Question 1

Intraindustry trade is most common in the trade patterns of

Accepted Answer

A)  developing countries of Asia and Africa. 
B)  developed countries of Western Europe. 
C)  all countries. 
D)  None of the above. 
A)  developing countries of Asia and Africa. 
B)  developed countries of Western Europe. 
C)  all countries. 
D)  None of the above. B

Question 2

The Leontief paradox can be summarized as the finding that U.S. exports tend to come from capital-intensive industries, while U.S. imports are produced using relatively labor-intensive techniques.

Accepted Answer

A) True 
 B)False  False

Question 3

One of the reasons why we have several competing theories of international trade flows is difficulty economists encounter in devising and carrying out precise tests of trade theories.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following has not been suggested as a reconciliation of Leontief's findings?

Accepted Answer

A)  international differences in tastes 
B)  U.S. tariff structure 
C)  failure to take into account natural resources 
D)  temporary data problems immediately after World War II 
A)  international differences in tastes 
B)  U.S. tariff structure 
C)  failure to take into account natural resources 
D)  temporary data problems immediately after World War II

Question 5

MacDougall compared export ratios and labor productivity ratios for the United States and the United Kingdom in order to test the

Accepted Answer

A)  classical theory. 
B)  the Heckscher-Ohlin theory. 
C)  the Linder hypothesis. 
D)  All of the above. 
A)  classical theory. 
B)  the Heckscher-Ohlin theory. 
C)  the Linder hypothesis. 
D)  All of the above.

Question 6

According to Linder, the gains from international trade come about because consumers are exposed to

Accepted Answer

A)  a greater variety of goods. 
B)  increasing returns to scale. 
C)  imperfect competition. 
D)  None of the above. 
A)  a greater variety of goods. 
B)  increasing returns to scale. 
C)  imperfect competition. 
D)  None of the above.

Question 7

Linder argues that trade is based on international similarities in preferences rather than international differences in costs of production.

Accepted Answer

A) True 
 B)False

Question 8

As of 2004, the U.S. , Canada, and Western Europe account for 60 percent of the world's annual consumption of goods and services while having only about 11 percent of the world's population.

Accepted Answer

A) True 
 B)False

Question 9

If the Heckscher-Ohlin model is correct, there would never be intraindustry trade.

Accepted Answer

A) True 
 B)False

Question 10

Does the presence in the real world of intraindustry trade prove or disprove the classical or Heckscher-Ohlin models? Explain.

Accepted Answer

It does not disprove these theories, but

Question 11

One of the leading alternative theories to the HO model of international trade is the Human Skills theory, which was developed by

Accepted Answer

A)  Donald Keesing. 
B)  Adam Smith. 
C)  David Ricardo. 
D)  G. D. A. MacDougall. 
A)  Donald Keesing. 
B)  Adam Smith. 
C)  David Ricardo. 
D)  G. D. A. MacDougall.

Question 12

Leontief found that

Accepted Answer

A)  U.S. exports are capital intensive relative to U.S. imports. 
B)  U.S. imports are labor intensive relative to U.S. exports. 
C)  U.S. exports are neither labor nor capital intensive. 
D)  None of the above. 
A)  U.S. exports are capital intensive relative to U.S. imports. 
B)  U.S. imports are labor intensive relative to U.S. exports. 
C)  U.S. exports are neither labor nor capital intensive. 
D)  None of the above.

Question 13

Linder's hypothesis says that countries with of preferences will trade intensively with each other.

Accepted Answer

A)  differences 
B)  utility 
C)  similarity 
D)  elasticity 
A)  differences 
B)  utility 
C)  similarity 
D)  elasticity

Question 14

An input-output table details the sales of each industry to all other industries in an economy.

Accepted Answer

A) True 
 B)False

Question 15

MacDougall's test provides evidence that exports are positively related to labor productivity.

Accepted Answer

A) True 
 B)False

Question 16

Tests, using Leontief's methodology, to explain trade patterns of other countries

Accepted Answer

A)  show that the Leontief Paradox holds only for the United States. 
B)  show that paradoxical results obtain for some countries but not for others. 
C)  show that the Leontief paradox holds in every case. 
D)  have never been performed. 
A)  show that the Leontief Paradox holds only for the United States. 
B)  show that paradoxical results obtain for some countries but not for others. 
C)  show that the Leontief paradox holds in every case. 
D)  have never been performed.

Question 17

MacDougall's results can be interpreted as

Accepted Answer

A)  evidence against the classical model. 
B)  evidence against the Heckscher-Ohlin model. 
C)  support for the classical model. 
D)  support for the Heckscher-Ohlin model. 
A)  evidence against the classical model. 
B)  evidence against the Heckscher-Ohlin model. 
C)  support for the classical model. 
D)  support for the Heckscher-Ohlin model.

Question 18

Is the distribution of income across different countries in the world equitable? In other words, do all countries share the world's wealth equally?

Accepted Answer

No, there are large differences in they

Question 19

Tests of the Heckscher-Ohlin model by Bowen, Leamer, and Sveikauskas and by Maskus continue to

Accepted Answer

A)  provide strong support for the theory. 
B)  provide weak support for the theory. 
C)  provide evidence against the theory. 
A)  provide strong support for the theory. 
B)  provide weak support for the theory. 
C)  provide evidence against the theory.

Question 20

Leontief explained his findings by arguing that U.S. labor is more efficient than their foreign counterparts.

Accepted Answer

A) True 
 B)False

Exam 5: Tests of Trade Models: the Leontief Paradox and Its After-math

Intraindustry trade is most common in the trade patterns of

The Leontief paradox can be summarized as the finding that U.S. exports tend to come from capital-intensive industries, while U.S. imports are produced using relatively labor-intensive techniques.

One of the reasons why we have several competing theories of international trade flows is difficulty economists encounter in devising and carrying out precise tests of trade theories.

Which of the following has not been suggested as a reconciliation of Leontief's findings?

MacDougall compared export ratios and labor productivity ratios for the United States and the United Kingdom in order to test the

According to Linder, the gains from international trade come about because consumers are exposed to

Linder argues that trade is based on international similarities in preferences rather than international differences in costs of production.

As of 2004, the U.S. , Canada, and Western Europe account for 60 percent of the world's annual consumption of goods and services while having only about 11 percent of the world's population.

If the Heckscher-Ohlin model is correct, there would never be intraindustry trade.

Does the presence in the real world of intraindustry trade prove or disprove the classical or Heckscher-Ohlin models? Explain.

One of the leading alternative theories to the HO model of international trade is the Human Skills theory, which was developed by

Leontief found that

Linder's hypothesis says that countries with of preferences will trade intensively with each other.

An input-output table details the sales of each industry to all other industries in an economy.

MacDougall's test provides evidence that exports are positively related to labor productivity.

Tests, using Leontief's methodology, to explain trade patterns of other countries

MacDougall's results can be interpreted as

Is the distribution of income across different countries in the world equitable? In other words, do all countries share the world's wealth equally?

Tests of the Heckscher-Ohlin model by Bowen, Leamer, and Sveikauskas and by Maskus continue to

Leontief explained his findings by arguing that U.S. labor is more efficient than their foreign counterparts.

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Classical Model of International Trade

The Heckscher-Ohlin Theory

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Arrangements

International Trade and Economic Growth

An Introduction to International Finance

The Balance of Payments

The Foreign-Exchange Market

Prices and Exchange Rates: Purchasing Power Parity

Exchange Rates, Interest Rates, and Interest Parity

Foreign-Exchange Risk, Forecasting, and International Investment

Basic Theories of the Balance of Payments

Exchange Rate Theories

Alternative International Monetary Standards

International Banking, Debt, and Risk

Open-Economy Macroeconomic Policy and Adjustment

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