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53 Cards in this Set

  • Front
  • Back
How do we calculate Index of Openness?
Exports + Imports / GDP
a set of rules governing behavior, whether written or not
written set of rules
Formal Institution
tradition or custom
Informal Institution
openness doesn't tell anything about ______ __ _____
Barriers to Trade
Requirement (or change) for the borrowing member to carry out economic reforms in exchange for a loan
IMF Conditionality
2 important functions to reduce free riding:
1. Maintaining order in international economic relations
2. reducing uncertainty
Technological improvements _______ financial capital flows
main goal of the IMF
global economic stability
the ______ helps regulate trade while the _____ _____ helps regulate financial growth
World Bank
Countries can gain if they take advantage of ________ _________
absolute advantage
Gains from trade means
Benefits of trade outweigh the losses
Held by a country that produces more of a certain good per hour worked than another
Absolute Advantage
Held by a country that has lower opportunity costs of producing a good than its trading partners do.
Comparative Advantage
In the medium and long run, what has influence on the number of jobs?
Government Macroeconomic Policies (nothing to do with trade)
What is the basis of all free trade?
Comparative Advantage
What does the Hecksher Ohlin theorem predict?
Which goods will be exported
If the PPC is bowed outward, that means...
Production costs are increasing
What does the Stolper-Samuelson Theorem predict?
The income distribution effects of trade
International trade of products made within the same industry
Intraindustry trade
International trade of products between two different industries
Interindustry Trade
Intraindustry trade relies on _______ __ _______
Economies of scale
We measure Intraindustry trade with the ________ _________ _____.
Grubel-Lloyd Index
Why are tariffs higher in developing countries?
cheap and efficient way to collect government revenue
After tariffs, the consumer surplus, which is ______ the demand curve and ______ the price line goes ____.
Under, Over, Down
After tariffs, the producer surplus, which is _____ the supply curve and ______ the price line goes ____.
Over, Under, Up
A section of the U.S. 1974 trade act that requires the U.S. trade representative to take action against any nation that persistently engages in unfair trade practices
Section 301
Requires the USTR to monitor property rights enforcement around the world
Special 301
__________ allow firms to sell their products at lower prices
Two or more countries adopt a common set of standards
Harmonization of Standards
Countries maintain their own standards, but accept the standards of others as valid and sufficient.
Mutual recognition of standards
Countries maintain their own standards and refuse to recognize the standards of others
Separate Standards
Which industry has the highest national welfare loss in EU and Japan?
Which industry has the highest national welfare loss in the US?
Rich countries have higher ______ and _______ standards.
labor, environmental
Barriers of trade are BAD why?
they create inefficient allocation of resources
What are better job creation tools? (2)
sound macroeconomic policies and flexible labor markets
adoption of the lowest level of standards possible in order to attract foreign firms
race to the bottom
a majority of the world lives in _____-_____ income
Is there an environmental race to the bottom?
If a home country forces firms operating at home or abroad to follow domestic environmental standards, it _________ race to the bottom
relative importance of trade to a national economy
openness (lets us know how important exports is to GDP)
Economists overwhelmingly support more open markets because trade...
leads to a better allocation of scarce resources
US highest GDP in the world
China Second
Japan Third
Quotas go in the same order
The ______ ______ established the WTO, measures regulating treatment of intellectual property, and new measures for trade dispute settlements.
Uruguay Round
Trade Creation > Trade Diversion
Trade Creation > Trade Diversion
Private markets fail to supply public goods because of _____ ______.
Free Riding
The complete absence of trade
the amount of output obtained from a unit of input
trade is based on _______ Advantage, not _______ Advantage.
Comparative, Absolute
Shows the tradeoffs a country faces when choosing between two goods
Production Possibilities Curve
Adam Smith's Model = ________ ________
Ricardian Model = ________ _______
Absolute Advantage

Comparative Advantage
demand for an input
derived demand