Question 1

For China, the result of opening its economy was:

Accepted Answer

A) a decline in its wages. 
B) an increase in wages. 
C) a reduction in the amount exported. 
D) a reduction in the amount imported. 
A) a decline in its wages. 
B) an increase in wages. 
C) a reduction in the amount exported. 
D) a reduction in the amount imported.

Question 2

SCENARIO: CHILE AND ARGENTINA
Chile and Argentina each produce jellybeans and peanut butter, using
Labor as their only resource.Each country has 1,000 hours of labor.In
Chile, an hour produces a pound of jellybeans and 2 hours produce a
Pound of peanut butter.In Argentina, an hour produces a pound of
Jellybeans and 3 hours produces a pound of peanut butter.When they do
Not trade with each other, Chile consumes 600 pounds of jellybeans and
200 pounds of peanut butter, and Argentina consumes 400 pounds of
Jellybeans and 200 pounds of peanut butter.
Reference: Ref 2­10
(Scenario: Chile and Argentina) Argentina's gains from trade will be
Largest when the price of jellybeans is:

Accepted Answer

A) 2 pounds of peanut butter per pound of jellybeans. 
B) 3 pounds of peanut butter per pound of jellybeans. 
C) 1/3 pound of peanut butter per pound of jellybeans. 
D) 1/2 pound of peanut butter per pound of jellybeans. 
A) 2 pounds of peanut butter per pound of jellybeans. 
B) 3 pounds of peanut butter per pound of jellybeans. 
C) 1/3 pound of peanut butter per pound of jellybeans. 
D) 1/2 pound of peanut butter per pound of jellybeans.

Question 3

To explain why some nations purchase products from abroad, even when
They have an absolute advantage in production, we have to use the
Theory of:

Accepted Answer

A) absolute advantage. 
B) relative pricing. 
C) comparative advantage. 
D) industrial advantage. 
A) absolute advantage. 
B) relative pricing. 
C) comparative advantage. 
D) industrial advantage.

Question 4

The textbook authors conclude that the Prebisch­Singer hypothesis:

Accepted Answer

A) is not true. 
B) is true. 
C) is valid in some instances but showed no consistent trend and cannot be considered a general rule. 
D) is valid only since 1995, when the World Trade Organization began its operations. 
A) is not true. 
B) is true. 
C) is valid in some instances but showed no consistent trend and cannot be considered a general rule. 
D) is valid only since 1995, when the World Trade Organization began its operations.

Question 5

If a home country is exporting corn and importing bikes and if the
Relative price Pc/Pb is increasing, then:

Accepted Answer

A) the home country will export less corn. 
B) the home country will export more corn. 
C) the home country will import the same number of bikes. 
D) there is no change in the trade pattern for the home country. 
A) the home country will export less corn. 
B) the home country will export more corn. 
C) the home country will import the same number of bikes. 
D) there is no change in the trade pattern for the home country.

Question 6

SCENARIO: United States Versus United Kingdom
In the United States, one worker can produce 10 tons of steel per day or
20 tons of chemicals per day.In the United Kingdom, one worker can
Produce 5 tons of steel per day or 15 tons of chemicals per day.
Reference: Ref 2­11
(Scenario: United States Versus United Kingdom) The United States has
The absolute advantage in the production of:

Accepted Answer

A) steel. 
B) chemicals. 
C) The United States has the absolute advantage in neither steel nor chemicals. 
D) The United States has the absolute advantage in both steel and chemicals. 
A) steel. 
B) chemicals. 
C) The United States has the absolute advantage in neither steel nor chemicals. 
D) The United States has the absolute advantage in both steel and chemicals.

Question 7

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150
Workers in this hypothetical economy; the slope of the PPF for this
Economy is:

Accepted Answer

A) 20/500. 
B) 200/50. 
C) 2/5. 
D) 1/5. 
A) 20/500. 
B) 200/50. 
C) 2/5. 
D) 1/5.

Question 8

In 2000, the U.S.terms of trade was one.In 2009 the U.S.export price
Index was 1.15 and the U.S.import price index was 1.18.Which of the
Following statements is the best interpretation of the change in the U.S.
Terms of trade between 2000 and 2009?

Accepted Answer

A) In 2009, the United States had to export 2% more in order to obtain the same amount of imports as in 2000. 
B) In 2009, the United States could export 2% less to obtain the same of amount of imports as in 2000. 
C) Prices of U.S.exports rose more rapidly than prices of U.S.imports. 
D) The U.S.terms of trade improved between 2000 and 2009. 
A) In 2009, the United States had to export 2% more in order to obtain the same amount of imports as in 2000. 
B) In 2009, the United States could export 2% less to obtain the same of amount of imports as in 2000. 
C) Prices of U.S.exports rose more rapidly than prices of U.S.imports. 
D) The U.S.terms of trade improved between 2000 and 2009.

Question 9

Assume a hypothetical economy where cloth and wheat can be produced.
What is the opportunity cost of producing wheat in this economy?

Accepted Answer

A) the amount of cloth that must be given up to produce one more unit of wheat 
B) the amount of money received by selling wheat 
C) the number of workers it takes to produce all the wheat 
D) More information is needed to answer the question. 
A) the amount of cloth that must be given up to produce one more unit of wheat 
B) the amount of money received by selling wheat 
C) the number of workers it takes to produce all the wheat 
D) More information is needed to answer the question.

Question 10

Suppose that:
• Malaysia requires an hour of labor to produce a pound of rice and 2 hours of labor to
produce a pencil;
• Indonesia requires 2 hours of labor to produce a pound of rice and 3 hours of labor
to produce a pencil;
• each country has 10,000 hours of labor to allocate between the production of rice
and pencils; and
• in autarky, Malaysia consumes 5,000 pounds of rice and 2,500 pencils.
• when trade occurs, the international price of rice becomes 3/5 pencils per pound of
rice.
A) In Malaysia, what are the marginal productivities of labor in rice and pencil
production?
B) In Indonesia, what are the marginal productivities of labor in rice and
pencil production?
C) What are the autarkic prices of rice and pencils in each country?
D) In which product will each specialize?
E) What happens to wages in each country when trade occurs?

Accepted Answer

A) Zimbabwe's terms of trade rose from 1

Question 11

The Ricardian model assumes that the marginal product of labor is:

Accepted Answer

A) increasing. 
B) decreasing. 
C) constant. 
D) zero. 
A) increasing. 
B) decreasing. 
C) constant. 
D) zero.

Question 12

In the Ricardian model, what is expected to happen to real wages in each
country as trade occurs?

Accepted Answer

The answer of In the Ricardian model, what is expected...

Question 13

Figure: Home Equilibrium with No Trade   (Figure: Home Equilibrium with No Trade) Under the condition of no
Trade, which combination gives the nation the MOST utility?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 14

In the Ricardian model, the marginal product of labor:

Accepted Answer

A) first rises, then falls, as more labor is employed to produce a good. 
B) first falls, then rises, as more labor is employed to produce a good. 
C) continuously falls, as more labor is employed to produce a good. 
D) does not change, as more labor is employed to produce a good. 
A) first rises, then falls, as more labor is employed to produce a good. 
B) first falls, then rises, as more labor is employed to produce a good. 
C) continuously falls, as more labor is employed to produce a good. 
D) does not change, as more labor is employed to produce a good.

Question 15

Suppose there are two countries (Home and Foreign) that produce two
Goods.Home's wages are 100% greater than Foreign's wages.Will trade
Be possible between Home and Foreign?

Accepted Answer

A) No, because Foreign's wages are lower than Home's wages. 
B) Yes, Foreign will be able to export both products to Home. 
C) Yes, as long as Home's marginal productivity of labor in one product is at least 100% higher than Foreign's marginal productivity of labor in
The same product. 
D) No, because prices will be the same in each country. 
A) No, because Foreign's wages are lower than Home's wages. 
B) Yes, Foreign will be able to export both products to Home. 
C) Yes, as long as Home's marginal productivity of labor in one product is at least 100% higher than Foreign's marginal productivity of labor in
The same product. 
D) No, because prices will be the same in each country.

Question 16

In trade, if-due to technology-a nation can produce a good (such as
Germany's production of snowboards) with fewest resources, it is known
As a(n):

Accepted Answer

A) absolute advantage. 
B) technology advantage. 
C) comparative advantage. 
D) resource advantage. 
A) absolute advantage. 
B) technology advantage. 
C) comparative advantage. 
D) resource advantage.

Question 17

Moving to a lower indifference curve means that a country is:

Accepted Answer

A) better off. 
B) worse off. 
C) indifferent. 
D) lowering production. 
A) better off. 
B) worse off. 
C) indifferent. 
D) lowering production.

Question 18

Why does the United States import textiles from Asian nations when it
has an absolute advantage in textile production?

Accepted Answer

The United States has a comparative disa

Question 19

The Prebisch­Singer hypothesis concludes that:

Accepted Answer

A) due to unfair trading practices, labor in developing countries is exploited. 
B) developing countries experience a long­run decline in their terms of trade, as the demand for primary products in higher­income countries
Declines relative to their demand for manufactured goods. 
C) OPEC has been responsible for a slowdown in the world's standard of living. 
D) technology lowers the cost of manufactured products, so developing countries should see an increase in their terms of trade. 
A) due to unfair trading practices, labor in developing countries is exploited. 
B) developing countries experience a long­run decline in their terms of trade, as the demand for primary products in higher­income countries
Declines relative to their demand for manufactured goods. 
C) OPEC has been responsible for a slowdown in the world's standard of living. 
D) technology lowers the cost of manufactured products, so developing countries should see an increase in their terms of trade.

Question 20

Several economists have hypothesized that the terms of trade for
Developing countries will decline over time.Which of the following might
Be a cause of this decline?

Accepted Answer

A) Technological progress in manufactured goods has caused their prices to fall. 
B) Some developing countries are able to keep the price of their exports high by restricting supplies on the world market. 
C) Increased demand for developing country exports has caused prices of developing country exports to rise. 
D) The demand for primary product exports from developing countries has not risen as fast as the demand for manufactured exports of
Industrialized countries. 
A) Technological progress in manufactured goods has caused their prices to fall. 
B) Some developing countries are able to keep the price of their exports high by restricting supplies on the world market. 
C) Increased demand for developing country exports has caused prices of developing country exports to rise. 
D) The demand for primary product exports from developing countries has not risen as fast as the demand for manufactured exports of
Industrialized countries.

For China, the result of opening its economy was:

To explain why some nations purchase products from abroad, even when They have an absolute advantage in production, we have to use the Theory of:

The textbook authors conclude that the PrebischSinger hypothesis:

If a home country is exporting corn and importing bikes and if the Relative price Pc/Pb is increasing, then:

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150 Workers in this hypothetical economy; the slope of the PPF for this Economy is:

In 2000, the U.S.terms of trade was one.In 2009 the U.S.export price Index was 1.15 and the U.S.import price index was 1.18.Which of the Following statements is the best interpretation of the change in the U.S. Terms of trade between 2000 and 2009?

Assume a hypothetical economy where cloth and wheat can be produced. What is the opportunity cost of producing wheat in this economy?

The Ricardian model assumes that the marginal product of labor is:

In the Ricardian model, what is expected to happen to real wages in each country as trade occurs?

Figure: Home Equilibrium with No Trade (Figure: Home Equilibrium with No Trade) Under the condition of no Trade, which combination gives the nation the MOST utility?

In the Ricardian model, the marginal product of labor:

Suppose there are two countries (Home and Foreign) that produce two Goods.Home's wages are 100% greater than Foreign's wages.Will trade Be possible between Home and Foreign?

In trade, if-due to technology-a nation can produce a good (such as Germany's production of snowboards) with fewest resources, it is known As a(n):

Moving to a lower indifference curve means that a country is:

Why does the United States import textiles from Asian nations when it has an absolute advantage in textile production?

The PrebischSinger hypothesis concludes that:

Several economists have hypothesized that the terms of trade for Developing countries will decline over time.Which of the following might Be a cause of this decline?

The Global Economy

Gains and Losses From Trade in the Specific-Factors 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 2: Trade and Technology: the Ricardian Model

For China, the result of opening its economy was:

To explain why some nations purchase products from abroad, even when They have an absolute advantage in production, we have to use the Theory of:

The textbook authors conclude that the Prebisch­Singer hypothesis:

If a home country is exporting corn and importing bikes and if the Relative price Pc/Pb is increasing, then:

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150 Workers in this hypothetical economy; the slope of the PPF for this Economy is:

In 2000, the U.S.terms of trade was one.In 2009 the U.S.export price Index was 1.15 and the U.S.import price index was 1.18.Which of the Following statements is the best interpretation of the change in the U.S. Terms of trade between 2000 and 2009?

Assume a hypothetical economy where cloth and wheat can be produced. What is the opportunity cost of producing wheat in this economy?

The Ricardian model assumes that the marginal product of labor is:

In the Ricardian model, what is expected to happen to real wages in each country as trade occurs?

Figure: Home Equilibrium with No Trade (Figure: Home Equilibrium with No Trade) Under the condition of no Trade, which combination gives the nation the MOST utility?

In the Ricardian model, the marginal product of labor:

Suppose there are two countries (Home and Foreign) that produce two Goods.Home's wages are 100% greater than Foreign's wages.Will trade Be possible between Home and Foreign?

In trade, if-due to technology-a nation can produce a good (such as Germany's production of snowboards) with fewest resources, it is known As a(n):

Moving to a lower indifference curve means that a country is:

Why does the United States import textiles from Asian nations when it has an absolute advantage in textile production?

The Prebisch­Singer hypothesis concludes that:

Several economists have hypothesized that the terms of trade for Developing countries will decline over time.Which of the following might Be a cause of this decline?

The Global Economy

Gains and Losses From Trade in the Specific-Factors 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 textbook authors conclude that the PrebischSinger hypothesis:

The PrebischSinger hypothesis concludes that: