POLITICAL FORCES and TRADE THEORY

What term refers to the practice of a government taking ownership of a foreign company's assets?

• a) Nationalization

• b) Privatization

• c) Globalization

• d) Diversification

What is a political force that can affect international business?

• a) Economic stability

• b) Cultural diversity

• c) Legal regulations

• d) Market demand

Which of the following is an example of a political risk?

• a) Exchange rate fluctuations

• b) Technological advancements

• c) Changes in government policies

• d) Social media trends

According to the theory of absolute advantage, who should specialize in the production of a good?

• a. The country with the lowest opportunity cost

• b. The country with the highest GDP

• c. The country with the largest population

• d. The country with the most resources

"If our country can produce some set of goods at a lower cost than a foreign country and if the foreign country can produce some other set of goods at a lower cost than we can produce them, then clearly it would be best for us to trade our relatively cheaper goods for their relatively cheaper goods." This quote is referring

• Globalization

• Terms of Trade

• Absolute Advantage

• Comparative Advantage

"Autarky" in international trade theory means:

• A closed economy with partial specialization

• A closed economy with no trade

• A closed economy with total specialization

What is the expected outcome of trade? (there can be more than one answer)

• Optimal use of the resources

• More consumption of at least one good.

• Exploitation of trading country

• Higher utility for residents in the country

Which trade theory suggests that nations trade goods and services as a result of factor endowments, such as land, labor, and capital?

• Comparative advantage theory

• Factor proportions theory

• New trade theory

• Absolute advantage theory

    According to the product life cycle theory, what happens to production as a product matures in the market?

• It shifts to developing countries.

• It remains in developed countries.

• It experiences continuous innovation.

• It declines rapidly.

Which theory suggests that countries will specialize in the production of goods for which they have a relative productivity advantage, even if they lack an absolute advantage?

•  Absolute advantage theory

• Comparative advantage theory

• New trade theory

• Factor proportions theory