Question 1

The price-specie-flow mechanism suggested that

Accepted Answer

A)  a country could easily maintain a balance-of-payments surplus for a long period ofTime. 
B)  a deficit country would experience an increase in its money supply and its price level. 
C)  a surplus country would experience an increase in its money supply and its price level. 
D)  a country's internal price level has no relation to the country's foreign trade activities. 
A)  a country could easily maintain a balance-of-payments surplus for a long period ofTime. 
B)  a deficit country would experience an increase in its money supply and its price level. 
C)  a surplus country would experience an increase in its money supply and its price level. 
D)  a country's internal price level has no relation to the country's foreign trade activities.

Question 2

Which of the following policies would NOT be consistent with the Mercantilist balance-Of-trade doctrine?

Accepted Answer

A)  payment of high wages to labor 
B)  import duties on final products 
C)  export subsidies 
D)  prohibition of imports of manufactured goods 
A)  payment of high wages to labor 
B)  import duties on final products 
C)  export subsidies 
D)  prohibition of imports of manufactured goods

Question 3

Given the following Classical-type table showing the number of days of labor inputRequired to obtain one unit of output of each of the two commodities in each of the two Countries:
$$\begin{array} { l l c } 
& \underline { \text { bicycles } } & \underline { \text { computers } } \
\text { United States } & \text { 4 days } & \text { 3 days } \
\text { United Kingdom } & 5 \text { days } & \text { 6 days }
\end{array}$$
The United States has an absolute advantage in the production of __________.

Accepted Answer

A)  bicycles (only) 
B)  computers (only) 
C)  both bicycles and computers 
D)  neither bicycles nor computers 
A)  bicycles (only) 
B)  computers (only) 
C)  both bicycles and computers 
D)  neither bicycles nor computers

Question 4

(a)  Why did the Mercantilists think that a situation where a country’s exports exceed its 
	imports is a “favorable” situation for the country?  Briefly, what policies would a  	Mercantilist recommend in order to generate such a “favorable” situation?

(b)  What was the “price-specie-flow doctrine” and how did it undermine Mercantilist 	thinking?  Why would a situation where the demands for traded goods are “inelastic” 	with respect to price changes pose a problem for the “price-specie-flow doctrine” in its 	attack on Mercantilist thinking?

Accepted Answer

(a) The Mercantilists believed that a si

Question 5

In the price-specie-flow doctrine, a deficit country will __________ gold, and this gold Flow will ultimately lead to __________ in the deficit country's exports.

Accepted Answer

A)  lose; a decrease 
B)  lose; an increase 
C)  gain; a decrease 
D)  gain; an increase 
A)  lose; a decrease 
B)  lose; an increase 
C)  gain; a decrease 
D)  gain; an increase

The price-specie-flow mechanism suggested that

Which of the following policies would NOT be consistent with the Mercantilist balance-Of-trade doctrine?

In the price-specie-flow doctrine, a deficit country will gold, and this gold Flow will ultimately lead to in the deficit country's exports.

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

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

Filters

Exam 2: Early Trade Theories: Mercantilism and the Transition to the Classical World of David Ricardo

The price-specie-flow mechanism suggested that

Which of the following policies would NOT be consistent with the Mercantilist balance-Of-trade doctrine?

In the price-specie-flow doctrine, a deficit country will __________ gold, and this gold Flow will ultimately lead to __________ in the deficit country's exports.

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

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

Filters

In the price-specie-flow doctrine, a deficit country will gold, and this gold Flow will ultimately lead to in the deficit country's exports.