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Questions and Answers
Who heralded the formulation of a theory of free trade?
Who heralded the formulation of a theory of free trade?
- David Hume
- Adam Smith (correct)
- David Ricardo
- Karl Marx
What type of theories does the country-based international trade theory refer to?
What type of theories does the country-based international trade theory refer to?
- Classical theories (correct)
- Firm-based theories
- Modern theories
- Regional theories
What is the purpose of the division of labor in a work process?
What is the purpose of the division of labor in a work process?
- To create competition
- To increase costs
- To enhance specialization and boost efficiency (correct)
- To reduce productivity
What does a trade surplus indicate for a country?
What does a trade surplus indicate for a country?
Which economic concept restricts imports and reduces consumer choices?
Which economic concept restricts imports and reduces consumer choices?
According to the information provided, what was the second phase of capitalism characterized by?
According to the information provided, what was the second phase of capitalism characterized by?
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between ______.
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between ______.
Country-based international trade theory states that a country's wealth is determined by its holdings of ______ and silver.
Country-based international trade theory states that a country's wealth is determined by its holdings of ______ and silver.
Classical refers to the ______-based theories.
Classical refers to the ______-based theories.
Modern refers to the ______-based theories.
Modern refers to the ______-based theories.
Adam Smith published Wealth of Nation in ______.
Adam Smith published Wealth of Nation in ______.
David Ricardo published Principles of Economics in ______.
David Ricardo published Principles of Economics in ______.
David Hume offered the theory of the ______-specie flow mechanism.
David Hume offered the theory of the ______-specie flow mechanism.
Division of labor is the separation of a work process into a number of tasks, with each task performed by a separate person or group of persons to boost productivity and efficiency and enhance ______.
Division of labor is the separation of a work process into a number of tasks, with each task performed by a separate person or group of persons to boost productivity and efficiency and enhance ______.
Trade surplus is the amount by which the value of a country's exports exceeds the cost of its ______.
Trade surplus is the amount by which the value of a country's exports exceeds the cost of its ______.
Industrial capitalism was the second phase of capitalism in which industries/ factories became the dominant factor in the production of ______.
Industrial capitalism was the second phase of capitalism in which industries/ factories became the dominant factor in the production of ______.
Individuals benefit from a greater choice of affordable goods in a ______ trade system.
Individuals benefit from a greater choice of affordable goods in a ______ trade system.
__________ refers to the firm-based theories.
__________ refers to the firm-based theories.
It restricts imports and reduces the choices available to consumers - __________.
It restricts imports and reduces the choices available to consumers - __________.
__________ was the second phase of capitalism in which industries/ factories became the dominant factor in the production of goods.
__________ was the second phase of capitalism in which industries/ factories became the dominant factor in the production of goods.
Country-based international trade theory states that a country's wealth is determined by its holdings of ______ and silver.
Country-based international trade theory states that a country's wealth is determined by its holdings of ______ and silver.
David Ricardo published Principles of Economics in ______.
David Ricardo published Principles of Economics in ______.
Adam Smith published Wealth of Nation in ______.
Adam Smith published Wealth of Nation in ______.
David Hume offered the theory of the ______-specie flow mechanism.
David Hume offered the theory of the ______-specie flow mechanism.
__________ advantage is the country's inherent ability to produce specific goods efficiently and effectively at a relatively lower marginal cost.
__________ advantage is the country's inherent ability to produce specific goods efficiently and effectively at a relatively lower marginal cost.
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between ______.
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between ______.
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Study Notes
Economic Theories and Trade
- Adam Smith is known for formulating the theory of free trade.
- Country-based international trade theory refers to classical theories that measure wealth based on resource holdings, especially gold and silver.
- Modern trade theories focus on firm-based and competitive advantages in economic interactions.
Division of Labor
- The division of labor separates a work process into distinct tasks, enhancing productivity and efficiency.
- It allows each task to be performed by specialized individuals or groups, improving overall workflow.
Trade Indicators
- A trade surplus occurs when the value of a country's exports exceeds its imports, indicating economic strength.
- A trade deficit implies reliance on foreign goods, potentially impacting currency value and economic stability.
Trade Policies
- Protectionism restricts imports and limits consumer choices by imposing tariffs and quotas on foreign goods.
- This often leads to higher prices and reduced availability of products.
Phases of Capitalism
- Industrial capitalism marks the second phase of capitalism, characterized by the emergence of factories as the main production unit.
- This phase emphasizes mass production and the growth of industries over traditional artisanal practices.
Contributions of Key Economists
- Adam Smith published "Wealth of Nations" in 1776, laying foundational principles of economics and free markets.
- David Ricardo published "Principles of Economics" in 1817, further developing trade theories and comparative advantage.
- David Hume proposed the price-specie flow mechanism, illustrating the balance of trade effects on currency and prices.
Benefits of Trade Systems
- A free trade system allows individuals access to a wider range of affordable goods, enhancing consumer choice and economic growth.
- Comparative advantage gives countries the ability to specialize in producing specific goods more efficiently, fostering international trade cooperation.
WTO
- The World Trade Organization (WTO) is the sole global entity managing international trade rules among member countries, facilitating negotiations and dispute resolutions.
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