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1. Factor conditions – Specialized or value-added factors that are developed because they do not naturally occurs 2. Exports-Imports=Savings-Investments – Signifies the relationship between trade deficits and surpluses 3. Eli Heckscher & Bertil Ohlin – Developed factor proportions theory 4. Adam Smith – Developed the Theory of Absolute Advantage 5. Opportunity Cost – The value of what had to be given up to consume or achieve the objective 6. Capital Account – Net change in foreign ownership of domestic assets 7. David Ricardo – Developed the Theory of Comparative Advantage 8. Paul Krugman – Developed New Trade Theory 9. Balance of Payments – Sum of all monies that flow in/out of a given country 10. General Agreement on Tariffs & Trade – Precursor to the World Trade Organization 11. Porter’s Diamond – The four determinants indicated the level of competitiveness of a national industry 12. Capital account surplus – When foreign ownership of domestic assets increases faster than domestic ownership 13. Mercantilism – Governments accumulate wealth in form of gold bullion 14. Modern global system – Interdependent group acting as a unified whole, performing activities to achieve a common goal 15. Michael Porter – Developed the Theory of Competitive Advantage of Nations 16. Neoclassical theory – Determines the actions needed to be taken if the goal is to maximize world production 17. Protectionism – Used as a means for controlling Foreign Direct Investment 18. Current Account – Sum of a country’s net income from trade in goods and services 19. Greenfield Investment – Development of a new operation in a foreign nation 20. Raymond Vernon- Developed Factor Proportions Theory Multiple choice/ true false

1. Though the World Trade Organization (WTO) has officially existed since 1975 (1995), the foundation for the rules in this trading system originates in the GATT. a. True b. False 2. In order to achieve economic advantage, a nation should specialize, produce, and export only products where the nation holds an absolute advantage. a. International Product Life Cycle Theory b. Absolute Advantage Theory c. Comparative Advantage Theory d. Factor Proportions Theory e. New Trade Theory

Liberty university busi 303 quiz 3 complete solution  
Liberty university busi 303 quiz 3 complete solution  
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