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ECON 101- CHAPTER 8 EXAM QUESTIONS AND CORRECT ANSWERS LATEST UPDATE (RATED A+) $7.99
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ECON 101- CHAPTER 8 EXAM QUESTIONS AND CORRECT ANSWERS LATEST UPDATE (RATED A+)
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ECON 101- CHAPTER 8 EXAM QUESTIONS AND CORRECT ANSWERS LATEST UPDATE (RATED A+) What are Imports? - Answers Goods and services purchased from other countries What are Exports? - Answers Goods and services sold to other countries What is Globalization? - Answers the phenomenon of growing economi...

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  • November 14, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • econ 101 chapter 8 exam questions and correct an

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ECON 101- CHAPTER 8 EXAM QUESTIONS AND CORRECT ANSWERS LATEST UPDATE 2024-2025 (RATED
A+)

What are Imports? - Answers Goods and services purchased from other countries

What are Exports? - Answers Goods and services sold to other countries

What is Globalization? - Answers the phenomenon of growing economic linkages among countries

The growth of international trade and other international linkages

What is the Ricardian model of international trade? - Answers analyzes international trade under the
assumption that opportunity costs are constant

It assumes that opportunity costs are constant

Shows that trade between two countries makes both countries better off than they would be if they
were in autarky-that is, there are gains from international trade

What is a Autarky? - Answers is a situation in which a country does not trade with other countries

What is Factor intensity? - Answers The factor intensity of production of a good is a measure of which
factor is used in relatively greater quantities than other factors in production

Goods differ in their factor intensity and countries tend to export goods that are intensive in the factors
that they have in abundance

Ex: oil refining is capital intensive because it requires a lot more capital than labor

Auto-seat production is labor intensive because it requires a lot more labor than capital

What is the Heckscher-Ohlin Model? - Answers a country has a good comparative advantage in a good
whose production is intensive in the factors that are abundantly available in that country

Ex: a country that has a lot of capital will have an advantage in capital intensive labor, while a country
that has a lot of labor will have a comparative advantage in labor intensive industries

Shows how comparative advantage can arise from differences in factor endowments: goods differ in
factor intensity, and countries tend to export goods that are intensive in the factors they have in
abundance

What is the Domestic demand curve? - Answers Shows the quantity demanded of a good at a given price

reflects the demand of consumers in that country

What is the domestic supply curve? - Answers shows how the quantity of a good supplied at a given
price by domestic producers depends on the price of that good

, reflects the supply of producers in that country

What is the world price? - Answers The World price of a good is the price at which that good can be
bought or sold abroad

When a market is open to international trade, the domestic price is driven to equal the world price

What are Exporting industries? - Answers produce goods and services that are sold abroad

What are Importing competing industries? - Answers produce goods and services that are also imported

What is free trade? - Answers An economy has free trade when the government does not attempt either
to reduce or to increase the levels of exports and imports that occur naturally as a result of supply and
demand

What is trade protection? - Answers Policies that limit imports (simply known as protection)

Many governments engage in trade protection of import-competing industries even though most
economists advocate for free trade

What is a tariff, and what does it do? - Answers a tax levied on imports

It raises the domestic price above the world price, leading to a fall in trade and domestic consumption,
and a rise in domestic production

It hurts consumers, and benefits domestic producers, and generates government revenue

As a result of a tariff, total surplus falls

Leads to deadweight loss

What is an import quota, and what does it do? - Answers is a legal limit on the quantity of a good that
can be imported

Has the same effects as a tariff(hurts consumers, benefits domestic producers), except that revenues-
the quota rents-accrue to the license-holder, not the domestic government

What are International trade agreements? - Answers treaties in which a country promises to engage in
less trade protection against the exports of other countries in return for a promise by other countries to
do the same for its own exports

Countries engage in international trade agreements to further trade liberalization

What is NAFTA? - Answers a trade agreement between the US, Canada, and Mexico

What is the European Union (EU)? - Answers a customs union among 27 European nations

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