In the graph below, without capital movements between countries I and II, the capital Stock in country I is 0K1 and the capital stock in country II is K10'. The return to capital In country I is thus __________ and the return to capital in country II is __________.

A) 0r1; 0'r'1 B) 0r3; 0'r'1 C) 0r1; 0'r'3 D) 0r2; 0'r'3 A) 0r1; 0'r'1 B) 0r3; 0'r'1 C) 0r1; 0'r'3 D) 0r2; 0'r'3

Exam 12: International Factor Movements

According to the Department of Commerce information given in the textbook, the country which is the recipient of the largest amount of U.S. foreign direct investment (FDI) is __________.

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Question 1

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Direct investment inflows by foreigners into the United States have been sizable in recent years. How might this net inward movement of capital affect the level and pattern of U.S. trade according to the Heckscher-Ohlin model? The level of world output?

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Question 2

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According to the Heckscher-Ohlin model, direct investment inflows by foreigners into the United States would lead to an increase in the level of capital in the country. This increase in capital would likely lead to an increase in the production of capital-intensive goods in the United States, as the country now has more capital to allocate towards the production of these goods.

As a result, the pattern of U.S. trade would likely shift towards exporting more capital-intensive goods and importing more labor-intensive goods. This is because the United States would now have a comparative advantage in the production of capital-intensive goods due to the increase in capital from foreign direct investment.

In terms of the level of world output, the increase in direct investment inflows into the United States would likely lead to an overall increase in world output. This is because the Heckscher-Ohlin model suggests that countries specialize in the production of goods for which they have a comparative advantage, leading to more efficient production and higher overall output.

Therefore, the net inward movement of capital into the United States would likely lead to a shift in the pattern of U.S. trade and an increase in the level of world output, according to the Heckscher-Ohlin model.

In the graph in Question #23 above, the migration of labor would result in in country II'sGross Domestic Product and in country II's Gross National Product.

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Question 3

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If labor moves from a labor-abundant country to a capital-abundant country, other things Equal, consideration of the Rybczynski theorem suggests that the labor movement will Cause __________ production effect in the labor-abundant country.

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Question 4

Consider the labor situation in countries I and II in a two-country world with the marginal Physical product schedules MPPL_I (= demand for labor schedule D_I) for country I and Marginal physical product schedule MPPL_II (= demand for labor schedule D_II) for country II shown in the graph below (where the vertical axes also represent real wages): Without any migration of labor between the two countries, the labor force is 0L₁ in country I and (in the leftward direction) 0'L₁ in country II. If labor is now allowed to flow freely between the two countries, labor would migrate . As a result of the migration, world output would increase by the amount of triangle .

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Question 5

Economists frequently point out that factor movements between two countries can be a substitute for goods movements between the countries in terms of the impact on relative factor prices in the countries. Explain why the two types of movements can be substitutes.

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Question 6

According to the Department of Commerce information given in the textbook, the industry in which the largest amount of foreign direct investment (FDI) in the United States has been made is __________.

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Question 7

According to the Department of Commerce information given in the textbook, the industry in which the United States has made the largest amount of foreign direct investment (FDI) abroad is __________.

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Question 8

The recent immigration of labor into the United States from Mexico has led to increased calls for new restrictions on this movement of labor (including greater enforcement of existing restrictions). What would be the costs and benefits to the United States of such restrictions?

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Question 9

Consider a situation where a foreign investor firm in country A wishes to move recorded profits out of country A to another plant location in country B. If the firm wants to utilize transfer pricing, it would want to record the prices of its exported goods from country A to country B at a value than would be the case in an ordinary market transaction, and the firm would, when recording the prices of goods that it imports into country A from country B, value than would be the case in an ordinary market transaction.

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Question 10

The impact of labor migration on patterns of international trade depends on the characteristics of the labor migrants. In which cases might migration expand trade? World income? In which cases might it reduce trade and world income?

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Question 11

If there is diminishing marginal productivity of labor in production (with other inputs held constant), an outmigration of labor from low-wage country A to higher-wage country B will lead, other things equal, to a in per capita income in country B and in per capita income in country A.

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Question 12

If there is diminishing marginal productivity of labor in production (with other inputs held constant), an outmigration of labor from low-wage country A to higher-wage country B will lead, other things equal and if trade is taking place in accordance with the Heckscher-Ohlin analysis, to __________ production effect in the capital-abundant country.

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Question 13

In the graph below, without capital movements between countries I and II, the capital Stock in country I is 0K₁ and the capital stock in country II is K₁0'. The return to capital In country I is thus and the return to capital in country II is .

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Question 14

According to the Department of Commerce information given in the textbook, the country which has made the largest amount of foreign direct investment (FDI) in the United States is __________.

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Question 15

Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?

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Question 16

In the diagram in Question #9 above, if restrictions on capital flows were removed, Capital would move from, and this movement would reduce the return to Capital in .

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Question 17

In the diagram in Question #9 above, if restrictions on capital flows were removed and capital was allowed to flow from the low-return country to the high-return country, then total output in country I __________.

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Question 18

In the diagram in Question #9 above, if restrictions on capital flows were removed and capital was allowed to flow freely from the low-return country to the high-return country, then world output would rise by the amount of area __________.

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Question 19

In the diagram in Question #9 above, if restrictions on capital flows were removed and Capital was allowed to flow freely from the low-return country to the high-return country, Then national income (i.e., GNP) in country II would rise by the amount of area__________.

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Question 20

Showing 1 - 20 of 30

Exam 12: International Factor Movements

According to the Department of Commerce information given in the textbook, the country which is the recipient of the largest amount of U.S. foreign direct investment (FDI) is __________.

Direct investment inflows by foreigners into the United States have been sizable in recent years. How might this net inward movement of capital affect the level and pattern of U.S. trade according to the Heckscher-Ohlin model? The level of world output?

In the graph in Question #23 above, the migration of labor would result in __________ in country II'sGross Domestic Product and __________ in country II's Gross National Product.

If labor moves from a labor-abundant country to a capital-abundant country, other things Equal, consideration of the Rybczynski theorem suggests that the labor movement will Cause __________ production effect in the labor-abundant country.

Economists frequently point out that factor movements between two countries can be a substitute for goods movements between the countries in terms of the impact on relative factor prices in the countries. Explain why the two types of movements can be substitutes.

According to the Department of Commerce information given in the textbook, the industry in which the largest amount of foreign direct investment (FDI) in the United States has been made is __________.

According to the Department of Commerce information given in the textbook, the industry in which the United States has made the largest amount of foreign direct investment (FDI) abroad is __________.

The recent immigration of labor into the United States from Mexico has led to increased calls for new restrictions on this movement of labor (including greater enforcement of existing restrictions). What would be the costs and benefits to the United States of such restrictions?

The impact of labor migration on patterns of international trade depends on the characteristics of the labor migrants. In which cases might migration expand trade? World income? In which cases might it reduce trade and world income?

In the graph below, without capital movements between countries I and II, the capital Stock in country I is 0K1 and the capital stock in country II is K10'. The return to capital In country I is thus __________ and the return to capital in country II is __________.

According to the Department of Commerce information given in the textbook, the country which has made the largest amount of foreign direct investment (FDI) in the United States is __________.

Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?

In the diagram in Question #9 above, if restrictions on capital flows were removed, Capital would move from__________, and this movement would reduce the return to Capital in __________.

In the diagram in Question #9 above, if restrictions on capital flows were removed and capital was allowed to flow from the low-return country to the high-return country, then total output in country I __________.

In the diagram in Question #9 above, if restrictions on capital flows were removed and capital was allowed to flow freely from the low-return country to the high-return country, then world output would rise by the amount of area __________.

In the diagram in Question #9 above, if restrictions on capital flows were removed and Capital was allowed to flow freely from the low-return country to the high-return country, Then national income (i.e., GNP) in country II would rise by the amount of area__________.

Early Trade Theories: Mercantilism and the Transition to the Classical World of David Ricardo

The Classical World of David Ricardo and Comparative Advantage

Extensions and Tests of the Classical Model of Trade

Introduction to Neoclassical Trade Theory: Tools to Be Employed

Gains From Trade in Neoclassical Theory

Offer Curves and the Terms of Trade

The Basis for Trade: Factor Endowments and the Heckscher-Ohlin Model

Empirical Tests of the Factor Endowments Approach

Post Heckscher-Ohlin Theories of Trade and Intra-Industry Trade

Economic Growth and International Trade

The Instruments of Trade Policy

The Impact of Trade Policies

Arguments for Interventionist Trade Policies

Political Economy and Us Trade Policy

Economic Integration

International Trade and the Developing Countries

The Balance-Of-Payments Accounts

The Foreign Exchange Market

International Financial Markets and Instruments: an Introduction

The Monetary and Portfolio Balance Approaches to External Balance

Price Adjustments and Balance-Of-Payments Disequilibrium

National Income and the Current Account

Economic Policy in the Open Economy Under Fixed Exchange Rates

Economic Policy in the Open Economy Under Flexible Exchange Rates

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

Fixed or Flexible Exchange Rates

The International Monetary System: Past, Present, and Future

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In the graph in Question #23 above, the migration of labor would result in in country II'sGross Domestic Product and in country II's Gross National Product.

In the graph below, without capital movements between countries I and II, the capital Stock in country I is 0K₁ and the capital stock in country II is K₁0'. The return to capital In country I is thus and the return to capital in country II is .

In the diagram in Question #9 above, if restrictions on capital flows were removed, Capital would move from, and this movement would reduce the return to Capital in .