welfare loss compared to quotes
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intraindustry trade relies on?
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economies of scale
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An internal economies of scale is defined as?
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one with falling costs over a relatively large range of output
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"Uruguay Round" of trade talks resulted in?
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new measures for trade dispute
formation of WTO Measures regulating the treatment of intellectual property |
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Consumer surplus is equal to the area??
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Area UNDER the demand curve and ABOVE the price line
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Producer surplus is equal to the area??
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Area ABOVE the supply curve and BELOW the price line
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What is "Race to the Bottom"?
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Situation where countries try to compete against each other for investment by reducing their standards on labor, environmental, or other policy issues
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Harmonization of standards implies that countries decide to?
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adopt a common set of standards in an area of concern, such as product safety or labor
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What was the most common reason for countries to impose tariffs?
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Raise revenue for the government
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Logic of collective action explains the persistence of tariffs and quotas as an outcome that is driven by the asymmetry between?
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the benefits concentrated in the hands of the few firms, versus the costs distributed across many consumers
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High-Income industrial nations such as the U.S. and Japan have their highest tariffs in??
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Agriculture, clothing, and textiles
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U.S. Tariffs and quotas reduce national welfare the most in?
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Clothing
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if a home country forces home firms to follow home environmental standards when home firms operate at home or in a foreign location?
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pressures for a race to the bottom will decrease
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Export labels provide an alternative to the use of trade barriers to promote environmental standards in partner trading countries since?
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Labels allow customers to determine whether products were produced in an environmental sustainable fashion
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Most of the worlds population and a majority of countries are?
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either low-income or middle-income
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A country may choose to levy a countervailing duty on imported products if?
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IF the imported products benefit from subsidies
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Labor standards are?
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Multifaceted, covering basic rights AND civic rights
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what are the three ways for countries to handle different standards abroad?
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Separate standards
Harmonization of standards Mutual recognition of standards |
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Openness does NOT reveal a country's trade policies OR define its barriers to trade. T or F??
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TRUE
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What are two important points regarding international capital flows?
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1) savings and investment are high correlated
2) Technology improvements increase financial capital flows |
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What are Formal institutions?
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Written sets of rules that explicitly state what is and is not allowed
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What are Informal institutions?
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Customs or traditions that define appropriate behavior, but without legal enforcement
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What are Two important functions of international economic institutions to reduce free riding are?
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Maintaining order in international economic relations
AND Reducing uncertainty |
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The improvement in national welfare is known as what??
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the gains from trade
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What happens to a country that does not have absolute productivity advantage in anything?
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Even if a country does not have any goods with an absolute productivity advantage, it can still benefit from trade
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What does the production possibilities curve (PPC) show?
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It shows the tradeoffs a country faces when choosing between two goods
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Define Absolute productivity advantage:
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Held by a country that produces more goods per hour worked than another
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Define Comparative productivity advantage
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Held by a country that has lower opportunity costs of producing a good than its trading partners do
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What does Comparative advantage allow?
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allows a country that lacks absolute advantage to sell its products abroad
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What is the purpose of the Hecksher-Ohlin Theorem?
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Predicts which goods will be exported.
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What is the purpose of The Stolper-Samuelson Theorem?
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Predicts the income distribution effects of trade
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How is protection obtained?
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1) Direct actions by the president
2) Countervailing duties Antidumping duties Escape clause relief Section 301 retaliation |
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What is Special 301?
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Requires the USTR to monitor property rights enforcement around the world
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Define Harmonization of standards?
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Two or more countries adopt a common set of standards
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Define Mutual recognition of standards?
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Countries maintain their own standards, but accept the standards of others as valid and sufficient
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Define Separate standards?
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Countries maintain their own standards and refuse to recognize the standards of others
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