Chapter 1: Evolution of International Trade

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Questions and Answers

Explain the Standard Theory of International Trade.

The Standard Theory of International Trade is how economists explain the pattern of international trade in goods and services.

Differentiate between free trade and mercantilism.

Free trade advocates for no restrictions on trade, while mercantilism believes in accumulating wealth through a positive balance of trade.

What is the difference between absolute advantage and comparative advantage?

Absolute advantage is when a country can produce a good using fewer resources, while comparative advantage is when a country can produce a good at a lower opportunity cost.

Discuss the history of international trade from the barter system to the present time.

International trade started with barter where goods were exchanged for other goods without a common medium of exchange. Over time, the development of money facilitated trade, leading to the complex global trade networks we have today. Signup and view all the answers

What is the primary purpose of the World Trade Organization (WTO)?

To open trade for the benefit of all. Signup and view all the answers

Where is the World Trade Organization (WTO) headquartered?

Geneva, Switzerland. Signup and view all the answers

What is the role of the WTO in settling trade disputes between its members?

It settles trade disputes between its members. Signup and view all the answers

Who elects the chairpersons of councils, committees, or working parties within the WTO?

Each council, committee, or working party elects its own chairperson. Signup and view all the answers

What was one of the first decisions made by President Joe Biden of the USA regarding international agreements?

Re-joining the Paris climate agreement. Signup and view all the answers

Which former finance minister was strongly supported by President Joe Biden for a position in the WTO?

Ngozi Okonjo-Iweala. Signup and view all the answers

Flashcards

Standard Theory of International Trade?

Explains the pattern of international trade in goods and services.

Free Trade vs. Mercantilism?

No trade restrictions vs. accumulating wealth through a positive trade balance.