Question 1

The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.

Accepted Answer

A) True 
 B)False

Question 2

An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.

Accepted Answer

A) True 
 B)False

Question 3

The trading-triangle concept is used to indicate a nation's

Accepted Answer

A)  exports, marginal rate of transformation, and terms of trade. 
B)  imports, terms of trade, and marginal rate of transformation. 
C)  marginal rate of transformation, imports, and exports. 
D)  terms of trade, exports, and imports. 
A)  exports, marginal rate of transformation, and terms of trade. 
B)  imports, terms of trade, and marginal rate of transformation. 
C)  marginal rate of transformation, imports, and exports. 
D)  terms of trade, exports, and imports.

Question 4

Trade between two nations would NOT be possible if they have

Accepted Answer

A)  identical community indifference curves but different production possibilities frontiers. 
B)  identical production possibilities frontiers but different community indifference curves. 
C)  different production possibilities frontiers and different community indifference curves. 
D)  identical production possibilities frontiers and identical community indifference curves. 
A)  identical community indifference curves but different production possibilities frontiers. 
B)  identical production possibilities frontiers but different community indifference curves. 
C)  different production possibilities frontiers and different community indifference curves. 
D)  identical production possibilities frontiers and identical community indifference curves.

Question 5

When a company starts an online trade, which aspect could limit their progress?

Accepted Answer

A)  data privacy issues 
B)  increasing competition 
C)  productivity issues 
D)  decreasing costs 
A)  data privacy issues 
B)  increasing competition 
C)  productivity issues 
D)  decreasing costs

Question 6

If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a good at a higher labor cost than Mexico.

Accepted Answer

A) True 
 B)False

Question 7

In his empirical test of the principle of comparative advantage, G.MacDougall found that relatively high export ratios are associated with relatively high labor productivity.

Accepted Answer

A) True 
 B)False

Question 8

The mercantilists would have objected to

Accepted Answer

A)  export promotion policies initiated by the government. 
B)  the use of tariffs or quotas to restrict imports. 
C)  trade policies designed to accumulate gold and other precious metals. 
D)  international trade based on open markets. 
A)  export promotion policies initiated by the government. 
B)  the use of tariffs or quotas to restrict imports. 
C)  trade policies designed to accumulate gold and other precious metals. 
D)  international trade based on open markets.

Question 9

MacDougall's 1951 writings argued that ______ explains a country's competitive position?

Accepted Answer

A)  national income levels 
B)  relative endowments of natural resources 
C)  domestic tastes and preferences 
D)  labor productivity 
A)  national income levels 
B)  relative endowments of natural resources 
C)  domestic tastes and preferences 
D)  labor productivity

Question 10

For the commodity terms of trade to improve, a country's export price index must rise relative to its import price index over a given time period.

Accepted Answer

A) True 
 B)False

Question 11

Figure 2.1. Production Possibilities Frontier   
-Referring to Figure 2.1, the relative cost of steel in terms of aluminum is

Accepted Answer

A)  4.0 tons. 
B)  2.0 tons. 
C)  0.5 tons. 
D)  0.25 tons. 
A)  4.0 tons. 
B)  2.0 tons. 
C)  0.5 tons. 
D)  0.25 tons.

Question 12

Your text describes the last-minute overhaul of the Iphone screens in China.From Apple Inc.'s perspective, Chinese workers

Accepted Answer

A)  have more expertise in technology. 
B)  work harder than Americans. 
C)  have greater national wealth on which to draw. 
D)  have greater labor flexibility in terms of wages and hours worked. 
A)  have more expertise in technology. 
B)  work harder than Americans. 
C)  have greater national wealth on which to draw. 
D)  have greater labor flexibility in terms of wages and hours worked.

Question 13

The principle of absolute advantage asserts that mutually beneficial trade can occur even if one nation is absolutely more efficient in the production of all goods.

Accepted Answer

A) True 
 B)False

Question 14

The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.

Accepted Answer

A) True 
 B)False

Question 15

Under free trade, Canada would not enjoy any gains from trade with Sweden if Canada

Accepted Answer

A)  trades at the Canadian rate of transformation. 
B)  trades at Sweden's rate of transformation. 
C)  specializes completely in the production of its export good. 
D)  specializes partially in the production of its export good. 
A)  trades at the Canadian rate of transformation. 
B)  trades at Sweden's rate of transformation. 
C)  specializes completely in the production of its export good. 
D)  specializes partially in the production of its export good.

Question 16

The price-specie-flow mechanism illustrated why one nation's gains from trade were accompanied by another country's losses.

Accepted Answer

A) True 
 B)False

Question 17

The expression "importance of being unimportant" suggests that if one nation is much larger than the other, the larger nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.

Accepted Answer

A) True 
 B)False

Question 18

Ricardo's model of comparative advantage assumed all of the following EXCEPT

Accepted Answer

A)  in each nation, labor is the only input. 
B)  costs do not vary with the level of production. 
C)  perfect competition prevails in all markets. 
D)  transportation costs rise as distance increases between countries. 
A)  in each nation, labor is the only input. 
B)  costs do not vary with the level of production. 
C)  perfect competition prevails in all markets. 
D)  transportation costs rise as distance increases between countries.

Question 19

Modern trade theory contends that the pattern of world trade is governed by

Accepted Answer

A)  mercantilism. 
B)  supply conditions only. 
C)  demand conditions only. 
D)  the ability to separate the production process into tasks that can be done in different locations. 
A)  mercantilism. 
B)  supply conditions only. 
C)  demand conditions only. 
D)  the ability to separate the production process into tasks that can be done in different locations.

Question 20

By reducing the overall volume of trade, import restrictions tend to reduce a nation's gains from trade.

Accepted Answer

A) True 
 B)False

The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.

An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.

The trading-triangle concept is used to indicate a nation's

Trade between two nations would NOT be possible if they have

When a company starts an online trade, which aspect could limit their progress?

If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a good at a higher labor cost than Mexico.

In his empirical test of the principle of comparative advantage, G.MacDougall found that relatively high export ratios are associated with relatively high labor productivity.

The mercantilists would have objected to

MacDougall's 1951 writings argued that ______ explains a country's competitive position?

For the commodity terms of trade to improve, a country's export price index must rise relative to its import price index over a given time period.

Figure 2.1. Production Possibilities Frontier -Referring to Figure 2.1, the relative cost of steel in terms of aluminum is

Your text describes the last-minute overhaul of the Iphone screens in China.From Apple Inc.'s perspective, Chinese workers

The principle of absolute advantage asserts that mutually beneficial trade can occur even if one nation is absolutely more efficient in the production of all goods.

The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.

Under free trade, Canada would not enjoy any gains from trade with Sweden if Canada

The price-specie-flow mechanism illustrated why one nation's gains from trade were accompanied by another country's losses.

The expression "importance of being unimportant" suggests that if one nation is much larger than the other, the larger nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.

Ricardo's model of comparative advantage assumed all of the following EXCEPT

Modern trade theory contends that the pattern of world trade is governed by

By reducing the overall volume of trade, import restrictions tend to reduce a nation's gains from trade.

The International Economy and Globalization

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Exam 2: Foundations of Modern Trade Theory Comparative Advantage

The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.

An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.

The trading-triangle concept is used to indicate a nation's

Trade between two nations would NOT be possible if they have

When a company starts an online trade, which aspect could limit their progress?

If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a good at a higher labor cost than Mexico.

In his empirical test of the principle of comparative advantage, G.MacDougall found that relatively high export ratios are associated with relatively high labor productivity.

The mercantilists would have objected to

MacDougall's 1951 writings argued that ______ explains a country's competitive position?

For the commodity terms of trade to improve, a country's export price index must rise relative to its import price index over a given time period.

Figure 2.1. Production Possibilities Frontier -Referring to Figure 2.1, the relative cost of steel in terms of aluminum is

Your text describes the last-minute overhaul of the Iphone screens in China.From Apple Inc.'s perspective, Chinese workers

The principle of absolute advantage asserts that mutually beneficial trade can occur even if one nation is absolutely more efficient in the production of all goods.

The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.

Under free trade, Canada would not enjoy any gains from trade with Sweden if Canada

The price-specie-flow mechanism illustrated why one nation's gains from trade were accompanied by another country's losses.

The expression "importance of being unimportant" suggests that if one nation is much larger than the other, the larger nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.

Ricardo's model of comparative advantage assumed all of the following EXCEPT

Modern trade theory contends that the pattern of world trade is governed by

By reducing the overall volume of trade, import restrictions tend to reduce a nation's gains from trade.

The International Economy and Globalization

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters