Given the following Classical-type table showing the fixed money prices of each good in each of the two countries: $\begin{array} { l c c } & \underline{\text { Shoes } }&\underline{ \text { Wine} } \\\\ \text { United States } & \text { \$20/pair } & \text { \$10/bottle } \\ \text { Switzerland } & 100 \text { francs/pair } & 40 \text { francs/bottle } \end{array}$ If the exchange rate is flexible, the upper limit to the price of the dollar (i.e., the number of Swiss francs per dollar above which there is export of both goods by Switzerland) is

A) 5 francs = $1. B) 4 francs = $1. C) 0.25 francs = $1. D) 0.20 francs = $1. A) 5 francs = $1. B) 4 francs = $1. C) 0.25 francs = $1. D) 0.20 francs = $1.

You are given the following Classical-type table showing the output of 10 days labor in the production of each of the two commodities in each of the two countries. Assume that The U.K. worker's wage is £30 per day and that the fixed exchange rate is $2 = £1. $\begin{array}{lll} &\underline{\text { Food }}&\underline{\text { Clothing }}\\\\ \text { United States } & 30 \text { units } & 30 \text { units } \\ \text { United Kingdom } & 20 \text { units } & 15 \text { units } \end{array}$ If trade is taking place between the two countries, what is the "upper limit" to the U.S.Worker's wage per day?

A) $30 B) $40 C) $90 D) $120 A) $30 B) $40 C) $90 D) $120

The following Classical-type table shows the number of days of labor input required to obtain one unit of output of each of the two commodities in each of the three countries: $\begin{array} { l l l } &\underline{ \text { clothing }} & \underline{\text { wheat }} \\ \text { Spain } & 3 \text { days } & 6 \text { days } \\ \text { United States } & 2 \text { days } & 5 \text { days } \\ \text { England } & 4 \text { days } & 6 \text { days } \end{array}$ Given this information, the United States has an absolute advantage over Spain in

A) both goods, and the United States also has an absolute advantage over England in Both goods. B) both goods, but the United States has an absolute advantage over England in neither Good. C) neither good, but the United States has an absolute advantage over England in both Goods. D) neither good, and the United States also has an absolute advantage over England in Neither good. A) both goods, and the United States also has an absolute advantage over England in Both goods. B) both goods, but the United States has an absolute advantage over England in neither Good. C) neither good, but the United States has an absolute advantage over England in both Goods. D) neither good, and the United States also has an absolute advantage over England in Neither good.

Given the following Classical-type table shows the number of days of labor input Required to obtain one unit of output of each of the three commodities in each of the two Countries: $\begin{array} { l l l l } &\underline{ \text { good T }} & \underline{\text { good X} } & \underline{\text { good Y }} \\ & & & \\ \text { United Kingdom } & \text { 4 days } & \text { 5 days } & 3 \text { days } \\ \text { United States } & 4 \text { days } & 4 \text { days } & \text { 2 days } \end{array}$ Suppose that the wage rate in the United Kingdom is £30 per day, the wage rate in the United States is $40 per day, and the exchange rate is £1 = $1. In this situation, the United Kingdom will

A) export good T and import goods X and Y. B) export good Y and import goods T and X. C) export goods T and X and import good Y. D) export goods X and Y and import good T. A) export good T and import goods X and Y. B) export good Y and import goods T and X. C) export goods T and X and import good Y. D) export goods X and Y and import good T.

Exam 4: Extensions and Tests of the Classical Model of Trade

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In a five country-two commodity Classical model of trade, where the autarky price ratios in all five countries are different, can you conclude a priori that all five countries will desire to trade? Why or why not? Between which of the five countries is trade certain? What will determine which of the remaining countries will trade?

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Question 21

Given the following Classical-type table showing the fixed money prices of each good in each of the two countries: United States \2 0/pair \1 0/bottle Switzerland 100 francs/pair 40 francs/bottle If the exchange rate is flexible, the upper limit to the price of the dollar (i.e., the number of Swiss francs per dollar above which there is export of both goods by Switzerland) is

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Question 22

(a) Set up a Ricardo-type comparative advantage numerical example with two countries and two goods. Distinguish “absolute advantage” from “comparative advantage” in the context of your example. Then explain how trade between the two countries benefits each of them in comparison with autarky. (b) For your numerical example in part (a) of this question, assign a wage rate to one of your countries and a fixed exchange rate between the two currencies. Then, using your wage rate and the exchange rate, indicate the upper and lower limits to the wage rate in the other country that are consistent with two-way trade between the countries, and explain why these are the upper and lower limits.

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Question 23

You are given the following Classical-type table showing the output of 10 days labor in the production of each of the two commodities in each of the two countries. Assume that The U.K. worker's wage is £30 per day and that the fixed exchange rate is $2 = £1. United States 30 units 30 units United Kingdom 20 units 15 units If trade is taking place between the two countries, what is the "upper limit" to the U.S.Worker's wage per day?

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Question 24

In Question #11 above, suppose that one-half day of labor must be used to transport a Good internationally, no matter which good is considered and which country is doing the Exporting. With this addition of transportation costs, England will export good(s) and will import good(s) .

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Question 25

In the three-country world in Question #19, which one of the following statements is TRUE?

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Question 26

The following Classical-type table shows the number of days of labor input required to obtain one unit of output of each of the two commodities in each of the three countries: Spain 3 days 6 days United States 2 days 5 days England 4 days 6 days Given this information, the United States has an absolute advantage over Spain in

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Question 27

Suppose that the wage rate in country A is three times the wage rate in country B. In this situation, in the context of the Classical/Ricardo trade model, country A would be able to export goods to country B in industries where

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Question 28

Suppose that, in a Classical model with two goods, Germany can produce 50 units of steel with one day of labor and 30 units of textiles with one day of labor; Switzerland can produce 45 units of steel with one day of labor and 45 units of textiles with one day of labor. If the exchange rate is fixed at 1 Swiss franc = 1 euro and if the Swiss wage rate is 10 francs per day, then, in trading equilibrium, German wages

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Question 29

In the situation in Question #13 above, if trade is taking place, what is the "lower limit" to the U.S. worker's wage per day?

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Question 30

In the Dornbusch-Fischer-Samuelson model of Question #24 above, a uniform Improvement in labor productivity in all of the ome country's industries would shift the A schedule and would lead to the export of a number of goods By the home country than the number exported before the productivity improvement.

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Question 31

Given the following Classical-type table shows the number of days of labor input Required to obtain one unit of output of each of the three commodities in each of the two Countries: United Kingdom 4 days 5 days 3 days United States 4 days 4 days 2 days Suppose that the wage rate in the United Kingdom is £30 per day, the wage rate in the United States is $40 per day, and the exchange rate is £1 = $1. In this situation, the United Kingdom will

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Question 32

Showing 21 - 32 of 32

In Question #11 above, suppose that one-half day of labor must be used to transport a Good internationally, no matter which good is considered and which country is doing the Exporting. With this addition of transportation costs, England will export good(s) and will import good(s) .

In the three-country world in Question #19, which one of the following statements is TRUE?

Suppose that the wage rate in country A is three times the wage rate in country B. In this situation, in the context of the Classical/Ricardo trade model, country A would be able to export goods to country B in industries where

In the situation in Question #13 above, if trade is taking place, what is the "lower limit" to the U.S. worker's wage per day?

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

The Classical World of David Ricardo and Comparative Advantage

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

International Factor Movements

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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