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AGB 302 Ch 6 Exam Questions and Answers
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AGB 302 Ch 6 Exam Questions and Answers
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AGB 302 Ch 6 Exam Questions andAnswers
Free Trade - Answer -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
New Trade Theory - Answer -Paul Krugman; stresses that in some cases, countries
specialize in the production and export of particular products not because of underlying
differences in factor endowments but because in certain industries the world market can
support only a limited number of firms; at variance with the Heckscher-Ohlin theory
Mercentilism - Answer -it was in a country's best interests to maintain a trade surplus, to
export more than it imported; advocate for government intervention in trade to create
surplus
Zero-Sum Game - Answer -one in which a gain by one country results in a loss by
another
Absolute Advantage - Answer -a country has an absolute advantage in the production of
a product when it is more efficient than any other country at producing it
constant returns to specialization - Answer -the units of resources required to produce a
good (cocoa or rice) are assumed to remain constant no matter where one is on a
country's production possibility frontier (PPF)
Economies of Scale - Answer -unit cost reductions associated with a large scale of
output.
First-mover advantages - Answer -the economic and strategic advantages that accrue
to early entrants into an industry.
balance-of-payments accounts - Answer -keeps track of the payments to and receipts
from other countries for a particular time period.
Current Account - Answer -records transactions that pertain to four categories
Current Account deficit - Answer -occurs when a country imports more goods, services,
and income than it exports
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