International econ - Chapter 4 Summary - Specific Factors & Income Distribution

cmarquardt94's version from 2016-09-26 07:03

Section 1

Question Answer
International trade often has strong effects on the...?distribution of income within countries, so it often produces losers as well as winners
What are the two reasons why income distribution effects arise?1) Factors of production cannot move instantaneously and costlessly from one industry to another 2)the changes in an economy's output mix have differential effects on the defferential effects on the demand for different factors of production
What is a useful model of [income distribution effects] of international trade?the specific-factors model
In the Specific-factors model, differences in resources can cause countries to...?have different [relative supply curves] and thus cause international trade
In the Specific-Factors model, factors specific to [export sectors] in each country...?gain from trade
In the Specific-Factors model, factors specific to [import-competing] sectors....?lose from trade
In the Specific-Factors model, what is true about Mobile factors that can work in either sector?they may gain or lose from trade

Section 2

Question Answer
What does "Trade nonetheless produces overall gains in the limited sense" mean?it means that those who gain could in principle compensate those who lose while still remaining better off than before
Most economists do not regard....?the effects of international trade on income distribution a good reason to limit this trade
in the actual politics of trade policy, income distribution is of crucial importance. This is true in particular because..?those who lose from trade are usually a much more informed, cohesive, and organized group than those who gain
What can sometimes substitute for trade?International Factor movements
International migration of labor is similar in its causes and effects to..?international trade!
Labor moves from countries where it is abundant to countries where it is scarce. This movement....?raises total world output, but also generates strong income distribution effects, so that some groups are hurt as a result