Exam 2: Foundations of Modern Trade Theory Comparative Advantage

According to the price-specie-flow-doctrine, a trade-surplus nation would experience gold outflows, a decrease in its money supply, and a fall in its price level.

All of the following are sources of dynamic gains from trade EXCEPT

If a production possibilities frontier is bowed out (i.e., concave) in appearance, production occurs under conditions of

Who gains more from trade when nations are of unequal economic size?

By enabling the spread of collaboration and ideas, an online-based company promotes

Assume that Germany has higher labor productivity and higher wage levels than France.Germany can produce a commodity more cheaply than France if its productivity differential more than offsets its wage differential.

As international trade proceeds, a country will produce more of its import- competing product.

The presence of increasing opportunity costs gives rises to production possibilities frontiers that are

Adam Smith and David Ricardo reasoned that in a world of two countries, at least one country will be worse off as the result of trade.

If the international terms of trade lies beneath (inside) the Mexican cost ratio, Mexico is worse off with trade than without trade.

A nation that gains from trade will find its consumption point being located

A nation's trade triangle denotes its exports, imports, and terms of trade.

Digital trade involves exchange of all EXCEPT

Explain the Law of Comparative Advantage.

A rise in the price of imports or a fall in the price of exports will

Introducing indifference curves into our trade model permits us to determine

A fall in the price of imports or a rise in the price of exports will

Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.

If two nations of approximately the same size and with similar taste patterns participate in international trade, the gains from trade tend to be shared about equally between them.

Germany has the absolute advantage in producing both steel and aluminum.