Trắc nghiệm Thương mại quốc tế (International Trade)

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THƯƠNG MẠI QUỐC TẾ

1) Approximately what percent of all world production of goods and servicesis exported to other countries?

2) The gravity model offers a logical explanation for the fact that

A) trade between Asia and the U.S. has grown faster than NAFTA trade. B) trade in services has grown faster than trade in goods.

C) trade in manufactures has grown faster than in agricultural products.

D) Intra-European Union trade exceeds international trade by the EuropeanUnion.

E) the U.S. trades more with Western Europe than it does with Canada.

3) The gravity model suggests that over time

A) trade between neighboring countries will increase. B) trade between all countries will increase.

C) world trade will eventually be swallowed by a black hole. D) trade between Earth and other planets will become important.

E) the value of trade between two countries will be proportional to theproduct of the two countries' GDP.

4) The gravity model explains why

A) trade between Sweden and Germany exceeds that between Sweden andSpain.

B) countries with oil reserves tend to export oil.

C) capital rich countries export capital intensive products.

D) intra-industry trade is relatively more important than other forms of trade between neighboring countries.

E) European countries rely most often on natural resources.

5) According to the gravity model, a characteristic that tends to affect theprobability of trade existing between any two countries is

A) their cultural affinity.

B) the average weight/value of their traded goods. C) their colonial-historical ties.

D) the distance between them.

E) the number of different product varieties produced by their industries.

6) In general, which of the following do NOT tend to increase trade betweentwo countries?

A) linguistic and/or cultural affinity B) historical ties

C) larger economies

D) mutual membership in preferential trade agreements

E) the existence of well controlled borders between countries7) Why does the gravity model work?

A) Large economies became large because they were engaged in international trade.

B) Large economies have relatively large incomes, and hence spend more on government promotion of trade and investment.

C) Large economies have relatively larger areas which raises the probability that a productive activity will take place within the borders of that country.

D) Large economies tend to have large incomes and tend to spend more onimports.

E) Large economies tend to avoid trading with small economies.

8) We see that the Netherlands, Belgium, and Ireland trade considerably morewith the United States than with many other countries.

A) This is explained by the gravity model, since these are all large countries. B) This is explained by the gravity model, since these are all small countries.

C) This fails to be consistent with the gravity model, since these are smallcountries.

D) This fails to be consistent with the gravity model, since these are large countries.

E) This is explained by the gravity model, since they do not share borders.

9) The two neighbors of the United States do a lot more trade with the UnitedStates than European economies of equal size.

A) This contradicts predictions from gravity models.

B) This is consistent with predictions from gravity models.

C) This is irrelevant to any inferences that may be drawn from gravity models. D) This is because these neighboring countries have exceptionally large GDPs. E) This relates to Belgium's trade record with the U.S.

10) Since the period following World War II (the early 1950s), the proportionof most countries' production being used in some other country

A) remained constant.

B) increased.

C) decreased.

D) fluctuated widely with no clear trend. E) increased slightly before dropping off.

11) Since World War II, the likelihood that foreign markets would gainimportance to average exporters as a source of profits has

A) remained constant.

B) increased.

C) decreased.

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D) fluctuated widely with no clear trend. E) increased slightly before dropping off.

12) Since World War II, the likelihood that any single item in the typicalconsumption basket of a consumer in the U.S. originated outside of the U.S.

A) remained constant.

B) increased.

C) decreased.

D) fluctuated widely with no clear trend. E) increased slightly before dropping off.

13) Since World War II, the likelihood that the job of a new college graduatewill be directly or indirectly affected by world trade

A) remained constant.

B) increased.

C) decreased.

D) fluctuated widely with no clear trend. E) increased slightly before dropping off.

14) Since World War II, the relative importance of raw materials, includingoil, in total world trade

A) remained constant. B) increased.

C) decreased.

D) fluctuated widely with no clear trend E) increased slightly before dropping off.

15) In the current Post-Industrial economy, international trade in services(including banking and financial services)

A) dominates world trade. B) does not exist.

C) is an increasingly important component of global trade.

D) is relatively stagnant.

E) far surpasses the predictions of economist Alan Blinder.

16) In the pre-World War I period, the U.S. exported mainly

A) manufactured goods. B) services.

C) primary products including agricultural.

D) technology intensive products. E) weapons.

17) In the pre-World War I period, the United Kingdom exported mainlyA) manufactured goods.

B) services.

C) primary products including agricultural.

D) technology intensive products. E) livestock.

18) In the pre-World War I period, the United Kingdom imported mainly

A) manufactured goods. B) services.

C) primary products including agricultural.

D) technology intensive products. E) from the United States.

19) In the present, most of the exports from China areA) manufactured goods.

B) services.

C) primary products including agricultural. D) technology intensive products.

E) overpriced by world market standards.

20) Which of the following does NOT explain the extent of trade betweenIreland and the U.S.?

A) historical ties

B) cultural Linguistic ties

C) Gravity Model

D) multinational corporations E) large numbers of Irish-Americans

21) Trade between two countries can benefit both countries if

A) each country exports that good in which it has a comparative advantage.

B) each country enjoys superior terms of trade.

C) each country has a more elastic demand for the imported goods. D) each country has a more elastic supply for the exported goods. E) each country produces a wide range of goods for export.

22) In order to know whether a country has a comparative advantage in theproduction of one particular product we need information on at least________ unit labor requirements

23) A country engaging in trade according to the principles of comparativeadvantage gains from trade because it

A) is producing exports indirectly more efficiently than it could alternatively.

B) is producing imports indirectly more efficiently than it could domestically.

C) is producing exports using fewer labor units.

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D) is producing imports indirectly using fewer labor units. E) is producing exports while outsourcing services.

24) Given the information in the table above, if it is ascertained that Foreignuses prison-slave labor to produce its exports, then home should

A) export cloth.

B) export widgets.

C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth.

25) Given the information in the table above, if the Home economy suffered ameltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40for widgets then home should

A) export cloth.

B) export widgets.

C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth.

26) The earliest statement of the principle of comparative advantage is

27) The Ricardian model attributes the gains from trade associated with theprinciple of comparative advantage result to

A) differences in technology. B) differences in preferences.

C) differences in labor productivity.

D) differences in resources.

E) gravity relationships among countries.

28) The Ricardian model demonstrates that

A) trade between two countries will benefit both countries.

B) trade between two countries may benefit both regardless of which good each exports.

C) trade between two countries may benefit both if each exports the productin which it has a comparative advantage.

D) trade between two countries may benefit one but harm the other.

E) trade between two countries always benefits the country with a larger labor force.

29) Given the information in the table above

A) neither country has a comparative advantage in cloth.

B) Home has a comparative advantage in cloth.

C) Foreign has a comparative advantage in cloth.

D) Home has a comparative advantage in both cloth and widgets. E) neither country has a comparative advantage in widgets.

30) Given the information in the table above, if wages were to double in Home,then Home should

A) export cloth.

B) export widgets.

C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth.

31) Given the information in the table above

A) neither country has a comparative advantage in cloth. B) Home has a comparative advantage in widgets.

C) Foreign has a comparative advantage in widgets.

D) Home has a comparative advantage in both cloth and widgets. E) neither country has a comparative advantage in widgets.

32) Given the information in the table above, Home's opportunity cost of cloth

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36) Given the information in the table above, if the world equilibrium price ofwidgets were 4 cloth, then

A) both countries could benefit from trade with each other.

B) neither country could benefit from trade with each other.

C) each country will want to export the good in which it enjoys comparative advantage.

D) neither country will want to export the good in which it enjoys comparative advantage.

E) both countries will want to specialize in cloth.

37) Given the information in the table above, if the world equilibrium price ofwidgets were 40 cloths, then

A) both countries could benefit from trade with each other.

B) neither country could benefit from trade with each other.

C) each country will want to export the good in which it enjoys comparative advantage.

D) neither country will want to export the good in which it enjoys comparative advantage.

E) both countries will want to specialize in cloth.

38) In a two product two country world, international trade can lead toincreases in

A) consumer welfare only if output of both products is increased.

B) output of both products and consumer welfare in both countries.

C) total production of both products but not consumer welfare in both countries. D) consumer welfare in both countries but not total production of both products. E) prices of both goods in both countries.

39) As a result of trade, specialization in the Ricardian model tends to be

A) complete with constant costs and with increasing costs.

B) complete with constant costs and incomplete with increasing costs.

C) incomplete with constant costs and complete with increasing costs. D) incomplete with constant costs and incomplete with increasing costs. E) dependent on the specific opportunity costs involved in production.

40) As a result of trade between two countries which are of completelydifferent economic sizes, specialization in the Ricardian 2X2 model tends to

A) be incomplete in both countries. B) be complete in both countries.

C) be complete in the small country but incomplete in the large country.

D) be complete in the large country but incomplete in the small country. E) sustain one countries economy in in direct proportion to the other.

41) A nation engaging in trade according to the Ricardian model will find itsconsumption bundle

A) inside its production possibilities frontier. B) on its production possibilities frontier.

C) outside its production possibilities frontier.

D) inside its trade-partner's production possibilities frontier. E) on its trade-partner's production possibilities frontier.

42) In the Ricardian model, if a country's trade is restricted, this will cause allEXCEPT which?

A) limited specialization and the division of labor B) reduced volume of trade and reduced gains from trade

C) nations to produce inside their production possibilities curves

D) a country to produce some of the product of its comparative disadvantage E) raised costs as more diverse product is produced internally

43) If a very small country trades with a very large country according to theRicardian model, then

A) the small country will suffer a decrease in economic welfare. B) the large country will suffer a decrease in economic welfare.

C) the small country only will enjoy gains from trade.

D) the large country will enjoy gains from trade. E) both countries will enjoy equal gains from trade.

44) If the world terms of trade for a country are somewhere between thedomestic cost ratio of H and that of F, then

A) country H but not country F will gain from trade.

B) country H and country F will both gain from trade.

C) neither country H nor F will gain from trade.

D) only the country whose government subsidizes its exports will gain. E) country F but not country H will gain from trade.

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45) If the world terms of trade equal those of country F, thenA) country H but not country F will gain from trade.

B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade.

D) only the country whose government subsidizes its exports will gain. E) country F but not country H will gain from trade.

46) If the world terms of trade equal those of country H, then

A) country H but not country F will gain from trade. B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade.

D) only the country whose government subsidizes its exports will gain.

E) country F but not country H will gain from trade.

47) According to Ricardo, a country will have a comparative advantage in theproduct in which its

A) labor productivity is relatively low.

B) labor productivity is relatively high.

C) labor mobility is relatively low. D) labor mobility is relatively high.

E) labor is outsourced to neighboring countries.

48) Assume that labor is the only factor of production and that wages in theUnited States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan ifA) U.S. labor productivity equaled 40 units per hour and Japan's 15 units perhour.

B) U.S. labor productivity equaled 30 units per hour and Japan's 20 units per hour. C) U.S. labor productivity equaled 20 units per hour and Japan's 30 units per hour. D) U.S. labor productivity equaled 15 units per hour and Japan's 25 units per hour. E) U.S. labor productivity equaled 15 units per hour and Japan's 40 units per hour.

49) If two countries engage in Free Trade following the principles ofcomparative advantage, then

A) neither relative prices nor relative marginal costs (marginal rates of transformation-MRTs) in one country will equal those in the other country.

B) both relative prices and MRTs will become equal in both countries.

C) relative prices but not MRTs will become equal in both countries.

D) MRTs but not relative prices will become equal in both countries. E) trade will be unrestricted, regardless of relative costs and MRTs.

50) Let us define the real wage as the purchasing power of one hour of labor.In the Ricardian 2X2 model, if two countries under autarky engage in tradethen

A) the real wage will not be affected since this is a financial variable. B) the real wage will increase only if a country attains full specialization.

C) the real wage will increase in one country only if it decreases in the other.

D) the real wage will rise in both countries.

E) the real wage will fall under pressure of international competition.

51) In a two country and two product Ricardian model, a small country islikely to benefit more than the large country because

A) the large country will wield greater political power, and hence will not yield to market signals.

B) the small country is less likely to trade at price equal or close to its autarkic(domestic) relative prices.

C) the small country is more likely to fully specialize. D) the small country is less likely to fully specialize. E) the small country can raise wages.

52) In the Ricardian model, comparative advantage is likely to be due to

A) scale economies. B) home product taste bias.

C) greater capital availability per worker.

D) labor productivity differences.

E) political pressure.

53) If a production possibilities frontier is bowed out (concave to the origin),then production occurs under conditions of

A) constant opportunity costs.

B) increasing opportunity costs.

C) decreasing opportunity costs. D) infinite opportunity costs. E) uncertain opportunity costs.

54) If the production possibilities frontier of one trade partner ("Country A")is bowed out (concave to the origin), then increased specialization inproduction by that country will

A) increase the economic welfare of both countries.

B) increase the economic welfare of only Country A. C) decrease the economic welfare of Country A. D) decrease the economic welfare of Country B. E) not affect the economic welfare of either country.

55) If two countries have identical production possibility frontiers, then tradebetween them is likely to be beneficial if

A) their supply curves are identical. B) their cost functions are identical. C) their demand conditions are identical. D) their incomes are identical.

E) their demand functions differ.

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56) If one country's wage level is very high relative to the other's (the relativewage exceeding the relative productivity ratios), then if they both use the samecurrency

A) neither country has a comparative advantage.

B) only the low wage country has a comparative advantage. C) only the high wage country has a comparative advantage.

D) consumers will still find trade worth while from their perspective.

E) it is possible that both will enjoy the conventional gains from trade.

57) If one country's wage level is very high relative to the other's (the relativewage exceeding the relative productivity ratios) then it is probable that

A) free trade will not improve either both countries welfare. B) free trade will result in no trade taking place.

C) free trade will result in each country exporting the good in which it enjoyscomparative advantage.

D) free trade will result in each country exporting the good in which it suffers the greatest comparative disadvantage.

E) free trade will not affect the economic welfare of either country.

58) In a two-country, two-product world, the statement "Germany enjoys acomparative advantage over France in autos relative to ships" is equivalent toA) France having a comparative advantage over Germany in ships.

B) France having a comparative disadvantage compared to Germany in autos and ships.

C) Germany having a comparative advantage over France in autos and ships. D) France having no comparative advantage over Germany.

E) France should produce autos.

59) If the United States' production possibility frontier was flatter to thewidget axis, whereas Germany's was flatter to the butter axis, we know that

A) the United States has no comparative advantage

B) Germany has a comparative advantage in butter.

C) the U.S. has a comparative advantage in butter.

D) Germany has comparative advantages in both products. E) the U.S. has a comparative disadvantage in widgets.

60) Suppose the United States' production possibility frontier was flatter tothe widget axis, whereas Germany's was flatter to the butter axis. We nowlearn that the German mark sharply depreciates against the U.S. dollar. Wenow know that

A) the United States has no comparative advantage

B) Germany has a comparative advantage in butter.

C) the United States has a comparative advantage in butter. D) Germany has a comparative advantage in widgets. E) Germany has lost its comparative advantage.

61) Suppose the United states production possibility frontier was flatter to thewidget axis, whereas Germany's was flatter to the butter axis. We now learnthat the German wage doubles, but U.S. wages do not change at all. We nowknow that

A) the United States has no comparative advantage.

B) Germany has a comparative advantage in butter.

C) the United States has a comparative advantage in butter. D) Not enough information is given.

E) Germany gains a comparative advantage in widgets.

62) Which of the following statements is TRUE?

A) Free trade is beneficial only if your country is strong enough to stand up to

D) Free trade is never beneficial for developing countries.

E) Free trade can be beneficial to economic welfare of all countries involved.63) Mahatma Gandhi exhorted his followers in India to promote economicwelfare by decreasing imports. This approach

A) makes no sense.

B) makes no economic sense.

C) is consistent with the the Ricardian model of comparative advantage.

D) is not consistent with the Ricardian model of comparative advantage.

E) guarantees benefits for Indian workers.

64) The Country of Rhozundia is blessed with rich copper deposits. The cost ofcopper produced (relative to the cost of widgets produced) is therefore verylow. From this information we know that

A) Rhozundia has a comparative advantage in copper. B) Rhozundia should import copper and export widgets. C) Rhozundia should export both widgets and copper. D) Rhozundia should invest in more in widget production.

E) Rhozundia may or may not have a comparative advantage in copper.65) We know that in antiquity, China exported silk because no one in anyother country knew how to produce this product. From this information weknow that

A) China had a comparative advantage in silk.

B) China had an absolute advantage, but not a comparative advantage in silk. C) no comparative advantage could exist because the technology was not diffused. D) China exported silk for political reasons even though it had no comparative advantage.

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E) China was unable to profit by exporting silk because it was unknown in the rest of the world.

66) The pauper labor theory, and the exploitation argument

A) are theoretical weaknesses that limit the applicability of the Ricardian concept

E) invalidate the Ricardian model.

67) If labor productivities were exactly proportional to wage levelsinternationally, this would

A) not negate the logical basis for trade in the Ricardian model.

B) render the Ricardian model theoretically correct but practically useless. C) negate the logical basis for trade in the Ricardian model.

D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners.

E) demonstrate the validity of the Ricardian model.

68) The country, multi-product model differs from the country, two-product model in that, in the former

A) the relative wage ratio will determine the pattern of trade ( which good isexported by which country.

B) which country will export which product is determined entirely by labor productivity data.

C) full specialization is likely to hold in equilibrium. D) none of the goods are potentially nontraded. E) domestic relative prices are not relevant.

69) Assume that transportation costs are especially high for Widgets in thetwo-country, two-product Ricardian model, and Country A enjoys acomparative advantage in Widgets, then

A) country B must also enjoy a comparative advantage in Widgets. B) country B may end up exporting Widgets.

C) country A may switch to having a comparative advantage in the other good. D) country A will still export Widgets.

E) Trade may be impossible between the two countries.

70) Which of the following is most likely to be an untraded good in aRicardian two-country, multi-good model?

C) International trade has no impact on income distribution. D) The unimportance of economies of scale as a cause of trade.

E) Companies tend to export goods in which they have a relatively high levelof productivity.

72) When compared with China, the growth of clothing exports originating inBangladesh is the result of

A) the comparative advantage that Bangladesh has in the production ofclothing for export.

B) the absolute advantage that China has in the production of clothing for export. C) the absolute advantage that Bangladesh has in the production of clothing for export.

D) the comparative and absolute advantage that China has in the production of clothing for export.

E) the comparative and absolute advantage that Bangladesh has in the production of clothing for export.

73) The growth of clothing exports originating in Bangladesh is the result ofthe

A) high productivity of workers in Bangladesh. B) low wages in Bangladesh.

C) low productivity of workers in other countries.

D) low productivity of workers in Bangladesh in industries other than thosethat produce clothing for export.

E) high wages in other countries.

74) The Ricardian model of international trade demonstrates that trade canbe mutually beneficial. Why, then, do governments restrict imports of somegoods?

A) Trade can have substantial effects on a country's distribution of income.

B) The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial.

C) Import restrictions are the result of trade wars between hostile countries.

D) Imports are only restricted when foreign-made goods do not meet domestic standards of quality.

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E) Restrictions on imports are intended to benefit domestic consumers.

75) The Ricardian two-country two-good model predicts that there arepotential benefits from trade, but NOT

A) the effect of trade on income distribution.

B) the mechanism that determines which country will specialize in which good. C) when one country has an absolute advantage in the production of both goods. D) when one country has significantly lower wages than the other country. E) when both countries have the same types of technology available.

76) International trade can have important effects on the distribution ofincome because

A) some resources are immobile in the short run.

B) of government corruption.

C) the more powerful country dictates the terms of trade. D) rich countries take advantage of poor countries. E) different countries use different currencies.

77) The Ricardian model of international trade demonstrates that trade canbe mutually beneficial. Why, then, do governments restrict imports of some

C) Import restrictions are the result of trade wars between hostile countries.

D) Imports are only restricted when foreign-made goods do not meet domestic

C) the more powerful country dictates the terms of trade. D) rich countries take advantage of poor countries. E) different countries use different currencies.

79) Japan's trade policies with regard to rice reflect the fact thatA) japanese rice farmers have significant political power.

B) Japan has a comparative advantage in rice production and therefore exports most of its rice crop.

C) there would be no gains from trade available to Japan if it engaged in free trade in rice.

D) there are gains from trade that Japan captures by engaging in free trade in rice.

E) Japan imports most of the rice consumed in the country.

80) The specific factors model was developed byA) Paul Samuelson and Ronald Jones.

B) Adam Smith and David Ricardo. C) Richard Nixon and Robert Kennedy. D) C.B. deMille and Gordon Willis. E) Bill Clinton and Monica Lewinsky.

81) In the specific factors model, labor is defined as a(an)

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87) The degree of a factor's specificity is directly related to

A) the amount of time required to redeploy the factor to a different industry.

B) the cost of the factor as a proportion of the long-run total cost of production. C) the mobility of the factor, with more mobile factors having more specificity. D) technology differences between two countries, with a more advanced technology resulting in more factor specificity.

E) factor quality, with higher quality factors having a higher level of specificity.

88) The degree of a factor's specificity is inversely related to

A) the mobility of the factor, with more mobile factors having less specificity.

B) the amount of time required to redeploy the factor to a different industry. C) the cost of the factor as a proportion of the long-run total cost of production. D) technology differences between two countries, with a less advanced technology resulting in less factor specificity.

E) factor quality, with lower quality factors having a lower level of specificity.

89) A worker who has invested in ________ skills will be ________ mobilethan would otherwise be the case.

A) a straight line; diminishing marginal returns

B) a curved line; diminishing marginal returns

C) a straight line; constant marginal returns D) a curved line; constant marginal returns E) a curved line; a limited supply of labor

91) In the specific factors model, a country's production function is ________because of ________.

A) a straight line; diminishing marginal returns

B) a curved line; diminishing marginal returns

C) a straight line; constant marginal returns D) a curved line; constant marginal returns E) a curved line; a limited supply of labor

92) In the four-quadrant diagram of the specific factors model, the graph inthe upper right quadrant is a country's

A) production possibility frontier.

B) labor allocation constraint. C) production function for food. D) production function for cloth. E) labor supply curve.

93) In the four-quadrant diagram of the specific factors model, the graph inthe lower right quadrant is a country's

A) production function for cloth.

B) production possibility frontier. C) labor allocation constraint. D) production function for food. E) labor supply curve.

94) In the four-quadrant diagram of the specific factors model, the graph inthe upper left quadrant is a country's

A) production function for food.

B) production possibility frontier. C) labor allocation constraint. D) production function for cloth. E) labor supply curve.

95) In the four-quadrant diagram of the specific factors model, the graph inthe upper right quadrant is a country's

A) labor allocation constraint.

B) production possibility frontier.

C) production function for food. D) production function for cloth. E) labor supply curve.

96) The slope of a country's production possibility frontier with clothmeasured on the horizontal and food measured on the vertical axis in thespecific factors model is equal to ________ and it ________ as more cloth is

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97) The slope of a country's production possibility frontier with clothmeasured on the horizontal and food measured on the vertical axis in theRicardian model is equal to ________ and it ________ as more cloth is

98) Under perfect competition, the equilibrium price of labor used to producecloth will be equal to

A) the marginal product of labor in the production of cloth times the price ofcloth.

B) the average product of labor in the production of cloth times the price of cloth. C) the ratio of the marginal product of labor in the production of cloth to the marginal product of labor in the production of food times the ratio of the price of cloth. to the price of food.

D) the slope of the production possibility frontier.

E) the price of cloth divided by the marginal product of labor in the production of cloth.

99) When a country's labor market is in equilibrium in the specific factorsmodel, the wage rate

A) will be the same in both sectors.

B) will be higher in the export-competing sector. C) will be higher in the import-competing sector.

D) will be higher in the sector where product price is higher. E) will be higher in the sector where product price is lower.

100) In the specific factors model, which of the following will increase thequantity of labor used in food production?

A) an increase in the price of food relative to that of cloth

B) an increase in the price of cloth relative to that of food C) a decrease in the price of labor

D) an equal percentage decrease in the price of food and cloth E) an equal percentage increase in the price of food and cloth

101) In the specific factors model, which of the following will increase thequantity of labor used in cloth production?

A) an increase in the price of cloth relative to that of food

B) an increase in the price of food relative to that of cloth C) a decrease in the price of labor

D) an equal percentage decrease in the price of food and cloth E) an equal percentage increase in the price of food and cloth

102) In the specific factor model, the effect of an increase in the productivityof labor in the production of cloth will cause a(an) ________ in the quantity oflabor used to produce cloth, a(an) ________ in the quantity of labor used toproduce food and a(an) ________ in the wage rate.

A) increase; decrease; increase

B) decrease; increase; increase C) increase; decrease; decrease D) decrease; increase; no change E) increase; increase; no change

103) In the specific factor model, the effect of an increase in the productivityof labor in the production of food will cause a(an) ________ in the quantity oflabor used to produce cloth, a(an) ________ in the quantity of labor used toproduce food and a(an) ________ in the wage rate.

A) decrease; increase; increase

B) increase; decrease; increase C) increase; decrease; decrease D) decrease; increase; no change E) increase; increase; no change

104) The slope of a country's production possibility frontier is equal to________ and the optimal production point is located where the slope is equalto ________. Assume that output of good Y is measured on the vertical axis,output of good X is measured on the horizontal axis, MPL is the marginalproduct of labor with a subscript indicating which good, P is the price of agood, and w is the wage rate.

105) In the specific factors model, a 5% increase in the price of foodaccompanied by a 5% increase in the price of cloth will cause wages to________, the production of cloth to ________, and the production of food to________.

A) increase by 5%; remain unchanged; remain unchanged

B) increase by less then 5%; decrease; increase

C) increase by more then 5%; increase; remain unchanged D) remain constant; increase; increase

E) remain constant; decrease; decrease

106) In the specific factors model, a 5% increase in the price of foodaccompanied by a 0% increase in the price of cloth will cause wages to

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________, the production of cloth to ________, and the production of food to________.

A) increase by less then 5%; decrease; increase

B) increase by 5%; remain unchanged; remain unchanged C) increase by more then 5%; increase; remain unchanged D) remain constant; increase; increase

E) remain constant; decrease; decrease

107) In the specific factors model, a 0% increase in the price of foodaccompanied by a 5% increase in the price of cloth will cause wages to________, the production of cloth to ________, and the production of food to________.

A) increase by less then 5%; increase; decrease

B) increase by 5%; remain unchanged; remain unchanged C) increase by more then 5%; increase; remain unchanged D) remain constant; increase; increase

E) remain constant; decrease; decrease

108) In the specific factors model, a 5% increase in the price of foodaccompanied by a 5% increase in the price of cloth will cause ________ in thewelfare of labor, ________ in the welfare of the fixed factor in the productionof food, and ________ in the welfare of the fixed factor in the production ofcloth.

A) no change; no change; no change

B) an increase; an increase; an increase C) a decrease; an increase; an increase D) an increase; a decrease; a decrease E) a decrease; a decrease; a decrease

109) In the specific factors model, a 5% decrease in the price of foodaccompanied by a 5% decrease in the price of cloth will cause ________ in thewelfare of labor, ________ in the welfare of the fixed factor in the productionof food, and ________ in the welfare of the fixed factor in the production ofcloth.

A) no change; no change; no change

B) an increase; an increase; an increase C) a decrease; an increase; an increase D) an increase; a decrease; a decrease E) a decrease; a decrease; a decrease

110) In the specific factors model, a 5% increase in the price of foodaccompanied by a 10% increase in the price of cloth will cause ________ in thewelfare of labor, ________ in the welfare of the fixed factor in the productionof food, and ________ in the welfare of the fixed factor in the production ofcloth.

A) an ambiguous change; a decrease; an increase

B) an ambiguous change; an ambiguous change; an ambiguous change C) a decrease; an ambiguous change; an ambiguous change

D) an increase; a decrease; an increase

E) an ambiguous change; an increase; a decrease

111) In the specific factors model, a 5% increase in the price of foodaccompanied by a 1% increase in the price of cloth will cause ________ in thewelfare of labor, ________ in the welfare of the fixed factor in the productionof food, and ________ in the welfare of the fixed factor in the production ofcloth.

A) an ambiguous change; an increase; a decrease

B) an ambiguous change; a decrease; an increase

C) an ambiguous change; an ambiguous change; an ambiguous change D) a decrease; an ambiguous change; an ambiguous change

E) an increase; a decrease; an increase

112) Refer to the production possibility graph above. Assume that theeconomy is in equilibrium at point e. If there is an increase in the wage rate,the new equilibrium is most likely to be

113) Refer to the production possibility graph above. Assume that theeconomy is in equilibrium at point e. If the price of good A increases, the newequilibrium is most likely to be

A) point d.

B) point e. C) point f.

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D) point h. E) point b.

114) Refer to the production possibility graph above. Assume that theeconomy is in equilibrium at point e. If the price of good B increases, the newequilibrium is most likely to be

115) Refer to the production possibility graph above. Assume that theeconomy is in equilibrium at point e. If the labor supply increases due toimmigration, the new equilibrium is most likely to be

116) Refer to the production possibility graph above. Assume that theeconomy is in equilibrium at point e. If a war reduces the country's capitalstock by 40%, the new equilibrium is most likely to be

117) A country that does NOT engage in trade can benefit from trade only ifA) pre-trade and free-trade relative prices are not identical.

B) it employs a unique technology.

C) it has an absolute advantage in at least one good. D) its wage rate is below the world average.

E) pre-trade and free-trade relative prices are identical.

118) The relative price of a unit of cloth in the small isolated country ofMoribundia is 5 units of food. When then central city, Mudhole, puts in anairstrip, the country is able to engage in trade. If the relative price of cloth inthe outside world is 3 units of food, then Moribundia will export ________ and________ factors used in the production of ________ will benefit.

A) food; immobile; food

B) food; mobile; food C) cloth; immobile; cloth D) cloth; mobile; cloth

E) food; immobile; cloth

119) The relative price of a unit of cloth in the small isolated country ofMoribundia is 5 units of food. When then central city, Mudhole, puts in anairstrip, the country is able to engage in trade. If the relative price of cloth inthe outside world is 8 units of food, then Moribundia will export ________ and________ factors used in the production of ________ will benefit.

A) cloth; immobile; cloth

B) food; immobile; food C) food; mobile; food D) cloth; mobile; cloth E) cloth; immobile; food

120) In the specific factors model, the effects of trade on welfare are ________for mobile factors, ________ for fixed factors used to produce the exportedgood, and ________ for fixed factors used to produce the imported good.A) ambiguous; positive; negative

B) ambiguous; negative; positive C) positive; ambiguous; ambiguous D) negative; ambiguous; ambiguous E) positive; positive; positive

121) In the specific factors model, the effects of trade on welfare overall are________ and for fixed factors used to produce the exported good they are

122) In the specific factors model, the effects of trade on welfare overall are________ and for fixed factors used to produce the imported good they are

123) The overall welfare effects of trade are ________ if ________.

A) positive; those who gain can compensate those who lose and still be betteroff

B) positive; more people gain from trade than lose from it C) negative; some people are made worse off by trade

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D) negative; those who lose can compel those who gain to compensate them for their losses

E) positive; the domestic economy grows faster than do foreign economies

124) The effect of trade on income distributionA) can be significant in the sort run.

B) is positive for all segments of an economy. C) is insignificant in the short run.

D) implies that there are no real gains from trade. E) refutes the model of comparative advantage.

125) A country's budget constraint states that

A) the value of exports must be equal to the value of imports.

B) real income in the exporting country must be equal to real income in the

126) A country's budget constraint states that

A) whether or not a country engages in trade, the value of goods consumedmust be equal to the value of goods produced.

B) real income in the exporting country must be equal to real income in the importing country.

C) unless a country engages in trade, the value of goods consumed cannot exceed the value of goods produced.

D) a country will engage in trade only if the value of goods consumed exceeds the value of goods produced.

E) a country will engage in trade only if the value of goods produced exceeds the value of goods consumed.

127) A country will realize no gains from trade ifA) pre-trade and free-trade relative prices are identical.

B) all countries employ the same technology.

C) it does not have an absolute advantage in at least one good. D) its wage exceeds the world average.

E) pre-trade and free-trade relative prices are not identical.

128) Those who will lose from free trade are ________ factors in sectors thatproduce goods that are ________.

A) immobile; also imported

B) mobile; also imported C) immobile; exported

D) mobile; exported E) mobile; untraded

129) Those who will unambiguously gain from free trade are ________ factorsin sectors that produce goods that are ________.

A) immobile; exported

B) immobile; also imported C) mobile; also imported D) mobile; exported E) mobile; untraded

130) The effect of trade on specialized employees of import-competingindustries will be ________ jobs and ________ pay because they are relatively________.

A) fewer; lower; immobile

B) fewer; lower; mobile C) more; lower; immobile D) more; higher; mobile E) more; higher; immobile

131) The effect of trade on specialized employees of exporting industries willbe ________ jobs and ________ pay because they are relatively ________.A) more; higher; immobile

B) fewer; lower; immobile C) fewer; lower; mobile D) more; lower; immobile E) more; higher; mobile

132) Economists consider the effects of free trade on income distribution to be________ important than the effects on overall welfare because ________. A) less; those who are harmed can be compensated by those who gain

B) more; those who are harmed are not compensated by those who gain C) less; the effects on income distribution are minor and inconsequential D) more; the effects on income distribution are major and consequential E) less; the wealthy benefit and only the poor lose

133) Economists consider the effects of free trade on income distribution to be________ important than the effects on overall welfare because ________. A) less; many factors besides trade affect income distribution

134) There is a bias in the political process against free trade becauseA) those who lose from free trade are better organized than those who gain.

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B) the gains from free trade cannot be measured.

C) those who gain from free trade can't compensate those who lose. D) foreign governments make large donations to U.S. political campaigns.

E) there is a high correlation between the volume of imports and the unemployment rate.

135) U.S. imports of sugar are limited by an import quota that, according to astudy updated in 2013, imposed annual costs on American consumers of

136) U.S. imports of sugar are limited by an import quota that, according to astudy updated in 2013, imposed a total cost on American consumers close to$________, or an average cost of ________ per year for every man, woman,and child in the country.

137) U.S. imports of sugar are limited by an import quota that, according to astudy updated in 2013, imposed a total cost on American consumers close to$________, or an average cost of ________ per year for every job saved in theU.S sugar industry.

A) restrictions on international labor mobility are common.

B) labor is far more mobile internationally than capital. C) restrictions on international labor mobility are rare.

D) labor is far more mobile internationally than it is intra-nationally. E) outsourcing increases international labor mobility.

139) Refer to the graph above. Points A, B, and C represent ________,________, and ________, respectively.

A) equilibrium wage rate after migration from home to foreign has occurred;the wage rate in foreign before migration; the wage rate in home beforemigration

B) equilibrium wage rate after migration from foreign to home has occurred; the wage rate in home before migration; the wage rate in foreign before migration C) the wage rate in home before migration; the wage rate in home after migration; the wage rate in foreign after migration

D) the global wage rate before migration; the wage rate in foreign after migration; the wage rate in home after migration

E) the global wage rate before migration; the wage rate in home after migration; the wage rate in foreign after migration

140) In the two-country model of international labor mobility

A) the effect of migration is to cause real wages in the two countries toconverge.

B) the effect of migration is to cause real wages in the two countries to diverge. C) labor has only limited international mobility.

D) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries.

E) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries.

141) In the two-country model of international labor mobility

A) the long-run equilibrium assumes that desired and actual migration areequal.

B) the long-run equilibrium assumes that desired migration exceeds actual migration.

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C) the long-run equilibrium assumes that actual migration exceeds desired

142) In the two-country model of international labor mobility

A) migration results in increased global output, although some groups aremade worse off.

B) migration results in increased global output, and all groups are made better off. C) migration has no effect on global output, although some groups are made worse off.

D) migration has no effect on global output, although some groups are made better off.

E) migration may reduce global output, although some groups are made better off.

143) Immigration into the U.S. over the past century has caused thepercentage of immigrants in the U.S. population to

A) fall steadily until the 1970s and increase thereafter.

B) remain relatively constant over the time period. C) fall steadily over the entire century.

D) rise steadily over the entire century.

E) rise steadily until the 1970s and fall thereafter.

144) In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers fromacross the border would

A) move the point of production along the production possibility curve.

B) shift the production possibility curve outward, and increase the production of both goods.

C) shift the production possibility curve outward and decrease the production of the labor-intensive product.

D) shift the production possibility curve outward and decrease the productionof the capital-intensive product.

E) shift the possibility curve outward and displace preexisting labor.

145) In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in

A) tastes and preferences. B) military capabilities. C) the size of their economies.

D) relative abundance of factors of production.

E) labor productivities.

146) One way in which the Heckscher-Ohlin model differs from the Ricardomodel of comparative advantage is by assuming that ________ is (are)identical in all countries.

147) If a country produces good Y (measured on the vertical axis) and good X(measured on the horizontal axis), then the absolute value of the slope of itsproduction possibility frontier is equal to

A) the opportunity cost of good X.

B) the price of good X divided by the price of good Y. C) the price of good Y divided by the price of good X. D) the opportunity cost of good Y.

E) the cost of capital (assuming that good Y is capital intensive) divided by the cost of labor.

148) The Heckscher-Ohlin model differs from the Ricardian model ofComparative Advantage in that the former

A) has only two countries. B) has only two products.

C) has two factors of production.

D) has two production possibility frontiers (one for each country). E) has varying wage rates.

149) In the 2-factor, 2 good Heckscher-Ohlin model, the country with arelative abundance of ________ will have a production possibility frontier thatis biased toward production of the ________ good.

A) labor; labor intensive

B) labor; capital intensive C) land; labor intensive D) land; capital intensive E) capital; land intensive

150) In the 2-factor, 2 good Heckscher-Ohlin model, the country with arelative abundance of ________ will have a production possibility frontier thatis biased toward production of the ________ good.

A) capital; capital intensive

B) labor; capital intensive C) land; labor intensive D) land; capital intensive E) labor; land intensive

151) In the 2-factor, 2 good Heckscher-Ohlin model, the production possibilityfrontier is kinked when

A) there is no factor substitution in production.

B) the opportunity cost of production is constant.

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C) there are unemployed factor resources. D) a country does not engage in trade. E) transportation costs are very high.

152) The assumption of diminishing returns in the Heckscher-Ohlin modelmeans that, unlike in the Ricardian model, it is likely that

A) countries will not be fully specialized in one product.

B) countries will benefit from free international trade.

C) countries will consume outside their production possibility frontier. D) comparative advantage will not determine the direction of trade. E) global production will decrease under trade.

153) In the Heckscher-Ohlin model, countries are assumed to differ only in

154) In the 2-factor, 2 good Heckscher-Ohlin model, trade will ________ theowners of a country's ________ factor and will ________ the good that usesthat factor intensively.

A) benefit; abundant; export

B) harm; abundant; import C) benefit; scarce; export D) benefit; scarce; import E) harm; scarce; export

155) According to the Heckscher-Ohlin model, the source of comparative

156) In the 2-factor, 2 good Heckscher-Ohlin model, trade will ________ theowners of a country's ________ factor and will ________ the good that usesthat factor intensively.

A) harm; scarce; import

B) harm; abundant; import C) benefit; scarce; export D) benefit; scarce; import E) harm; scarce; export

157) According to the Heckscher-Ohlin model

A) the gainers from trade could compensate the losers and still retain gains.

B) everyone gains from trade.

C) the scarce factor gains from trade and the abundant factor loses. D) a country gains from trade if its exports have a high value added. E) only the country with the more advanced technology gains from trade.

158) In the Heckscher-Ohlin model, when two countries begin to trade witheach other

A) the relative prices of traded goods in the two countries converge.

B) relative factor prices in the two countries diverge.

C) benefits from trade are evenly distributed between the two countries. D) all factors in both countries will gain from trade.

E) all factors in one country will gain, but there may be no gains in the other country.

Assume that only two countries, A and B, exist.

159) Refer to the table above. If good S is capital intensive, then following theHeckscher-Ohlin Theory

A) country B will export good S.

B) country A will export good S. C) both countries will export good S.

D) trade will not occur between these two countries. E) both countries will import good S.

160) Refer to the table above. If you are told that Country B is very muchricher than Country A, then the correct answer is

A) country B will export good S.

B) country A will export good S. C) both countries will export good S.

D) trade will not occur between these two countries. E) both countries will import good S.

161) Refer to the table above. You are told that Country B is very much largerthan country A. The correct answer is

A) country B will export good S.

B) country A will export good S. C) both countries will export good S.

D) trade will not occur between these two countries. E) both countries will import good S.

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162) Refer to the table above. You are told that Country B has no minimumwage or child labor laws. Now the correct answer is

A) country B will export good S.

B) country A will export good S. C) both countries will export good S.

D) trade will not occur between these two countries. E) both countries will import good S.

163) If a good is labor intensive it means that the good is producedA) using relatively more labor than goods that are not labor intensive.

B) using labor as the only input.

C) using more labor per unit of output than goods that are not labor intensive. D) using labor such that the total cost of labor is greater than the total cost of capital.

E) using labor such that the cost of labor is more than 50% of total cost.

164) In the Heckscher-Ohlin model, when there is international-tradeequilibrium

A) the relative price of the capital intensive good in the capital rich countrywill be the same as that in the capital poor country.

B) the capital rich country will charge less for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

C) the capital rich country will charge more for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

D) workers in the capital rich country will earn more than those in the poor country.

E) the workers in the capital rich country will earn less than those in the poor country.

165) If a good is capital intensive it means that the good is producedA) using relatively more capital than goods that are not labor intensive.

B) using capital as the only input.

C) using more capital per unit of output than goods that are not capital intensive. D) using capital such that the total cost of capital is greater than the total cost of labor.

E) using capital such that the cost of capital is more than 50% of total cost.

166) The Heckscher-Ohlin model predicts all of the following EXCEPTA) the volume of trade.

B) which country will export which product.

C) which factor of production within each country will gain from trade. D) that relative wages will tend to become equal in both trading countries. E) that trade increases a country's overall welfare.

167) If Australia has relatively more land per worker, and Belgium hasrelatively more capital per worker, then if trade began between these twocountries

A) the relative price of the land-intensive product would increase in Australia.

B) the relative price of the capital-intensive product would increase in Australia. C) the relative price of the land-intensive product would increase in Belgium. D) the relative price of the capital-intensive product would decrease in Belgium. E) relative product prices would diverge between Australia and Belgium.

168) If Australia has more land per worker, and Belgium has more capital perworker,then if trade began between these two countries

A) the real income of landowners in Belgium would decline.

B) the real income of capital owners in Australia would increase. C) the real income of labor in Australia would decline.

D) the real income of labor in Belgium would decline. E) the real income of labor in both countries would decline.

169) If Japan is relatively capital rich and the United States is relatively landrich, and if food is relatively land intensive then trade between these two,formerly autarkic countries will result in

A) an increase in the relative price of food in the U.S.

B) an increase in the relative price of food in Japan. C) a global increase in the relative price of food.

D) a decrease in the relative price of food in both countries. E) an increase in the relative price of food in both countries.

170) Trade benefits a country by

A) increasing available consumption choices.

B) reducing the need for specialization in production. C) reducing the relative price of the exported good. D) increasing the real income of all resource owners. E) increasing the wage rate.

171) If Gambinia has many workers but very little land and even lessproductive capital, then, following the Heckscher-Ohlin model, we predict thatGambinia will export

A) labor-intensive goods.

B) capital-intensive goods.

C) both capital- and land-intensive goods. D) land-intensive goods.

E) both labor- and land-intensive goods.

172) If Gambinia has many workers but very little land and even lessproductive capital, then, following the Heckscher-Ohlin model, in order toimprove the country's economic welfare, the Gambinian government shouldA) engage in free trade.

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B) protect the capital-intensive product. C) protect the land-intensive product. D) protect the labor-intensive product. E) discontinue all international trade.

173) Starting from an autarky (no-trade) situation with Heckscher-Ohlinmodel, if Country H is relatively labor abundant, then once trade beginsA) wages should rise and rents should fall in H.

B) wages and rents should rise in H. C) wages and rents should fall in H.

D) wages should fall and rents should rise in H. E) rent will be unchanged but wages will rise in H.

174) Suppose that there are two factors, capital and land, and that the UnitedStates is relatively land endowed while the European Union is relativelycapital-endowed. According to the Heckscher-Ohlin model

A) European capitalists should support U.S.-European free trade.

B) European landowners should support U.S.-European free trade. C) all capitalists in both countries should support free trade. D) all landowners should support free trade.

E) the U.S. should compensate European countries once trade commences.

175) International trade has strong effects on income distributions. Therefore,international trade

A) will tend to hurt some groups in each trading country.

B) is beneficial to everyone in both trading countries. C) will tend to hurt one trading country.

D) will tend to hurt everyone in both countries.

E) will be beneficial to all those engaged in international trade.

176) Factors tend to be specific to certain uses and productsA) in the short run.

B) in countries lacking comparative advantage. C) in capital-intensive industries.

D) in labor-intensive industries. E) in countries lacking fair labor laws.

177) If the price of the capital intensive product rises more than does the priceof the land intensive product, then

A) the relative price of the capital intensive product will fall to some pointbetween the pretrade relative prices.

B) demand will shift away from the capital-intensive product, and its production will decrease.

C) demand will shift away from the capital-intensive product, and its production will decrease relative to that of the land intensive product.

D) the production of the capital-intensive product will decrease, but by less than production of the land-intensive product.

E) the country that exports the capital-intensive good will lose its comparative advantage.

178) If trade opens up between the two formerly autarkic countries, Australiaand Belgium, then

A) the real income of both countries may increase.

B) the real income of Australia and of Belgium will increase. C) the real income of Australia but not of Belgium will increase. D) the real income of neither country will increase.

E) the real income of both countries will increase.

179) The Leontief Paradox

A) failed to support the validity of the Heckscher-Ohlin model.

B) supported the validity of the Ricardian theory of comparative advantage. C) supported the validity of the Heckscher-Ohlin model.

D) failed to support the validity of the Ricardian theory. E) proved that the U.S. economy is different from all others.

180) The Leontief Paradox

A) refers to the finding that U.S. exports were more labor intensive than itsimports.

B) refers to the finding that U.S. Exports were more capital intensive than its exports.

C) refers to the finding that the U.S. produces outside its Edgeworth Box. D) still accurately applies to today's pattern of U.S. international trade.

E) refers to the fact that Leontief—an American economist—had a Russian name.

181) The 1987 study by Bowen, Leamer and SveikauskasA) supported the validity of the Leontief Paradox.

B) supported the validity of the Heckscher-Ohlin model. C) used a two-country and two-product framework.

D) demonstrated that in fact countries tend to use different technologies. E) proved that the U.S.'s comparative advantage relied on skilled labor.

182) Empirical observations on actual North-South trade patterns tend toA) support the validity of the Heckscher-Ohlin model.

B) support the validity of the Leontief Paradox. C) support the validity of the Rybczynski Theorem. D) support the validity of the wage equalization theorem.

E) support the validity of the neo-imperialism exploitation theory.

183) The Case of the Missing Trade refers to

A) the fact that factor trade is less than predicted by the Heckscher-Ohlintheory.

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B) the 9th volume of the Hardy Boys' Mystery series. C) the fact that world exports does not equal world imports.

D) the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists.

E) the fact that the Heckscher Ohlin theory never applies to China-U.S. trade practices.

184) If two countries are very different in relative factor abundance, thenempirical support for which of the following would less likely?

A) the Factor Price Equalization Theorem

B) the Heckscher-Ohlin Theorem C) the Law of One Price

D) the Law of Demand E) the Gravity Theorem

185) Which of the following empirical studies cast the most doubt on theHeckscher-Ohlin model?

A) the study by Wassily Leontief

B) the study by Bowen, Leamer, and Sveikauskas C) the study by David Ricardo

D) the study by Adam Smith

E) the study by Davis and Weinstein

186) Which of the following empirical studies provided the most support forthe heckscher-Ohlin model?

A) the study by Wassily Leontief

B) the study by Bowen, Leamer, and Sveikauskas C) the study by David Ricardo

D) the study by Adam Smith

E) the study by Davis and Weinstein

187) Empirical support for the Heckscher-Ohlin model was weakest when thestudy applied

A) all of the assumptions of the model.

B) all of the assumptions of the model except that regarding technology.

C) all of the assumptions of the model except those regarding technology,goods and shipping costs.

D) all of the assumptions of the model except those regarding technology, shipping costs and gravity.

E) all of the assumptions of the model except those regarding shipping costs.

188) Which of the following is an assertion of the Heckscher-Ohlin model?A) The wage-rental ratio is determined by relative product prices.

B) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

C) In the long-run, labor is mobile and capital is not.

D) Factor price equalization will occur only if there is costless mobility of all factors across borders.

E) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

189) Which of the following is an assertion of the Heckscher-Ohlin model?A) The wage-rental ratio determines the capital-labor ratio in a country'sindustries.

B) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

C) In the long-run, labor is mobile and capital is not.

D) Factor price equalization will occur only if there is costless mobility of all factors across borders.

E) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

190) Which of the following is an assertion of the Heckscher-Ohlin model?A) An increase in a country's labor supply will increase production of thelabor-intensive good and decrease production of the capital-intensive good.

B) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

C) In the long-run, labor is mobile and capital is not.

D) Factor price equalization will occur only if there is costless mobility of all factors across borders.

E) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

191) The meaning of "terms of trade" is

A) the price of a country's exports divided by the price of its imports.

B) the amount of exports sold by a country.

C) the price conditions bargained for in international markets. D) the quantities of imports received in free trade.

E) the tariffs in place between two trading countries.

192) A country cannot produce a mix of products with a higher value thanwhere

A) the isovalue line is tangent to the production possibility frontier.

B) the isovalue line intersects the production possibility frontier. C) the isovalue line is above the production possibility frontier. D) the isovalue line is below the production possibility frontier. E) the isovalue line is tangent with the indifference curve.

193) Tastes of individuals are represented by

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A) indifference curves.

B) production possibility frontiers. C) isovalue lines.

D) production functions. E) the terms of trade.

194) If the ratio of price of cloth (PC) divided by the price of food (PF)increases in the international marketplace, then

A) the terms of trade of cloth exporters will improve.

B) all countries would be better off.

C) the terms of trade of food exporters will improve. D) the terms of trade of all countries will improve. E) the terms of trade of cloth exporters will worsen.

195) If the ratio of price of cloth (PC) divided by the price of food (PF)increases in the international marketplace, then

A) the cloth exporter will increase the quantity of cloth produced.

B) the cloth exporter will increase the quantity of cloth exported. C) the food exporter will increase the quantity of food exported. D) the cloth exporter will decrease the quantity of cloth exported. E) the country would import more cloth.

196) If the ratio of price of cloth (PC) divided by the price of food (PF)increases in the international marketplace, then

A) world relative quantity of cloth supplied will increase.

B) world relative quantity of cloth supplied and demanded will increase. C) world relative quantity of cloth supplied and demanded will decrease. D) world relative quantity of cloth demanded will decrease.

E) world relative quantity of food will increase.

197) A country will be able to consume a combination of goods that is notattainable solely from domestic production if

A) the world terms of trade differ from its domestic relative costs.

B) the country specializes in one product. C) the country avoids international trade.

D) the world terms of trade equal the domestic relative costs.

E) the country's domestic production value equals world relative value.

198) Terms of trade refers to

A) the relative price at which trade occurs.

B) what goods are imported. C) what goods are exported. D) the volume of trade. E) the tariffs applied to trade.

199) If points A and B are two locations on a country's production possibilityfrontier, then

A) the country could produce either of the two bundles.

B) consumers are indifferent between the two bundles. C) producers are indifferent between the two bundles. D) at any point in time, the country could produce both. E) both bundles must have the same relative cost.

200) If the economy is producing at point a on its production possibilityfrontier, then

A) all of the country's workers are employed.

B) all of the country's workers are specialized in one product. C) all of the country's capital is used for one product.

D) all of its capital is used, but not efficiently.

E) all of the country's exports are produced in equal amounts.

201) Refer to the figure above, which shows a country's possible productionpossibility frontiers and indifference curves. If the country is producing at________, then moving to ________ will cause utility to ________.

A) point b; point c; remain unchanged

B) point a; point b; increase C) point c; point b; increase D) point c; point b; decrease

E) point a; point c; remain unchanged

202) If two countries with diminishing returns and different marginal rates ofsubstitution between two products were to engage in trade, then

A) the marginal rates of substitution of both would become equal.

B) the shapes of their respective production possibility frontiers would change. C) the larger of the two countries would dominate their trade.

D) the country with relatively elastic supplies would export more.

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E) the opportunity costs for the smaller country would increase.

203) If a country began exporting product A and importing product B, then,as compared to the autarky (no-trade) situation, the marginal cost of product E) remain the same.

204) When the production possibility frontier shifts out relatively more in one

A) this will tend to worsen the country's terms of trade.

B) this will tend to improve the country's terms of trade.

C) this will tend to leave the country's terms of trade unchanged.

D) this will tend to worsen the terms of trade for the country's trading partner. E) this will increase the price of cloth relative to the imported good.

206) Suppose that a "small country" experiences growth strongly biasedtoward its export, cloth

A) this will have no effect on terms of trade for the country's trading partner.

B) this will tend to worsen the country's terms of trade. C) this will tend to improve the country's terms of trade.

D) this will tend to worsen terms of trade for the country's trading partner. E) this will tend to improve terms of trade for the country's trading partner.

207) Refer to the figure above, which shows a country's possible productionpossibility frontiers and indifference curves. If the country is producing at________, then moving to ________ will cause utility to ________.

A) point c; point b; remain unchanged

B) point a; point b; increase C) point c; point b; increase D) point c; point b; decrease

E) point a; point c; remain unchanged

208) Refer to the figure above, which shows a country's possible productionpossibility frontiers and indifference curves. If the country is producing at________, then moving to ________ will cause utility to ________.

A) point b; point a; increase

B) point a; point b; increase C) point c; point b; increase D) point c; point b; decrease

E) point a; point c; remain unchanged

209) If the U.S. (a large country) imposes a tariff on its imported good, thiswill tend to

A) improve the terms of trade of the United States.

B) have no effect on terms of trade.

C) improve the terms of trade of all countries. D) cause a deterioration of U.S. terms of trade.

E) raise the world price of the good imported by the United States.

210) If Slovenia is a small country in world trade terms, then if it imposes alarge series of tariffs on many of its imports, this would

A) have no effect on its terms of trade.

B) improve its terms of trade. C) deteriorate its terms of trade.

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D) decrease its marginal propensity to consume. E) increase its exports.

211) If Slovenia is a large country in world trade, then if it imposes a large setof tariffs on many of its imports, this would

A) improve its terms of trade.

B) have no effect on its terms of trade. C) harm its terms of trade.

D) decrease its marginal propensity to consume. E) increase its exports.

212) If Slovenia were a large country in world trade, then if it imposes a largeset of tariffs on its imports, this must

A) decrease the internal price of imports below the world market rate.

B) cause retaliation on the part of its trade partners. C) harm Slovenia's real income.

D) improve Slovenia's real income.

E) improve the real income of its trade partners.

213) If Slovenia were a large country in world trade, then if it instituted alarge set of subsidies for its exports, this must

A) harm its terms of trade.

B) have no effect on its terms of trade. C) improve its terms of trade.

D) decrease its marginal propensity to consume. E) harm world terms of trade.

214) If Slovenia were a large country in world trade, then if it instituted alarge set of subsidies for its exports, this must

A) improve the real income of its trade partners.

B) cause retaliation on the part of its trade partners. C) harm Slovenia's real income.

D) improve Slovenia's real income.

E) increase internal prices above the world market rate.

215) If a small country were to levy a tariff on its imports then this wouldA) decrease the country's economic welfare.

B) have no effect on that country's economic welfare. C) increase the country's economic welfare.

D) change the terms of trade.

E) raise prices on its exports in other countries.

216) An increase in a country's net commodity terms of trade willA) not always guarantee positive changes in the country's economy.

B) always increase the country's economic welfare. C) always increase the country's real income.

D) never increase the country's quantity of exports.

E) always increase the country's production of its import competing good.

217) An import tariff will cause the relative demand for ________ to ________and the relative supply for ________ to ________.

A) imports; decrease; imports; increase

B) imports; increase; imports; decrease C) exports; increase; exports; decrease D) exports; decrease; exports; increase E) exports; increase; imports; decrease

218) An export subsidy will cause the relative demand for ________ to________ and the relative supply for ________ to ________.

A) exports; decrease; exports; increase

B) imports; decrease; imports; increase C) imports; increase; imports; decrease D) exports; increase; exports; decrease E) exports; increase; imports; decrease

219) An import tariff will cause the terms of trade of the ________ country to________ and will ________ the country.

A) importing; improve; benefit

B) exporting; improve; benefit C) importing; suffer; harm D) exporting; improve; harm E) importing; improve; harm

220) An export subsidy will cause the terms of trade of the ________ countryto ________ and will ________ the country.

A) exporting; suffer; harm

B) exporting; improve; benefit C) importing; suffer; harm D) importing; suffer; benefit E) importing; improve; harm

221) International borrowing and lending may be interpreted as one form ofA) intertemporal trade.

B) intermediate trade. C) trade in services.

D) unrequited international transfers. E) aid to offset trade advantages.

222) If one observes that Japan was traditionally a net foreign lender, onecould conclude that relative to its international trade and financial partnersA) Japan's intertemporal production possibilities are biased toward presentconsumption.

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Trắc nghiệm Thương mại quốc tế (International Trade)

<b>THƯƠNG MẠI QUỐC TẾ</b>

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