Question 1

The Leontief Paradox

Accepted Answer

A) proved that the U.S.economy is different from all others. 
B) supported the validity of the Ricardian theory of comparative advantage. 
C) failed to support the validity of the Heckscher- Ohlin model. 
D) supported the validity of the Heckscher- Ohlin model. 
E) failed to support the validity of the Ricardian theory. 
A) proved that the U.S.economy is different from all others. 
B) supported the validity of the Ricardian theory of comparative advantage. 
C) failed to support the validity of the Heckscher- Ohlin model. 
D) supported the validity of the Heckscher- Ohlin model. 
E) failed to support the validity of the Ricardian theory. C

Question 2

Factors tend to be specific to certain uses and products

Accepted Answer

A) in countries lacking fair labor laws. 
B) in countries lacking comparative advantage. 
C) in capital- intensive industries. 
D) in the short run. 
E) in labor- intensive industries. 
A) in countries lacking fair labor laws. 
B) in countries lacking comparative advantage. 
C) in capital- intensive industries. 
D) in the short run. 
E) in labor- intensive industries. D

Question 3

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 its production possibility frontier is equal to

Accepted Answer

A) the price of good X divided by the price of good Y. 
B) the price of good Y divided by the price of good X. 
C) the cost of capital (assuming that good Y is capital intensive)divided by the cost of labor. 
D) the opportunity cost of good Y. 
E) the opportunity cost of good X. 
A) the price of good X divided by the price of good Y. 
B) the price of good Y divided by the price of good X. 
C) the cost of capital (assuming that good Y is capital intensive)divided by the cost of labor. 
D) the opportunity cost of good Y. 
E) the opportunity cost of good X. E

Question 4

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

Accepted Answer

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

Question 5

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

Accepted Answer

A) the real income of capital owners in Australia would increase. 
B) the real income of labor in both countries would decline. 
C) the real income of labor in Belgium would decline. 
D) the real income of labor in Australia would decline. 
E) the real income of landowners in Belgium would decline. 
A) the real income of capital owners in Australia would increase. 
B) the real income of labor in both countries would decline. 
C) the real income of labor in Belgium would decline. 
D) the real income of labor in Australia would decline. 
E) the real income of landowners in Belgium would decline.

Question 6

In the Heckscher- Ohlin model,countries are assumed to differ only in terms of their

Accepted Answer

A) factor productivities. 
B) factor endowments. 
C) tastes and preferences. 
D) physical size. 
E) available technologies. 
A) factor productivities. 
B) factor endowments. 
C) tastes and preferences. 
D) physical size. 
E) available technologies.

Question 7

If trade opens up between the two formerly autarkic countries,Australia and Belgium,then

Accepted Answer

A) the real income of Australia but not of Belgium will increase. 
B) the real income of both countries will increase. 
C) the real income of Australia and of Belgium will increase. 
D) the real income of neither country will increase. 
E) the real income of both countries may increase. 
A) the real income of Australia but not of Belgium will increase. 
B) the real income of both countries will increase. 
C) the real income of Australia and of Belgium will increase. 
D) the real income of neither country will increase. 
E) the real income of both countries may increase.

Question 8

According to the Heckscher- Ohlin model

Accepted Answer

A) the scarce factor gains from trade and the abundant factor loses. 
B) only the country with the more advanced technology gains from trade. 
C) the gainers from trade could compensate the losers and still retain gains. 
D) a country gains from trade if its exports have a high value added. 
E) everyone gains from trade. 
A) the scarce factor gains from trade and the abundant factor loses. 
B) only the country with the more advanced technology gains from trade. 
C) the gainers from trade could compensate the losers and still retain gains. 
D) a country gains from trade if its exports have a high value added. 
E) everyone gains from trade.

Question 9

In the Heckscher- Ohlin model,when two countries begin to trade with each other

Accepted Answer

A) all factors in both countries will gain from trade. 
B) benefits from trade are evenly distributed between the two countries. 
C) relative factor prices in the two countries diverge. 
D) all factors in one country will gain,but there may be no gains in the other country. 
E) the relative prices of traded goods in the two countries converge. 
A) all factors in both countries will gain from trade. 
B) benefits from trade are evenly distributed between the two countries. 
C) relative factor prices in the two countries diverge. 
D) all factors in one country will gain,but there may be no gains in the other country. 
E) the relative prices of traded goods in the two countries converge.

Question 10

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

Accepted Answer

A) countries will not be fully specialized in one product. 
B) global production will decrease under trade. 
C) countries will benefit from free international trade. 
D) countries will consume outside their production possibility frontier. 
E) comparative advantage will not determine the direction of trade. 
A) countries will not be fully specialized in one product. 
B) global production will decrease under trade. 
C) countries will benefit from free international trade. 
D) countries will consume outside their production possibility frontier. 
E) comparative advantage will not determine the direction of trade.

Question 11

Which of the following empirical studies cast the most doubt on the Heckscher- Ohlin model?

Accepted Answer

A) the study by David Ricardo 
B) the study by Adam Smith 
C) the study by Wassily Leontief 
D) the study by Davis and Weinstein 
E) the study by Bowen,Leamer,and Sveikauskas 
A) the study by David Ricardo 
B) the study by Adam Smith 
C) the study by Wassily Leontief 
D) the study by Davis and Weinstein 
E) the study by Bowen,Leamer,and Sveikauskas

Question 12

Empirical observations on actual North- South trade patterns tend to

Accepted Answer

A) support the validity of the Leontief Paradox. 
B) support the validity of the neo- imperialism exploitation theory. 
C) support the validity of the Rybczynski Theorem. 
D) support the validity of the Heckscher- Ohlin model. 
E) support the validity of the wage equalization theorem. 
A) support the validity of the Leontief Paradox. 
B) support the validity of the neo- imperialism exploitation theory. 
C) support the validity of the Rybczynski Theorem. 
D) support the validity of the Heckscher- Ohlin model. 
E) support the validity of the wage equalization theorem.

Question 13

Trade benefits a country by

Accepted Answer

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

Question 14

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

Accepted Answer

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

Question 15

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

Accepted Answer

A) labor productivities. 
B) relative abundance of factors of production. 
C) tastes and preferences. 
D) military capabilities. 
E) the size of their economies. 
A) labor productivities. 
B) relative abundance of factors of production. 
C) tastes and preferences. 
D) military capabilities. 
E) the size of their economies.

Question 16

If two countries are very different in relative factor abundance,then empirical support for which of the following would be less likely?

Accepted Answer

A) the Gravity Theorem 
B) the Law of One Price 
C) the Law of Demand 
D) the Factor Price Equalization Theorem 
E) the Heckscher- Ohlin Theorem 
A) the Gravity Theorem 
B) the Law of One Price 
C) the Law of Demand 
D) the Factor Price Equalization Theorem 
E) the Heckscher- Ohlin Theorem

Question 17

The Case of the Missing Trade refers to

Accepted Answer

A) the 9th volume of the Hardy Boys' Mystery series. 
B) the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists. 
C) the fact that world exports does not equal world imports. 
D) the fact that the Heckscher Ohlin theory never applies to China- U.S.trade practices. 
E) the fact that factor trade is less than predicted by the Heckscher- Ohlin theory. 
A) the 9th volume of the Hardy Boys' Mystery series. 
B) the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists. 
C) the fact that world exports does not equal world imports. 
D) the fact that the Heckscher Ohlin theory never applies to China- U.S.trade practices. 
E) the fact that factor trade is less than predicted by the Heckscher- Ohlin theory.

Question 18

If the price of the capital - intensive product rises more than does the price of the land- intensive product,then

Accepted Answer

A) the country that exports the capital- intensive good will lose its comparative advantage. 
B) demand will shift away from the capital- intensive product,and its production will decrease relative to that of the land- intensive product. 
C) demand will shift away from the capital- intensive product,and its production will decrease. 
D) the relative price of the capital- intensive product will fall to some point between the pretrade relative prices. 
E) the production of the capital- intensive product will decrease,but by less than production of the land- intensive product. 
A) the country that exports the capital- intensive good will lose its comparative advantage. 
B) demand will shift away from the capital- intensive product,and its production will decrease relative to that of the land- intensive product. 
C) demand will shift away from the capital- intensive product,and its production will decrease. 
D) the relative price of the capital- intensive product will fall to some point between the pretrade relative prices. 
E) the production of the capital- intensive product will decrease,but by less than production of the land- intensive product.

Question 19

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

Accepted Answer

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

Question 20

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

Accepted Answer

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

The Leontief Paradox

Factors tend to be specific to certain uses and products

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 its production possibility frontier is equal to

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

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

In the Heckscher- Ohlin model,countries are assumed to differ only in terms of their

If trade opens up between the two formerly autarkic countries,Australia and Belgium,then

According to the Heckscher- Ohlin model

In the Heckscher- Ohlin model,when two countries begin to trade with each other

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

Which of the following empirical studies cast the most doubt on the Heckscher- Ohlin model?

Empirical observations on actual North- South trade patterns tend to

Trade benefits a country by

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

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

If two countries are very different in relative factor abundance,then empirical support for which of the following would be less likely?

The Case of the Missing Trade refers to

If the price of the capital - intensive product rises more than does the price of the land- intensive product,then

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters

Exam 5: Resources and Trade: the Heckscher-Ohlin Model

The Leontief Paradox

Factors tend to be specific to certain uses and products

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 its production possibility frontier is equal to

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

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

In the Heckscher- Ohlin model,countries are assumed to differ only in terms of their

If trade opens up between the two formerly autarkic countries,Australia and Belgium,then

According to the Heckscher- Ohlin model

In the Heckscher- Ohlin model,when two countries begin to trade with each other

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

Which of the following empirical studies cast the most doubt on the Heckscher- Ohlin model?

Empirical observations on actual North- South trade patterns tend to

Trade benefits a country by

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

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

If two countries are very different in relative factor abundance,then empirical support for which of the following would be less likely?

The Case of the Missing Trade refers to

If the price of the capital - intensive product rises more than does the price of the land- intensive product,then

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters