Found 2066 results for: Chapter 17 International Trade Test Answers
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Alternatively, the exporter can receive the discounted value at inception from its bank, or sell it at its current discounted value in the money market prior to maturity. What is a forfaiting transaction? Answer: Forfaiting is a form of medium-term...
Found: 24 May 2021 | Rating: 96/100
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Consequently, the foreign trade is not paying for itself. Nevertheless, if most governments of developed countries offer such assistance to their domestic exporters, it is difficult for one to refuse if the country desires to have its...
Found: 24 May 2021 | Rating: 97/100
International Economics, Global Edition, 7th Edition
First, the plant buyer borrows hard currency in the capital market to pay the seller for the plant. Second, the plant seller agrees to purchase enough of the plant output over a period of time to enable the buyer to pay back the borrowed funds. A counterpurchase is similar to a buy-back transaction, but with some notable differences. The major difference between a buy-back and a counterpurchase transaction is that in the latter, the seller agrees to purchase unrelated merchandise that has not been produced on the exported equipment. The seller agrees to purchase goods from a list drawn up by the importer at prices set by the importer. The list frequently includes items the buyer may be experiencing difficulty in selling. Answer: Arguments both for and against countertrade transactions can be made. There are both negative and positive incentives for a country to be in favor of countertrade.
Found: 25 Apr 2021 | Rating: 85/100
Economics Principles & Practices
Negative incentives are those that are forced upon a country or corporations whether or not they desire to engage in countertrade. Negative reasons include: the conservation of cash and hard currency, the improvement of trade imbalances, and the maintenance of export prices. Positive reasons from both the country and corporate perspectives include: enhanced economic development, increased employment, technology transfer, market expansion, increased profitability, less costly sourcing of supply, reduction of surplus goods from inventory, and the development of marketing expertise. Those against countertrade transactions claim that such transactions tamper with the fundamental operation of free markets, and therefore, resources are used inefficiently. Opponents claim that transaction costs are increased, that multilateral trade is restricted through fostering bilateral trade agreements, and that, in general, transactions that do not make use of money represent a step backwards in economic development.
Found: 5 Apr 2021 | Rating: 92/100
What is the difference between a buy-back transaction and a counterpurchase? Answer: A buy-back transaction involves a technology transfer via the sale of a manufacturing plant. As part of the transaction, the seller agrees to purchase a certain portion of the plant output once it is constructed to enable the buyer to pay back the borrowed funds. In a counterpurchase, the seller agrees to purchase unrelated merchandise that has not been produced on the exported equipment. Generally, the seller agrees to purchase goods from a list drawn up by the importer at prices set by the importer. American Machine Tools is a mid-western manufacturer of tool-and-die-making equipment. The sales manager spoke with the Estonian representative, but he is doubtful that the Estonian government will be able to obtain enough hard currency to make the purchase.
Found: 5 Apr 2021 | Rating: 89/100
While the U. If something cannot be arranged, the firm will likely be forced to lay off some of its skilled workforce. Is there a way that you can think of that American Machine Tools might be able to make the machinery sale to Estonia? Suggested Solution to American Tools, Inc. American Machine Tools needs a manager in charge of countertrade. Since the U. In a buy-back transaction, the Estonian government would issue debt denominated in a hard currency to obtain the funds to purchase the equipment from American Machine Tools. It should be able to obtain hard currency debt financing if it is likely that it can service the debt. American Machine Tools, in turn, would agree to buy in dollars from the Estonian tool and die manufacturer enough of the output produced on the machinery to enable it to meet the debt service obligations. A countertrade works similarly, except that American Machine Tools would agree to purchase enough other goods produced in Estonia to enable the hard currency debt service obligations to be met.
Found: 19 Apr 2021 | Rating: 85/100
International Trade: Causes And Consequences
Either of these two types of countertrade would work if American Machine Tools has the sales ability to market the Estonia output in the U. Related Papers.
Found: 13 Apr 2021 | Rating: 89/100
Chapter 1. Introduction Abstract This book is on what, following Alfred Marshall, has come to be known as the pure theory of international trade dealing primarily with the determinants of the pattern of trade, gains from trade, and trade policy. Most textbooks in international economics attempt to cover both the pure theory of international trade and what has come to be known as international money which deals with balance of payments, exchange rates, etc. One concomitant consequence clearly is paucity of space, with the inevitable result that some topics in pure theory receive only perfunctory treatment. For example, the neotechnology and neofactor proportions theories are often not discussed or the empirical tests of various theories are either not discussed or discussed only as obiter dicta.
Found: 26 Apr 2021 | Rating: 86/100
International Economics: Theory And Policy
Furthermore, often the substantial literature, both theoretical and empirical, dealing with intra-industry trade, imperfect competition and increasing returns to scale, are neither adequately discussed nor systematically assimilated in the existing textbooks. Again, very few textbooks have considered the recent dynamic models dealing with endogenous growth and international trade. Borkakoti Chapter 2. International Trade in the Real World and the Theoretical Issues Abstract The pure theory of international trade attempts to determine the causes of trade, that is, to determine why one country, for example, imports machinery and exports textiles. It then attempts to analyse the consequences of international trade. First, as trade takes place, a country produces more of the exportables and less of the importables. This transformation of production, in conjunction with international exchange, will change factor prices, commodity prices, income, and income distribution, and hence, consumption.
Found: 1 Apr 2021 | Rating: 90/100
Second, as trade takes place without any impediments of tariffs or quotas, the question is raised regarding whether a country obtains gains from trade, or for that matter, whether the global welfare of the trading world increases. This question raises further issues related to the terms of trade, tariffs and subsidies within a static framework of given endowments of factors of production, and to economic growth in a dynamic framework. Borkakoti Chapter 3. Economic Methodology Abstract Economic methodology scrutinises the principles which are employed to make scientific enquiries into economic phenomena and attempts to set rules regarding what constitutes a scientific approach. The pure theory of international trade is often derided because of its severe abstract nature and unrealistic assumptions. Furthermore, familiarity with methodological tenets makes a reader more aware of the strengths and weaknesses of theories so that judgments can be formed in a more informed manner about the robustness of policy conclusions derived from theories.
Found: 20 Apr 2021 | Rating: 89/100
Borkakoti Chapter 4. The Classical View: Specialisation and Exchange, Absolute and Comparative Advantage Abstract In dealing with a subject in a comprehensive manner, it is imperative to discuss, even if very briefly, how the subject evolved over time, that is, one ought to have a glance at the history of the development of thought, and in this instance, in the theory of international trade. We will begin with the Mercantilist doctrine, as expounded by John Hales and Thomas Mun — , which dominated the sixteenth and seventeenth century England of commercial capitalism which itself was the precursor to industrial capitalism. It is during the period of industrial revolution that Adam Smith —90 published his Wealth of Nations in , and the father of economics expounded the doctrine of free trade. Smith was followed by other perspicacious economists: David Ricardo — , Robert Torrens — , Friedrich List — and John Stuart Mill —73 who made specific contributions to the theory of international trade.
Found: 14 Apr 2021 | Rating: 93/100
Burda & Wyplosz: Macroeconomics 7e
Borkakoti Chapter 5. Sources of International Trade: An Overall View Abstract The objective of this chapter is to give some idea to the reader about the various probable causes of international trade. These notions, it is hoped, will provide a better perspective and enable the reader to appreciate the theories discussed in this book. The various sources of trade are not rigorously discussed but presented here in the simplest possible way. Borkakoti Chapter 6. The Ricardian Hypothesis Abstract The core idea of the Ricardian hypothesis is contained in the classic numerical example as discussed in Chapter 4 which not only elucidated the concept of comparative advantage but also demonstrated welfare gains from free international trade. One view asserts the latter objective and points out in evidence that, in a full enquiry of the pattern of international trade, Ricardo would have taken three factors of production land, labour and capital into account as in his model of economic growth.
Found: 23 Apr 2021 | Rating: 91/100
The alternative view asserts the former objective and believes that the celebrated England-Portugal example can be construed as being an explanation of the pattern of international trade. In evidence, it points out that the assumption of labour being the only factor of production is a direct implication of the classical labour theory of value. If this argument is valid, then one needs to concentrate only on labour requirements. Borkakoti Chapter 7. Empirical Tests of the Ricardian Hypothesis Abstract In accordance with the tenets of economic methodology, a hypothesis must be tested by using the real world data to gauge its explanatory power.
Found: 3 Apr 2021 | Rating: 88/100
Chapter 9 - Application: International Trade - Questions For Review - Page 189: 1
The Ricardian hypothesis had to wait for years before the first attempts on its empirical corroboration were made. His work was followed by several other economists. In this chapter, we discuss the methods used to test the Ricardian hypothesis, summarise the important results, and form an overall opinion about whether the hypothesis is empirically valid or not. Borkakoti Chapter 8. A further indispensable condition is that the proportions in which the factors of production are combined shall not be the same for one commodity or for another. Borkakoti Chapter 9. The Heckscher-Ohlin Model Mathematically Treated Abstract It should perhaps be stated that readers who are not keen on mathematical presentation of models may skip this chapter without any loss of knowledge of trade theory.
Found: 2 Apr 2021 | Rating: 91/100
On the other hand, this chapter presents an opportunity to develop mathematical abilities to discuss trade theory. These two-sector mathematical models are used to analyse international trade, within the HOS framework, between two countries. This separate mathematical chapter is warranted by the vast amount of work done in this area. In this chapter we first discuss the analytics of a two-good two-factor mathematical model of an economy under autarky and establish the existence of a globally stable equilibrium, and then extend the same to include two countries trading with each other. Here we are concerned only with the static or temporary equilibrium, and the growth equilibrium in the presence of international trade will be discussed in Chapter Borkakoti Chapter Additionally, there are more than two goods, two factors and two countries in the real world.
Found: 9 Apr 2021 | Rating: 93/100
Answer Key Chapter 17 - Chemistry: Atoms First 2e | OpenStax
These assumptions clearly are unrealistic. The objective of this chapter is to explore the consequences if these assumptions are eschewed. It is not theoretically possible to do away with all the restrictive assumptions at the same time. Following the usual methodological procedure, the HOS model is examined by changing one assumption at a time. We consider specifically the consequences of internationally non-identical tastes, internationally non-identical technology, the reversal of factor intensities, many goods but two factors and two countries, many factors but two goods and two countries, and many countries but two goods and two factors. The former theorem, propounded by Stolper and Samuelson , answers the following question: what happens to income distribution real rewards to the factors of production if the pattern of production in a country changes, that is, if the production of one good increases and that of the other good in a two-good case falls?
Found: 12 Apr 2021 | Rating: 91/100
The latter theorem, propounded by Samuelson , , answers the question: are factor prices internationally equalised if commodity prices are internationally equalised when only commodities are freely traded? Although the SS theorem was originally expounded in the context of international trade, it essentially answers a general equilibrium question about income distribution when, under full employment, the sectoral levels of production change. The proposition put forward by the SS theorem is of immense importance as it has rendered deep insights into the problems of income distribution. The paper by Stolper and Samuelson is a precursor1 to the two famous papers by Samuelson , It retains all the assumptions of the standard HOS model except that one factor, usually capital, is assumed to be sector-specific at least in the short run while labour is assumed to be perfectly mobile between the sectors.
Found: 15 Apr 2021 | Rating: 89/100
Jones , Mussa , Mayer and Neary have made significant contributions. Specifically, Jones has analysed some comparative static properties of the short-run Ricardo-Viner model. Neary has analysed some long-run dynamic properties when capital, the specific factor, moves from one sector to the other in response to higher rental through a process of decreasing capital stock in one sector via capital depreciation coupled with starvation of new investment and increasing capital stock in the other sector via new investment. Such an analytical framework has more relevance to the problems of the real world. If, as a result of international trade, a country produces, say, more of motor vehicles but less of textiles, then clearly capital equipment producing textiles cannot be used to produce more cars. This transformation has to take place over time as described above. As we know, the theorem is most robust in its two-good, two-factor, two-country form.
Found: 2 Apr 2021 | Rating: 91/100
International Trade And Factor-Mobility Theory
To test the HOS hypothesis by this method, one would normally regress net exports on capital per worker at the sectoral level on the assumption that there are two generic factors of production capital and labour. If the results are poor, then a common practice is to bring in additional regressors such as human capital in order to obtain some statistically significant results.
Found: 18 Apr 2021 | Rating: 87/100
Within limits, this procedure of including extra relevant explanatory variables can be justified on the basis of a multi-factor approach. However, with the practice of adding explanatory variables ad hoc, a test could degenerate into an empirical search for significant explanatory variables till one finds econometrically acceptable results. Empirical Tests of the HOS Hypothesis: The Tests of Assumptions Abstract It is a reasonable methodological procedure to test the empirical validity of the crucial assumptionsassumptions1 of a model since the conclusions of a hypotheticodeductive model are dependent on the explanans. Notwithstanding the F-twist, Friedman , p. This chapter discusses the results which are obtained by eschewing these assumptions. Rybczynski , in a classic paper, discusses the impact of a change in the endowment of a factor on the sectoral levels of output and on the inter-industry terms of trade relative price.
Found: 5 Apr 2021 | Rating: 86/100
The result obtained regarding the levels of sectoral output has come to be known as the Rybczynski theorem. On the other hand, Findlay and Grubert , in another classic paper, discuss the impact of technological progress in one sector on the sectoral levels of output at constant inter-industry terms of trade relative price. The result obtained regarding the levels of output has come to be known as the Findlay-Grubert theorem.
Found: 2 Apr 2021 | Rating: 92/100
Both these theorems, which have nothing specifically to do with the pure theory of international trade, are direct contributions to the general equilibrium theory although the use of these theorems has enriched trade theory in analysing the impact of capital accumulation and technological progress on international trade. International Trade and Economic Growth Abstract This chapter presents an analysis of the relationship between economic growth and international trade — a topic which was introduced first by Hicks There are three agents of economic growth: capital accumulation, increase in labour supply and technological progress.
Found: 1 Apr 2021 | Rating: 91/100
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