Question 1

When a nation engages in no trade and produces
Everything it consumes, we call it:

Accepted Answer

A) anarchy. 
B) oligarchy. 
C) autarky. 
D) embargo. 
A) anarchy. 
B) oligarchy. 
C) autarky. 
D) embargo.

Question 2

Suppose that the wage is $20 per hour in a two­sector
(manufacturing and agriculture) specific­factors model.
Currently, the prices of manufactured and agricultural
Outputs are $5 and $1, respectively; the marginal
Product of labor in the manufactured sector is 6 units
Per hour; and the marginal product of labor in the
Agricultural sector is 10 units per hour.What will happen
To the distribution of labor between the two sectors?

Accepted Answer

A) Nothing will happen.The current allocation of labor between the two sectors is ideal. 
B) The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the
Current wage. 
C) The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the
Current wage. 
D) Both the agricultural and the manufacturing sector will demand more labor at the current wage. 
A) Nothing will happen.The current allocation of labor between the two sectors is ideal. 
B) The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the
Current wage. 
C) The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the
Current wage. 
D) Both the agricultural and the manufacturing sector will demand more labor at the current wage.

Question 3

The specific­factors model assumes that in each industry
(such as manufacturing and agriculture) there are
Factors of production that are:

Accepted Answer

A) less productive. 
B) outsourced to other nations. 
C) fixed or immobile. 
D) very scarce and therefore have a high supply price. 
A) less productive. 
B) outsourced to other nations. 
C) fixed or immobile. 
D) very scarce and therefore have a high supply price.

Question 4

When there are diminishing returns to labor, the
Production possibility frontier is _______ sloping and
________ to the origin.

Accepted Answer

A) downward; convex 
B) downward; concave 
C) upward; concave 
D) upward; convex 
A) downward; convex 
B) downward; concave 
C) upward; concave 
D) upward; convex

Question 5

The term real wages refers to:

Accepted Answer

A) a worker's hourly wage in dollars. 
B) the purchasing power of a worker's wage. 
C) the productivity of a worker's labor. 
D) the productivity of a worker's capital. 
A) a worker's hourly wage in dollars. 
B) the purchasing power of a worker's wage. 
C) the productivity of a worker's labor. 
D) the productivity of a worker's capital.

Question 6

Suppose that labor is mobile between sectors but that
Capital and land are specific.Then labor will tend to
Benefit from trade when:

Accepted Answer

A) it spends a large amount of its income on the imported good. 
B) it spends a large amount of its income on the exported good. 
C) wages do not change much in percentage terms. 
D) all of these occur. 
A) it spends a large amount of its income on the imported good. 
B) it spends a large amount of its income on the exported good. 
C) wages do not change much in percentage terms. 
D) all of these occur.

Question 7

If trade causes some workers to be laid off, most
Economists conclude:

Accepted Answer

A) that all other workers will be better off because their wages will rise. 
B) that we should not allow imports to take U.S.jobs. 
C) that we should expect wages to fall. 
D) that none of these answers is true. 
A) that all other workers will be better off because their wages will rise. 
B) that we should not allow imports to take U.S.jobs. 
C) that we should expect wages to fall. 
D) that none of these answers is true.

Question 8

The model used to study the earnings of resources of
Production is called:

Accepted Answer

A) comparative advantage theory. 
B) absolute advantage theory. 
C) specific­factors model. 
D) production possibility frontier. 
A) comparative advantage theory. 
B) absolute advantage theory. 
C) specific­factors model. 
D) production possibility frontier.

Question 9

What resource is specific to the agriculture sector?

Accepted Answer

A) labor 
B) land 
C) capital 
D) entrepreneurs 
A) labor 
B) land 
C) capital 
D) entrepreneurs

Question 10

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
After trade occurs, the return on capital will
____________ the price of the manufactured good.

Accepted Answer

A) increase faster than 
B) increase slower than 
C) increase at the same rate as 
D) decrease faster than 
A) increase faster than 
B) increase slower than 
C) increase at the same rate as 
D) decrease faster than

Question 11

Suppose that wages in the agricultural and
Manufacturing sectors are $10 and $20 per hour,
Respectively, and that the prices of both the agricultural
And manufactured good are both $50 per unit.What is
The marginal productivity of labor in the manufacturing
Sector?

Accepted Answer

A) $1,000 
B) 0.4 units per hour 
C) 2.5 units per hour 
D) $0.40 
A) $1,000 
B) 0.4 units per hour 
C) 2.5 units per hour 
D) $0.40

Question 12

If the relative price of one product rises and labor is
Mobile, then:

Accepted Answer

A) the percentage increase in the equilibrium real wage will be exactly the same as the percentage increase in
The relative price. 
B) the percentage increase in the equilibrium real wage will be lower than the percentage increase in the relative
Price. 
C) the percentage increase in the equilibrium real wage will be higher than the percentage increase in the
Relative price. 
D) the equilibrium real wage will not change. 
A) the percentage increase in the equilibrium real wage will be exactly the same as the percentage increase in
The relative price. 
B) the percentage increase in the equilibrium real wage will be lower than the percentage increase in the relative
Price. 
C) the percentage increase in the equilibrium real wage will be higher than the percentage increase in the
Relative price. 
D) the equilibrium real wage will not change.

Question 13

Which federal government program provides additional
Benefits to workers who are laid off due to import
Competition?

Accepted Answer

A) Trade Unemployment Insurance 
B) Import Unemployment Insurance 
C) Trade Adjustment Assistance 
D) Unemployment Insurance 
A) Trade Unemployment Insurance 
B) Import Unemployment Insurance 
C) Trade Adjustment Assistance 
D) Unemployment Insurance

Question 14

As a nation increases its production of exports, demand
For all factors of production used in those firms:

Accepted Answer

A) will rise. 
B) will fall. 
C) will remain the same. 
D) will decrease but only slightly. 
A) will rise. 
B) will fall. 
C) will remain the same. 
D) will decrease but only slightly.

Question 15

An increase in demand for resources fixed or specific to
An industry will cause their earnings _____ because
Those resources cannot be released from other
Industries.

Accepted Answer

A) to fall 
B) to rise by the same rate as for all resources 
C) to rise disproportionally 
D) to fall disproportionally 
A) to fall 
B) to rise by the same rate as for all resources 
C) to rise disproportionally 
D) to fall disproportionally

Question 16

In the two­sector (manufacturing and agriculture)
Specific­factors model, the slope of the production
Possibilities curve equals:

Accepted Answer

A) the ratio of marginal products of capital in the two sectors. 
B) the ratio of marginal products of labor utilized in the two sectors. 
C) the ratio of outputs produced in the two sectors. 
D) the ratio of land and capital utilized in the two sectors. 
A) the ratio of marginal products of capital in the two sectors. 
B) the ratio of marginal products of labor utilized in the two sectors. 
C) the ratio of outputs produced in the two sectors. 
D) the ratio of land and capital utilized in the two sectors.

Question 17

From 1807 to 1809, a trade embargo imposed by the
United States resulted in:

Accepted Answer

A) a rise in real GDP, as residents turned toward domestic production. 
B) a fall in real GDP of about 5%. 
C) a lower unemployment rate in the United States. 
D) a rise in the U.S.standard of living from lower prices as a result of lowered demand. 
A) a rise in real GDP, as residents turned toward domestic production. 
B) a fall in real GDP of about 5%. 
C) a lower unemployment rate in the United States. 
D) a rise in the U.S.standard of living from lower prices as a result of lowered demand.

Question 18

Trade Adjustment Assistance provides:

Accepted Answer

A) training to those employed in exporting industries. 
B) training to those employed in importing industries. 
C) extra income to those employed in importing industries. 
D) extra income to those formerly employed in importing industries. 
A) training to those employed in exporting industries. 
B) training to those employed in importing industries. 
C) extra income to those employed in importing industries. 
D) extra income to those formerly employed in importing industries.

Question 19

Earlier in our study we learned that when a country is
Opened to free trade:

Accepted Answer

A) relative prices of the traded products do not change. 
B) absolute prices measured in the domestic currency do not change. 
C) the relative price rises in the export sector and falls in the import sector. 
D) the export sector experiences a decline in demand. 
A) relative prices of the traded products do not change. 
B) absolute prices measured in the domestic currency do not change. 
C) the relative price rises in the export sector and falls in the import sector. 
D) the export sector experiences a decline in demand.

Question 20

If the wage rate in the agriculture sector is lower than
The manufacturing sector, then labor will migrate to the
Manufacturing sector.This will cause:

Accepted Answer

A) both wage and marginal product of labor in the manufacturing sector to decrease. 
B) both wage and marginal product of labor in the agriculture sector to decrease. 
C) the nation to import more goods. 
D) There will be no effect on either sector. 
A) both wage and marginal product of labor in the manufacturing sector to decrease. 
B) both wage and marginal product of labor in the agriculture sector to decrease. 
C) the nation to import more goods. 
D) There will be no effect on either sector.

When a nation engages in no trade and produces Everything it consumes, we call it:

The specificfactors model assumes that in each industry (such as manufacturing and agriculture) there are Factors of production that are:

When there are diminishing returns to labor, the Production possibility frontier is _ sloping and __ to the origin.

The term real wages refers to:

Suppose that labor is mobile between sectors but that Capital and land are specific.Then labor will tend to Benefit from trade when:

If trade causes some workers to be laid off, most Economists conclude:

The model used to study the earnings of resources of Production is called:

What resource is specific to the agriculture sector?

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

Suppose that wages in the agricultural and Manufacturing sectors are $10 and $20 per hour, Respectively, and that the prices of both the agricultural And manufactured good are both $50 per unit.What is The marginal productivity of labor in the manufacturing Sector?

If the relative price of one product rises and labor is Mobile, then:

Which federal government program provides additional Benefits to workers who are laid off due to import Competition?

As a nation increases its production of exports, demand For all factors of production used in those firms:

An increase in demand for resources fixed or specific to An industry will cause their earnings _____ because Those resources cannot be released from other Industries.

In the twosector (manufacturing and agriculture) Specificfactors model, the slope of the production Possibilities curve equals:

From 1807 to 1809, a trade embargo imposed by the United States resulted in:

Trade Adjustment Assistance provides:

Earlier in our study we learned that when a country is Opened to free trade:

If the wage rate in the agriculture sector is lower than The manufacturing sector, then labor will migrate to the Manufacturing sector.This will cause:

The Global Economy

Trade and Technology: the Ricardian Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Filters

Exam 3: Gains and Losses From Trade in the Specific-Factors Model

When a nation engages in no trade and produces Everything it consumes, we call it:

The specific­factors model assumes that in each industry (such as manufacturing and agriculture) there are Factors of production that are:

When there are diminishing returns to labor, the Production possibility frontier is _______ sloping and ________ to the origin.

The term real wages refers to:

Suppose that labor is mobile between sectors but that Capital and land are specific.Then labor will tend to Benefit from trade when:

If trade causes some workers to be laid off, most Economists conclude:

The model used to study the earnings of resources of Production is called:

What resource is specific to the agriculture sector?

Suppose that the Home country in the two­sector (manufacturing and agriculture) specific­factors model Has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

Suppose that wages in the agricultural and Manufacturing sectors are $10 and $20 per hour, Respectively, and that the prices of both the agricultural And manufactured good are both $50 per unit.What is The marginal productivity of labor in the manufacturing Sector?

If the relative price of one product rises and labor is Mobile, then:

Which federal government program provides additional Benefits to workers who are laid off due to import Competition?

As a nation increases its production of exports, demand For all factors of production used in those firms:

An increase in demand for resources fixed or specific to An industry will cause their earnings _____ because Those resources cannot be released from other Industries.

In the two­sector (manufacturing and agriculture) Specific­factors model, the slope of the production Possibilities curve equals:

From 1807 to 1809, a trade embargo imposed by the United States resulted in:

Trade Adjustment Assistance provides:

Earlier in our study we learned that when a country is Opened to free trade:

If the wage rate in the agriculture sector is lower than The manufacturing sector, then labor will migrate to the Manufacturing sector.This will cause:

The Global Economy

Trade and Technology: the Ricardian Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Filters

The specificfactors model assumes that in each industry (such as manufacturing and agriculture) there are Factors of production that are:

When there are diminishing returns to labor, the Production possibility frontier is _ sloping and __ to the origin.

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

In the twosector (manufacturing and agriculture) Specificfactors model, the slope of the production Possibilities curve equals: