International Trade and Money summary [Level A+] Questions and Answers
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Comparative Advantage - -The ability of a country to produce a g/s at a lower opportunity cost than competitors -Gains from trade - -The net benefits from entering into voluntary trade. Increases w... hen countries specialize in g/s they have CA in -Autarky - -When a country does not trade with other countries -Inter-Industry Trade - -Trade of products that belong to different industries -Horizontal Intra-Industry Trade - -Trade of products that belong to the same industry -Heckscher-Ohlin theorem - -A country will export goods that use its abundant factors and import goods that use its scarce factors: capital-abundant and labor-abundant -Stolper-Samuelson Theorem - -Trade leads to an increase in the return to a country's abundant factor and a fall in the return to its scarce factor; under constant returns to scale, perfect competition, equality of the number of factors to the number of products. -Factors of production - -Economic resources used in the production of goods: natural resources, labor, capital Mobile- reallocated easily Specific- cannot be reallocated easily [Show More]
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