ESSE Definitions

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Questions and Answers

According to the absolute advantage theory, which country should produce and distribute a good?

The country that has absolute advantage in producing the good (correct)

The country that has the largest population

The country that has the most advanced technology

The country that has the highest GDP

What does the HO Model suggest about a country's specialization in production and export?

It should specialize in the production and export of the goods with the lowest production cost

It should specialize in the production and export of the goods with the highest demand

It should specialize in the production and export of the good that uses intensively the factor of production it has in abundance (correct)

It should specialize in the production and export of the most expensive goods

What does the term 'competitive advantage' refer to in international trade?

Higher production cost than other countries

Higher opportunity cost to produce a certain good than other countries

Lower opportunity cost to produce a certain good than other countries (correct)

Equal opportunity cost to produce a certain good as other countries

What does the Revealed Comparative Advantage (RCA) index measure?

A country’s relative advantage in a specific industry as evidenced by trade flows Signup and view all the answers

What does the Gini coefficient measure?

The income distribution inequality Signup and view all the answers

What does the term 'intergenerational elasticity' refer to?

The effect of parents' income changes on their children's situation Signup and view all the answers

What is the 'Commitment to reducing inequality Index 2018'?

A measure of governments' efforts to address the wealth gap Signup and view all the answers

What does the term 'replacement fertility' refer to?

The total fertility rate for population replacement without migration Signup and view all the answers

What does the Lorenz curve illustrate?

The cumulative income distribution in a population Signup and view all the answers

What is meant by 'market income'?

Income from market activities Signup and view all the answers

What is the 'technological divide'?

Unequal access to digital technology Signup and view all the answers

What does 'urbanization' refer to?

Increase in urban population Signup and view all the answers

What is 'dependency ratio'?

The ratio of elderly people to working-age individuals Signup and view all the answers

What does the term 'categorical inequalities' refer to?

Inequalities based on certain categories Signup and view all the answers

What is 'slowbalization'?

A slower rate of globalization integration Signup and view all the answers

What is a 'financial crisis'?

A situation where financial assets lose substantial value Signup and view all the answers

What do economies of scale refer to?

Cost advantages due to operational scale, measured by the amount produced per unit of time Signup and view all the answers

What does the Gravity Model state about trade?

Closer countries with higher GDP will trade more Signup and view all the answers

What does inter-industrial trade involve?

Countries specializing in producing and exporting certain goods and importing others Signup and view all the answers

When does Intra-Industrial Trade occur?

When a country both produces and exports the same goods it imports Signup and view all the answers

What does the Grubel-Lloyd Index measure?

Intra-industrial trade of a specific product using a formula with a numerator and denominator Signup and view all the answers

What is Protectionism?

The theory or practice of shielding domestic industries from foreign competition by taxing imports Signup and view all the answers

What is Free Trade?

International trade without tariffs, quotas, or restrictions Signup and view all the answers

How do Import Quotas restrict trade?

By limiting the quantity of a good that may be imported and enforcing through licenses Signup and view all the answers

What are Voluntary Export Restraints (VERs)?

Limits imposed by the exporting country to protect consumers by limiting exports to a specific country Signup and view all the answers

What are Domestic Content Requirements?

Regulations that specify a fraction of a final good to be produced domestically Signup and view all the answers

What is the role of the World Trade Organization (WTO)?

Promotes free trade, reduces trade barriers, and provides stability and fair competition Signup and view all the answers

Study Notes

International Trade and Economic Development

Economies of scale refer to cost advantages due to operational scale, measured by the amount produced per unit of time.
The Gravity Model states that closer countries with higher GDP will trade more.
Inter-industrial trade involves countries specializing in producing and exporting certain goods and importing others.
Intra-Industrial Trade occurs when a country both produces and exports the same goods it imports.
The Grubel-Lloyd Index measures intra-industrial trade of a specific product using a formula with a numerator and denominator.
Protectionism is the theory or practice of shielding domestic industries from foreign competition by taxing imports.
Free trade is international trade without tariffs, quotas, or restrictions.
Import Quotas restrict the quantity of a good that may be imported and are enforced through licenses.
Voluntary Export Restraints are limits imposed by the exporting country to protect consumers by limiting exports to a specific country.
Domestic content requirements are regulations that specify a fraction of a final good to be produced domestically.
The World Trade Organization promotes free trade, reduces trade barriers, and provides stability and fair competition.
Economic development encompasses multidimensional processes for improving living standards and goes beyond GDP growth.

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Description

Test your knowledge of international trade and economic development with this quiz. Explore concepts such as economies of scale, the Gravity Model, inter-industrial and intra-industrial trade, trade barriers like protectionism and import quotas, as well as the role of organizations like the World Trade Organization in promoting free trade and economic development.