Trends and Patterns in International Trade Quiz

China is the world's largest exporter of goods, dominating global trade with a significant share of manufactured and consumer goods.

FDI stands for Foreign Direct Investment, representing the investment made by a company in another country to establish business operations or acquire assets.

A trade deficit occurs when a country imports more goods and services than it exports, leading to a negative balance in its trade.

Free trade agreements facilitate trade by reducing barriers, making them the opposite of trade barriers, which hinder or restrict international trade.

The Smoot-Hawley Tariff Act, enacted during the Great Depression, increased tariffs on numerous imported goods, contributing to global economic difficulties.

Protectionist trade policies, aiming to shield domestic industries, can lead to trade wars as other countries retaliate with their own protectionist measures.

The Theory of Comparative Advantage suggests that countries should specialize in producing goods where they have a relative efficiency or lower opportunity cost compared to other countries.

Offshoring is the practice of setting up production facilities in different countries to leverage variations in production costs, labor, and resource quality.

The GATT aims to promote international trade by negotiating agreements to reduce tariffs and eliminate barriers to facilitate smoother global commerce.

Import quotas, restricting the quantity of goods that can be imported, are a non-tariff barrier aiming to control trade without altering tax levels.

The Balance of Payments is a comprehensive record of all economic transactions, including trade, between a country and the rest of the world.

The Stolper-Samuelson theorem hypothesizes that international trade can impact income distribution, potentially leading to winners and losers within a country.

The World Trade Organization (WTO) is the international organization tasked with establishing trade rules, resolving disputes, and promoting fair and open global trade.

The Most Favored Nation principle ensures equal trade treatment, requiring any advantage given to one nation to be extended to all nations on a reciprocal basis.

The Heckscher-Ohlin Theory posits that differences in factors like labor productivity and resource endowments shape patterns of international trade.

The Linder hypothesis suggests that countries with similar income levels are more likely to engage in trade with each other, driven by similarities in consumer preferences.

The infant industry argument supports protectionism for developing industries, suggesting they need protection from international competition until they mature and can compete on a global scale.