COMPRE 1 MIDTERMS

Front

Which of the following refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country? Economic patriotism, Protectionism, Free trade, Offshoring

Back

Free trade

Front

David Ricardo's theory of comparative advantage explains global trade in terms of the _____.

Back

international differences in labor productivity

Front

Identify the theory that supports the view that in some cases countries export for the reason that the world market can support only a limited number of firms.

Back

New trade theory

Front

Which of the following observations is consistent with Michael Porter's theory of national competitive advantage? Factors such as domestic demand and domestic rivalry determine nations' dominance on production.

Back

Factors such as domestic demand and domestic rivalry determine nations' dominance on production.

Front

Which of the following is a major flaw associated with mercantilism?
- Mercantilists do not support government intervention in trade.
- Mercantilists view trade as a zero-sum game.
- Mercantilists recommend policies to maximize imports.
- Mercantilists recommend countries to maintain a negative trade balance.

Back

Mercantilists view trade as a zero-sum game.

Front

According to Adam Smith, A country should specialize in the production of a good when it has _____.

Back

an absolute advantage in the production of the good

Front

Country A can produce product X, but it can also buy it at a cheap rate from Country B. Which of the following courses of action is suitable in this situation according to Adam Smith's theory of absolute advantage?

Back

Country A should import product X from country B and it should not attempt to produce it at home.

Front

Which of the following is a statement that supports the theory of comparative advantage?
Options:
International trade is a zero-sum gain where one nation's gain is another's loss.
Domestic industries are at risk when a country engages in free trade.
A country should maintain trade surplus to succeed in global trade.
Global production is greater with free trade than it is with restricted trade.

Back

Global production is greater with free trade than it is with restricted trade.

Front

Diminishing returns to specialization occurs when _____.

Back

more units of resources are required to produce each additional unit

Front

What will happen, according to Paul Samuelson's critique, if a rich country enters into a free trade agreement with a poor country?

Back

The poor country will rapidly improve its productivity.