International Economy and Globalization (H.W 2)

Homework 2 Chapter 3 questions: I True or False: (Only type T or F) 1. In the factor endowment theory, a nation with more capital per worker than another nation will have a comparative advantage in capital-intensive products. 2. The factor endowment theory predicts that trade will cause relative wages to fall in a labor-abundant nation. 3. The Leontief paradox is that industrial nations tend to trade more with each other than with developing nations. 4. The product life cycle model states that a new product will be produced throughout its lifetime in whatever nation first succeeds in introducing that product. 5. Generalized factor endowment models emphasize the roles of different varieties of labor and capital in determining a nation's comparative advantage. 6. The overlapping demand theory explains why trade often occurs between industrial nations with similar levels of per capita income. 7. Owners of specialized equipment used only in a nation's export industry will tend to lose as that nation moves from self-sufficiency to more participation in trade. 8. Dynamic comparative advantage recognizes that a nation's export patterns will shift as products move through the life cycle and relative factor endowments change. 9. The existence of transportation costs often causes a reversal of comparative advantage between nations. 10. Strict U.S. laws on auto exhaust emissions create a production advantage for Japanese auto firms over domestic firms in the United States. Textbook: Chapter 3Page 108-9; Questions 2, 4, 5, 7, 9 (See the attached picture) Textbook : Chapter 4 Pages 151-153 Questions 4,9,13 (See the attached picture) Textbook: Chapter 5 Pages 184-185; Questions 1, 4,6,10 (See the attached picture) Write direct short answers to the each of the following questions: Chapter 5: 1. In your opinion do you believe free trade still exists? 2. Do you agree with Friedman when he says, “Americans now compete not only with other Americans, but with the most brilliant minds around the globe for positions,” If so, why? 3. What is the simple message of Chapter 5, “America and the Flat World”, does America benefit from this? 4. Is fear a good stimulator for adaptability and change in the world? 5. What does Friedman mean when he says that “The world is flattening and raising at the same time”? Chapter 6: 1. What is your understanding of the KEY to thriving as an individual in a flat world? 2. What does Friedman mean by saying, "When the world goes flat, the caste-system gets turned upside down"? 3. What are the nine components that Friedman talks about when referring to the attributes of being an "untouchable"? Which do you see in yourself? 4. How can we become what Friedman calls "The New Middlers"? 5. What are the three categories of workers who will have job security in the flat world, according to Friedman? for sources, use: - International Economics (13th edition) by Richard J. Carbaugh. ISBN-10: 1439038945 - The World is Flat: a Brief History of the Twenty-first Century by Thomas L. Friedman ISBN-10: 0374292884. ISBN-13: 9780374292881