front 1 refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country | back 1 free trade |
front 2 Name the 8 trade theories. | back 2 1. mercantilism (neo-mercantilism) |
front 3 Encourage Exports• Discourage Imports• Viewed trade as ZERO SUMGAME | back 3 mercantilism |
front 4 If a company exports 2 items, another country gains 2 items | back 4 zero sum game |
front 5 Import Raw Materials -> CheapLabor -> Export Finished Goods• Exports have been greater than Imports | back 5 neo mercantilism (China) |
front 6 argued that countries differ in their ability to produce goods efficiently | back 6 absolute advantage |
front 7 Who came up with absolute advantage and when? | back 7 Adam Smith 1776 |
front 8 Adam Smith said trade is a ________________ sum game | back 8 positive-sum game |
front 9 Countries should specialize in producing goods they have _______________ advantage in and trade these for goods produced by other countries who are advantaged in other areas | back 9 Absolute advantage; absolute advantage by Adam Smith |
front 10 all countries that participate realize economic gains. | back 10 positive sum game |
front 11 agreed that countries differ in their ability to produce goods efficiently | back 11 comparative advantage |
front 12 Who developed the theory of comparative advantage and when? | back 12 David Ricardo; 1817 |
front 13 It is more important to focus on __________________ advantage and import even where it has ________________________ advantage | back 13 comparative; absolute |
front 14 when a country is more efficient at producing a good comparatively to another country | back 14 comparative advantage |
front 15 Nations will trade based on ______________ cost and ______________ ______________ | back 15 oppurtunity; limited resources |
front 16 comparative advantage by David Ricardo says that trade is a ___________ sum game | back 16 positive |
front 17 believed that Comparative Advantage arose from differences in National factor endowments(land, labor, capital) | back 17 Heckscher Ohlin Theory |
front 18 __________________would predict that since the USA has strong FactorEndowments for capital, therefore should be a strong exporter of ____________intensive goods (printing presses, oil rigs) and an importer of ___________intensive goods• | back 18 Heckscher Ohlin; capital; labor |
front 19 Countries like Germany are stronger exporters of capital-intensive good, making the theory of the US a paradox. Why? | back 19 The USA chose to spend its limited resources elsewhere; skilled production, technology, innovation, entrepreneurship |
front 20 proposed that that mostnew products were developed by the US andwent through a life-cycle that brought themback as imports | back 20 Product Life Cycle theoory by Raymond Vernon in the 1960s |
front 21 5 stages of product life cycle | back 21 1. US production and demand |
front 22 The Product Life-CycleTheory Problems | back 22 1. Major MNES |
front 23 Economies of scale and first mover advantage are part of the _______ theory? | back 23 new trade theory by Paul Krugman 1970 |
front 24 increasing product variety and pressures to reduce costs favors large companies | back 24 economies of scale |
front 25 global market can only support a limited number of firms producing the same products or services | back 25 first mover advantage |
front 26 Paul Krugman _________ with Hecksher ohlin and __________ with Ricardo's competitive advantage | back 26 disagrees; agrees |
front 27 What is the current trade theory? | back 27 Porter's Diamond by Michael Porter in 1990s |
front 28 Michael Porter proposed 4 broad attributes? | back 28 1. factor endowments |
front 29 presence of suppliers assists growth andprovides new technology | back 29 relating and supporting industries |
front 30 competitive advantage unique to firm` | back 30 firm strategy |
front 31 Two additional determinants to Porters diamond? | back 31 Chance/luck and government |
front 32 advanced factors of Porter's diamond | back 32 communication, infrastructure, skilled labor, technology |
front 33 More ________________ needs to begathered to provide a conclusionon Porter's Diamond | back 33 empirical data |
front 34 Which countries has the largest share of exports? | back 34 1. China |
front 35 The US is the top importer of _________ and top exporter of ____________ | back 35 cars; petroleum |
front 36 WHo are the world's biggest importers? | back 36 1. US |
front 37 Biggest exporters? | back 37 1. China |
front 38 What is the major flaw of theories of global trade? Why? | back 38 there is NO FREE TRADE; because of gov't intervention |
front 39 Why does the gov't impose tarrifs? | back 39 1. increase gov't revenues |
front 40 Political Arguments for Government Interventio | back 40 1. retaliation |
front 41 Economic Arguments for Intervention | back 41 1. infant industry argument |
front 42 Protect Industries that are in First-Moverposition• Help Domestic Firms overcome Barriers ofEntry | back 42 strategic trade policy |
front 43 The Revised Case for FREE TRADE by Paul Krugman states that strategic trade policy is a __________ policy and creates? | back 43 beggar-thy-neighbor; retaliation and war |
front 44 what are 6 instruments of trade policy | back 44 1. tariffs |
front 45 Who benefits from import restraints? | back 45 domestic producers by limiting import competition, but this raises prices of imported goods for consumers |
front 46 a tax levied as a fixed charge for each unit of a good imported` | back 46 specific tariff |
front 47 a tax levied as a proportion of the value ofthe imported good` | back 47 ad valorem tariff |
front 48 Why is sugar more expensive in the US than the rest of the world? | back 48 tariffs |
front 49 a government payment to a domestic producer | back 49 subsidy |
front 50 Subsidies help domestic producers compete against? | back 50 low-cost foreign imports and gain export markets |