International economics theory and policy by Paul r krugman
of interaction between two places, based on the size of their populations and their
distance from each other.
Gross Domestic Product (GDP) - (correct Answer) - A measurement of the total goods
and services produced within a country.
developing countries - (correct Answer) - countries with less productive economies
and a lower quality of life
service offshoring (service outsourcing) - (correct Answer) - practice of hiring
foreign workers or contracting with an international third party service provider
to run service based functions of a particular industry
opportunity cost - (correct Answer) - Cost of the next best alternative use of
money, time, or resources when one choice is made rather than another
Ricardian Model - (correct Answer) - explains how the level of a country's
technology affects the wages paid to labor, such that countries with better
technologies have higher wages
production possibilities curve - (correct Answer) - A curve that describes the
maximum amount of one good that can be produced for every possible level of
production of the other good.
Production Possibilities Frontier (PPF) - (correct Answer) - a diagram that shows
the productively efficient combinations of two products that an economy can produce
given the resources it has available
absolute advantage - (correct Answer) - the ability to produce more of a given
product using a given amount of resources
partial equilibrium analysis - (correct Answer) - the analysis of a single market
in isolation, ignoring any feedbacks that may come from induced changes in other
markets
general equilibrium analysis - (correct Answer) - the analysis of all the economy's
markets simultaneously, recognizing the interactions among the various markets
relative demand - (correct Answer) - The ratio of the demand for one good to the
demand for another
relative demand curve - (correct Answer) - The quantity demanded of one good
divided by the quantity demanded of another good; how many units are demanded of a
good for each unit demanded of another good
relative supply curve - (correct Answer) - the quantity supplied of one good
divided by the quantity supplied of another good; how many units are supplied of a
good for each unit supplied of another good
gains from trade - (correct Answer) - the extra output that trading partners obtain
through specialization of production and exchange of goods and services
Relative wages - (correct Answer) - the wages of the domestic country relative to
the wages in the foreign country
pauper labor argument - (correct Answer) - Foreign competition is unfair and hurts
other countries when it is based on low wages
Specialization - (correct Answer) - the concentration of the productive efforts of
individuals and firms on a limited number of activities
derived demand - (correct Answer) - Business demand that ultimately comes from
(derives from) the demand for consumer goods.
nontraded goods - (correct Answer) - goods that are neither imported nor exported,
for reasons like high transportation costs. Domestic produced and consumed
products.
unit labor requirement - (correct Answer) - indicates the constant number of hours
of labor required to produce one unit of output
Mobile Factors - (correct Answer) - Factors of production that can move between
sectors. I.e., labor
specific factors - (correct Answer) - Factors of production that are unable to move
into or out of an industry or sector.
, production function - (correct Answer) - the relationship between quantity of
inputs used to make a good and the quantity of output of that good
Marginal product of labor - (correct Answer) - the increase in the amount of output
from an additional unit of labor
diminishing returns - (correct Answer) - stage where output increases at a
decreasing rate as more units of variable input are added
budget constraint - (correct Answer) - all possible consumption combinations of
goods that someone can afford, given the prices of goods, when all income is spent;
the boundary of the opportunity set
labor mobility - (correct Answer) - the ability and willingness of workers to
relocate in markets where wages are higher
U.S. Trade Adjustment Assistance program - (correct Answer) - Provides extended
unemployment coverage for an additional year and tuition reimbursement to workers
who are displaced by Plant closure due to import competition or an overseas
relocation to a country receiving preferential access to the United States
wage convergence - (correct Answer) - As the wages of migrant and local workers
converge, and the labor market barriers are gradually eliminated, more adequate and
integrated labor mobility across regions is expected to bring about a reduction of
regional wage differentials.
marginal product - (correct Answer) - extra output due to the addition of one more
unit of input
total product - (correct Answer) - All the goods and services produced by a
business during a given period of time with a given amount of input
Abundance of Factors - (correct Answer) - Resource richness for production
Heckscher-Ohlin Theory - (correct Answer) - comparative advantage arises from
differences in national factor endowments
Factor Proportions Theory - (correct Answer) - Countries produce and export goods
that require resources (factors) in abundance, and import goods that require
resources in short supply
factors of production - (correct Answer) - Land, labor, and capital; the three
groups of resources that are used to make all goods and services
factor prices - (correct Answer) - The prices of the services of the factors of
production.
Expansion of production possibilities - (correct Answer) - Occurs when the
production possibility frontier shifts out much more in one direction than in
another
Heckscher-Ohlin Theorem - (correct Answer) - "The country that is abundant in a
factor exports the good who's production is intensive in that factor"
Abundant Factor - (correct Answer) - The resource of which a country has a
relatively large supply
Scarce factor - (correct Answer) - The resource of which a country has a relatively
small supply
NAFTA (North American Free Trade Agreement) - (correct Answer) - An agreement for
free trade between the United States and Canada and Mexico
Equalization of factor prices - (correct Answer) - When factor prices in different
countries become equalized (the same) due to international trade (convergence)
factor content of trade - (correct Answer) - The mix of factors of production used
to produce a country's net exports
Leontief Paradox - (correct Answer) - The empirical finding that, in contrast to
the predictions of the Heckscher-Ohlin theory, US exports are less capital
intensive than US imports.
Specific Factors Model - (correct Answer) - a trade model that allows for mobile
and immobile factors of production, as well as income distribution
Standard Trade Model - (correct Answer) - Nothing makes it difficult for factors of
production currently employed in comparatively disadvantaged industries to move to
the comparatively advantaged sector. Factors of production will move will move to
comparatively advantaged industries because it is profitable to do so.
isovalue line - (correct Answer) - The set of all combinations of final goods
multiplied by respective prices resulting in a given level of value, expressed as a
of interaction between two places, based on the size of their populations and their
distance from each other.
Gross Domestic Product (GDP) - (correct Answer) - A measurement of the total goods
and services produced within a country.
developing countries - (correct Answer) - countries with less productive economies
and a lower quality of life
service offshoring (service outsourcing) - (correct Answer) - practice of hiring
foreign workers or contracting with an international third party service provider
to run service based functions of a particular industry
opportunity cost - (correct Answer) - Cost of the next best alternative use of
money, time, or resources when one choice is made rather than another
Ricardian Model - (correct Answer) - explains how the level of a country's
technology affects the wages paid to labor, such that countries with better
technologies have higher wages
production possibilities curve - (correct Answer) - A curve that describes the
maximum amount of one good that can be produced for every possible level of
production of the other good.
Production Possibilities Frontier (PPF) - (correct Answer) - a diagram that shows
the productively efficient combinations of two products that an economy can produce
given the resources it has available
absolute advantage - (correct Answer) - the ability to produce more of a given
product using a given amount of resources
partial equilibrium analysis - (correct Answer) - the analysis of a single market
in isolation, ignoring any feedbacks that may come from induced changes in other
markets
general equilibrium analysis - (correct Answer) - the analysis of all the economy's
markets simultaneously, recognizing the interactions among the various markets
relative demand - (correct Answer) - The ratio of the demand for one good to the
demand for another
relative demand curve - (correct Answer) - The quantity demanded of one good
divided by the quantity demanded of another good; how many units are demanded of a
good for each unit demanded of another good
relative supply curve - (correct Answer) - the quantity supplied of one good
divided by the quantity supplied of another good; how many units are supplied of a
good for each unit supplied of another good
gains from trade - (correct Answer) - the extra output that trading partners obtain
through specialization of production and exchange of goods and services
Relative wages - (correct Answer) - the wages of the domestic country relative to
the wages in the foreign country
pauper labor argument - (correct Answer) - Foreign competition is unfair and hurts
other countries when it is based on low wages
Specialization - (correct Answer) - the concentration of the productive efforts of
individuals and firms on a limited number of activities
derived demand - (correct Answer) - Business demand that ultimately comes from
(derives from) the demand for consumer goods.
nontraded goods - (correct Answer) - goods that are neither imported nor exported,
for reasons like high transportation costs. Domestic produced and consumed
products.
unit labor requirement - (correct Answer) - indicates the constant number of hours
of labor required to produce one unit of output
Mobile Factors - (correct Answer) - Factors of production that can move between
sectors. I.e., labor
specific factors - (correct Answer) - Factors of production that are unable to move
into or out of an industry or sector.
, production function - (correct Answer) - the relationship between quantity of
inputs used to make a good and the quantity of output of that good
Marginal product of labor - (correct Answer) - the increase in the amount of output
from an additional unit of labor
diminishing returns - (correct Answer) - stage where output increases at a
decreasing rate as more units of variable input are added
budget constraint - (correct Answer) - all possible consumption combinations of
goods that someone can afford, given the prices of goods, when all income is spent;
the boundary of the opportunity set
labor mobility - (correct Answer) - the ability and willingness of workers to
relocate in markets where wages are higher
U.S. Trade Adjustment Assistance program - (correct Answer) - Provides extended
unemployment coverage for an additional year and tuition reimbursement to workers
who are displaced by Plant closure due to import competition or an overseas
relocation to a country receiving preferential access to the United States
wage convergence - (correct Answer) - As the wages of migrant and local workers
converge, and the labor market barriers are gradually eliminated, more adequate and
integrated labor mobility across regions is expected to bring about a reduction of
regional wage differentials.
marginal product - (correct Answer) - extra output due to the addition of one more
unit of input
total product - (correct Answer) - All the goods and services produced by a
business during a given period of time with a given amount of input
Abundance of Factors - (correct Answer) - Resource richness for production
Heckscher-Ohlin Theory - (correct Answer) - comparative advantage arises from
differences in national factor endowments
Factor Proportions Theory - (correct Answer) - Countries produce and export goods
that require resources (factors) in abundance, and import goods that require
resources in short supply
factors of production - (correct Answer) - Land, labor, and capital; the three
groups of resources that are used to make all goods and services
factor prices - (correct Answer) - The prices of the services of the factors of
production.
Expansion of production possibilities - (correct Answer) - Occurs when the
production possibility frontier shifts out much more in one direction than in
another
Heckscher-Ohlin Theorem - (correct Answer) - "The country that is abundant in a
factor exports the good who's production is intensive in that factor"
Abundant Factor - (correct Answer) - The resource of which a country has a
relatively large supply
Scarce factor - (correct Answer) - The resource of which a country has a relatively
small supply
NAFTA (North American Free Trade Agreement) - (correct Answer) - An agreement for
free trade between the United States and Canada and Mexico
Equalization of factor prices - (correct Answer) - When factor prices in different
countries become equalized (the same) due to international trade (convergence)
factor content of trade - (correct Answer) - The mix of factors of production used
to produce a country's net exports
Leontief Paradox - (correct Answer) - The empirical finding that, in contrast to
the predictions of the Heckscher-Ohlin theory, US exports are less capital
intensive than US imports.
Specific Factors Model - (correct Answer) - a trade model that allows for mobile
and immobile factors of production, as well as income distribution
Standard Trade Model - (correct Answer) - Nothing makes it difficult for factors of
production currently employed in comparatively disadvantaged industries to move to
the comparatively advantaged sector. Factors of production will move will move to
comparatively advantaged industries because it is profitable to do so.
isovalue line - (correct Answer) - The set of all combinations of final goods
multiplied by respective prices resulting in a given level of value, expressed as a
