Question 1

If domestically 3X=3Y in nation A,while 1X=1Y domestically in nation B:

Accepted Answer

A) there will be no trade between the two nations 
B) the relative price of X is the same in both nations 
C) the relative price of Y is the same in both nations 
D) all of the above 
A) there will be no trade between the two nations 
B) the relative price of X is the same in both nations 
C) the relative price of Y is the same in both nations 
D) all of the above D

Question 2

In the trade between a small and a large nation:

Accepted Answer

A) the large nation is likely to receive all of the gains from trade 
B) the small nation is likely to receive all of the gains from trade 
C) the gains from trade are likely to be equally shared 
D) we cannot say 
A) the large nation is likely to receive all of the gains from trade 
B) the small nation is likely to receive all of the gains from trade 
C) the gains from trade are likely to be equally shared 
D) we cannot say B

Question 3

Which of the following statements is true?

Accepted Answer

A) The combined demand for each commodity by the two nations is negatively sloped 
B) the combined supply for each commodity by the two nations is rising stepwise 
C) the equilibrium relative commodity price for each commodity with trade is given by the intersection of the demand and supply of each commodity by the two nations 
D) all of the above 
A) The combined demand for each commodity by the two nations is negatively sloped 
B) the combined supply for each commodity by the two nations is rising stepwise 
C) the equilibrium relative commodity price for each commodity with trade is given by the intersection of the demand and supply of each commodity by the two nations 
D) all of the above D

Question 4

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

Accepted Answer

A) nation A has a comparative disadvantage in commodity X 
B) nation B has a comparative disadvantage in commodity Y 
C) nation A has a comparative advantage in commodity X 
D) nation A has a comparative advantage in neither commodity 
A) nation A has a comparative disadvantage in commodity X 
B) nation B has a comparative disadvantage in commodity Y 
C) nation A has a comparative advantage in commodity X 
D) nation A has a comparative advantage in neither commodity

Question 5

According to Adam Smith,international trade was based on:

Accepted Answer

A) absolute advantage 
B) comparative advantage 
C) both absolute and comparative advantage 
D) neither absolute nor comparative advantage 
A) absolute advantage 
B) comparative advantage 
C) both absolute and comparative advantage 
D) neither absolute nor comparative advantage

Question 6

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

Accepted Answer

A) an absolute advantage in commodity Y 
B) an absolute disadvantage in commodity Y 
C) a comparative disadvantage in commodity Y 
D) a comparative advantage in commodity Y 
A) an absolute advantage in commodity Y 
B) an absolute disadvantage in commodity Y 
C) a comparative disadvantage in commodity Y 
D) a comparative advantage in commodity Y

Question 7

With reference to the statement in Question 6,if 3X is exchanged for 3Y:

Accepted Answer

A) nation A gains 2X 
B) nation B gains 6Y 
C) nation A gains 3Y 
D) nation B gains 3Y 
A) nation A gains 2X 
B) nation B gains 6Y 
C) nation A gains 3Y 
D) nation B gains 3Y

Question 8

The Ricardian trade model has been empirically

Accepted Answer

A) verified 
B) rejected 
C) not tested 
D) tested but the results were inconclusive 
A) verified 
B) rejected 
C) not tested 
D) tested but the results were inconclusive

Question 9

What proportion of international trade is based on absolute advantage?

Accepted Answer

A) All 
B) most 
C) some 
D) none 
A) All 
B) most 
C) some 
D) none

Question 10

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Accepted Answer

A) absolute disadvantage 
B) absolute advantage 
C) comparative disadvantage 
D) comparative advantage 
A) absolute disadvantage 
B) absolute advantage 
C) comparative disadvantage 
D) comparative advantage

Question 11

Ricardo explained the law of comparative advantage on the basis of:

Accepted Answer

A) the labor theory of value 
B) the opportunity cost theory 
C) the law of diminishing returns 
D) all of the above 
A) the labor theory of value 
B) the opportunity cost theory 
C) the law of diminishing returns 
D) all of the above

Question 12

The Mercantilists did not advocate:

Accepted Answer

A) free trade 
B) stimulating the nation's exports 
C) restricting the nations' imports 
D) the accumulation of gold by the nation 
A) free trade 
B) stimulating the nation's exports 
C) restricting the nations' imports 
D) the accumulation of gold by the nation

Question 13

A difference in relative commodity prices between two nations can be based upon a difference in:

Accepted Answer

A) factor endowments 
B) technology 
C) tastes 
D) all of the above 
A) factor endowments 
B) technology 
C) tastes 
D) all of the above

If domestically 3X=3Y in nation A,while 1X=1Y domestically in nation B:

In the trade between a small and a large nation:

Which of the following statements is true?

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

According to Adam Smith,international trade was based on:

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

With reference to the statement in Question 6,if 3X is exchanged for 3Y:

The Ricardian trade model has been empirically

What proportion of international trade is based on absolute advantage?

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Ricardo explained the law of comparative advantage on the basis of:

The Mercantilists did not advocate:

A difference in relative commodity prices between two nations can be based upon a difference in:

Introduction

The Standard Theory of International Trade

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters

Exam 2: The Law of Comparative Advantage

If domestically 3X=3Y in nation A,while 1X=1Y domestically in nation B:

In the trade between a small and a large nation:

Which of the following statements is true?

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

According to Adam Smith,international trade was based on:

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

With reference to the statement in Question 6,if 3X is exchanged for 3Y:

The Ricardian trade model has been empirically

What proportion of international trade is based on absolute advantage?

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Ricardo explained the law of comparative advantage on the basis of:

The Mercantilists did not advocate:

A difference in relative commodity prices between two nations can be based upon a difference in:

Introduction

The Standard Theory of International Trade

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters