Question 1

The following is a property of indifference curves:

Accepted Answer

A)  they can intersect. 
B)  they slope downward from left to right. 
C)  their slope is always constant. 
D)  they are concave to (they bow out from) the origin. 
E)  None of the above. 
A)  they can intersect. 
B)  they slope downward from left to right. 
C)  their slope is always constant. 
D)  they are concave to (they bow out from) the origin. 
E)  None of the above. B

Question 2

Since 1950, world trade has grown world output.

Accepted Answer

A)  faster than. 
B)  slower than. 
C)  at the same rate as. 
D)  in opposite directions as. 
A)  faster than. 
B)  slower than. 
C)  at the same rate as. 
D)  in opposite directions as. A

Question 3

Most estimates of the total static costs of protectionism find:

Accepted Answer

A)  the losses are less than 5 percent of GDP. 
B)  the losses range from 6 percent to 10 percent of GDP. 
C)  the losses range from 11 percent to 25 percent of GDP. 
D)  the losses range from 26 percent to 50 percent of GDP. 
A)  the losses are less than 5 percent of GDP. 
B)  the losses range from 6 percent to 10 percent of GDP. 
C)  the losses range from 11 percent to 25 percent of GDP. 
D)  the losses range from 26 percent to 50 percent of GDP. A

Question 4

According to empirical studies, the gains from international trade:

Accepted Answer

A)  are equal to more than 10 percent of GDP per year in all countries. 
B)  are not large enough to be of any concern to policy makers interested in increasing human welfare. 
C)  are large only in very small countries, but negative in large countries like the United States. 
D)  are equal to several hundred billion dollars per year throughout the world. 
A)  are equal to more than 10 percent of GDP per year in all countries. 
B)  are not large enough to be of any concern to policy makers interested in increasing human welfare. 
C)  are large only in very small countries, but negative in large countries like the United States. 
D)  are equal to several hundred billion dollars per year throughout the world.

Question 5

The fact that the ratio of the highest level of per capita real output to the lowest level of per capita real output has increased is evidence of:

Accepted Answer

A)  convergence. 
B)  divergence. 
C)  economic growth. 
D)  a lowering of standards of living. 
A)  convergence. 
B)  divergence. 
C)  economic growth. 
D)  a lowering of standards of living.

Question 6

According to Angus Maddison, world economic growth began to occur:

Accepted Answer

A)  with the discovery of agriculture. 
B)  with the invention of democracy. 
C)  the 19th century. 
D)  at the height of the Roman Empire. 
A)  with the discovery of agriculture. 
B)  with the invention of democracy. 
C)  the 19th century. 
D)  at the height of the Roman Empire.

Question 7

Dynamic models:

Accepted Answer

A)  describe how the model's equilibrium changes as the result of a change in one variable. 
B)  are not appropriate for analyzing globalization's effects on economic growth. 
C)  trace the economy's path of adjustment as it moves from one equilibrium to another. 
D)  describe the one-time changes that result from some outside variable's one-time change. 
A)  describe how the model's equilibrium changes as the result of a change in one variable. 
B)  are not appropriate for analyzing globalization's effects on economic growth. 
C)  trace the economy's path of adjustment as it moves from one equilibrium to another. 
D)  describe the one-time changes that result from some outside variable's one-time change.

Question 8

Producer surplus is:

Accepted Answer

A)  the area between the supply curve and the market price. 
B)  the difference between total revenue and total variable costs. 
C)  the net welfare gain to producers from being able to produce and sell their product. 
D)  All of the above. 
E)  None of the above. 
A)  the area between the supply curve and the market price. 
B)  the difference between total revenue and total variable costs. 
C)  the net welfare gain to producers from being able to produce and sell their product. 
D)  All of the above. 
E)  None of the above.

Question 9

The small country general equilibrium (PPF/indifference curve) model of international trade brought out a number of important points, among which is/are:

Accepted Answer

A)  Whenever the relative prices of goods are the same, countries can enhance national welfare by engaging in exchange, but they cannot gain from specialization. 
B)  Producers will specialize and produce more of the goods that, compared to world prices, were relatively expensive at home and fewer of the goods that were relatively cheap. 
C)  A country exports goods that are relatively cheap at home, compared to overseas prices, and imports goods that are relatively expensive at home. 
D)  All of the above. 
E)  None of the above. 
A)  Whenever the relative prices of goods are the same, countries can enhance national welfare by engaging in exchange, but they cannot gain from specialization. 
B)  Producers will specialize and produce more of the goods that, compared to world prices, were relatively expensive at home and fewer of the goods that were relatively cheap. 
C)  A country exports goods that are relatively cheap at home, compared to overseas prices, and imports goods that are relatively expensive at home. 
D)  All of the above. 
E)  None of the above.

Question 10

The small country general equilibrium (PPF/indifference curve model) of international trade brought out a number of important points, among which is/are:

Accepted Answer

A)  After international trade is carried out to its fullest potential, domestic prices will become lower than international prices. 
B)  The gains from exchange are the result of domestic consumers substituting relatively cheaper foreign products for more expensive domestic products. 
C)  The shift from self-sufficiency to free trade decreases the economy's real output but it lowers the prices of everything so that it seems as though real income increases. 
D)  All of the above. 
E)  None of the above. 
A)  After international trade is carried out to its fullest potential, domestic prices will become lower than international prices. 
B)  The gains from exchange are the result of domestic consumers substituting relatively cheaper foreign products for more expensive domestic products. 
C)  The shift from self-sufficiency to free trade decreases the economy's real output but it lowers the prices of everything so that it seems as though real income increases. 
D)  All of the above. 
E)  None of the above.

Question 11

The Rule of 72 says that:

Accepted Answer

A)  a quantity that grows at 1% will double in size in about 72 years. 
B)  a quantity that grows at 7.2% will double in about 10 years. 
C)  a quantity that grows at 1% will double in about 7.2 years. 
D)  none of the above. 
A)  a quantity that grows at 1% will double in size in about 72 years. 
B)  a quantity that grows at 7.2% will double in about 10 years. 
C)  a quantity that grows at 1% will double in about 7.2 years. 
D)  none of the above.

Question 12

According to the static Heckscher-Ohlin model of trade, when countries trade, they are able to reach points outside their production possibilities frontier (PPF) because of:

Accepted Answer

A)  economies of scale. 
B)  foreign exploitation. 
C)  specialization and exchange. 
D)  technological progress. 
A)  economies of scale. 
B)  foreign exploitation. 
C)  specialization and exchange. 
D)  technological progress.

Question 13

Suppose that the market for soccer balls looks as in the figure below. Consumer surplus is equal to:

Accepted Answer

A)  $150. 
B)  $600. 
C)  $900. 
D)  $750. 
E)  None of the above. 
A)  $150. 
B)  $600. 
C)  $900. 
D)  $750. 
E)  None of the above.

Question 14

According to the two-country general equilibrium (PPF/indifference curves) model, a country's comparative advantage depends on:

Accepted Answer

A)  each country's opportunity costs of production. 
B)  each country's consumer tastes. 
C)  each country's resource endowment. 
D)  All of the above. 
E)  None of the above. 
A)  each country's opportunity costs of production. 
B)  each country's consumer tastes. 
C)  each country's resource endowment. 
D)  All of the above. 
E)  None of the above.

Question 15

Surveys generally show that:

Accepted Answer

A)  Americans strongly support free trade policies. 
B)  nearly all Americans believe that international trade is good for their welfare. 
C)  about half of the American public agrees that free trade agreements are good for the economy. 
D)  economists are evenly divided on whether international trade is beneficial for human welfare. 
A)  Americans strongly support free trade policies. 
B)  nearly all Americans believe that international trade is good for their welfare. 
C)  about half of the American public agrees that free trade agreements are good for the economy. 
D)  economists are evenly divided on whether international trade is beneficial for human welfare.

Question 16

If an economy insists on remaining completely self-sufficient and isolated from the rest of the world and it is already producing as efficiently as possible, it can raise the welfare of its citizens only by

Accepted Answer

A)  specializing according to its comparative advantage. 
B)  increasing the amount of productive resources, perhaps by investing and increasing its capital stock. 
C)  improving its level of technology so that it can convert the same amount of inputs into a greater amount of output. 
D)  All of the above. 
E)  b and c above. 
A)  specializing according to its comparative advantage. 
B)  increasing the amount of productive resources, perhaps by investing and increasing its capital stock. 
C)  improving its level of technology so that it can convert the same amount of inputs into a greater amount of output. 
D)  All of the above. 
E)  b and c above.

Question 17

The Rule of 72 says that:

Accepted Answer

A)  a quantity that grows at 1% will double in size in about 72 years. 
B)  a quantity that grows at 7.2% will double in about ten years. 
C)  a quantity that grows at at 10% will double in about 7.2 years. 
D)  all of the above. 
E)  none of the above. 
A)  a quantity that grows at 1% will double in size in about 72 years. 
B)  a quantity that grows at 7.2% will double in about ten years. 
C)  a quantity that grows at at 10% will double in about 7.2 years. 
D)  all of the above. 
E)  none of the above.

Question 18

According to the two-country general-equilibrium model, international trade is a:

Accepted Answer

A)  positive-sum game in which both players win. 
B)  zero-sum game in which one side wins and the other loses. 
C)  negative-sum game in which both sides end up worse off than if they had not played. 
D)  indeterminate game, in which there are sometimes winners and sometimes there are losers. 
A)  positive-sum game in which both players win. 
B)  zero-sum game in which one side wins and the other loses. 
C)  negative-sum game in which both sides end up worse off than if they had not played. 
D)  indeterminate game, in which there are sometimes winners and sometimes there are losers.

Question 19

The production possibilities frontier is typically drawn so that it has a bowed-out shape, or concave to the origin. This shape implies that:

Accepted Answer

A)  it becomes increasingly costly to expand production of one good the more of society's resources are taken from other sectors of the economy. 
B)  the more of a product is produced, the less costly it becomes. 
C)  production is characterized by decreasing costs. 
D)  Both b and c above. 
E)  None of the above. 
A)  it becomes increasingly costly to expand production of one good the more of society's resources are taken from other sectors of the economy. 
B)  the more of a product is produced, the less costly it becomes. 
C)  production is characterized by decreasing costs. 
D)  Both b and c above. 
E)  None of the above.

Question 20

Suppose that the market for running shoes looks as in the figure below. Producer surplus is equal to:

Accepted Answer

A)  $15,000. 
B)  $90. 
C)  $7,500. 
D)  $18,000. 
E)  None of the above. 
A)  $15,000. 
B)  $90. 
C)  $7,500. 
D)  $18,000. 
E)  None of the above.

The following is a property of indifference curves:

Since 1950, world trade has grown world output.

Most estimates of the total static costs of protectionism find:

According to empirical studies, the gains from international trade:

The fact that the ratio of the highest level of per capita real output to the lowest level of per capita real output has increased is evidence of:

According to Angus Maddison, world economic growth began to occur:

Dynamic models:

Producer surplus is:

The small country general equilibrium (PPF/indifference curve) model of international trade brought out a number of important points, among which is/are:

The small country general equilibrium (PPF/indifference curve model) of international trade brought out a number of important points, among which is/are:

The Rule of 72 says that:

According to the static Heckscher-Ohlin model of trade, when countries trade, they are able to reach points outside their production possibilities frontier (PPF) because of:

Suppose that the market for soccer balls looks as in the figure below. Consumer surplus is equal to:

According to the two-country general equilibrium (PPF/indifference curves) model, a country's comparative advantage depends on:

Surveys generally show that:

If an economy insists on remaining completely self-sufficient and isolated from the rest of the world and it is already producing as efficiently as possible, it can raise the welfare of its citizens only by

The Rule of 72 says that:

According to the two-country general-equilibrium model, international trade is a:

The production possibilities frontier is typically drawn so that it has a bowed-out shape, or concave to the origin. This shape implies that:

Suppose that the market for running shoes looks as in the figure below. Producer surplus is equal to:

Trade and Growth: the Empirical Evidence

International Trade and Factor Accumulation

Overcoming Diminishing Returns: Technology As an Externality

Technological Progress As Creative Destruction

International Trade and Technological Progress

Multi-Sector Models and International Trade

International Trade and Technology Transfers

Restating the Case for Free Trade

Filters

Exam 1: The Welfare Gains From Trade

The following is a property of indifference curves:

Since 1950, world trade has grown world output.

Most estimates of the total static costs of protectionism find:

According to empirical studies, the gains from international trade:

The fact that the ratio of the highest level of per capita real output to the lowest level of per capita real output has increased is evidence of:

According to Angus Maddison, world economic growth began to occur:

Dynamic models:

Producer surplus is:

The small country general equilibrium (PPF/indifference curve) model of international trade brought out a number of important points, among which is/are:

The small country general equilibrium (PPF/indifference curve model) of international trade brought out a number of important points, among which is/are:

The Rule of 72 says that:

According to the static Heckscher-Ohlin model of trade, when countries trade, they are able to reach points outside their production possibilities frontier (PPF) because of:

Suppose that the market for soccer balls looks as in the figure below. Consumer surplus is equal to:

According to the two-country general equilibrium (PPF/indifference curves) model, a country's comparative advantage depends on:

Surveys generally show that:

If an economy insists on remaining completely self-sufficient and isolated from the rest of the world and it is already producing as efficiently as possible, it can raise the welfare of its citizens only by

The Rule of 72 says that:

According to the two-country general-equilibrium model, international trade is a:

The production possibilities frontier is typically drawn so that it has a bowed-out shape, or concave to the origin. This shape implies that:

Suppose that the market for running shoes looks as in the figure below. Producer surplus is equal to:

Trade and Growth: the Empirical Evidence

International Trade and Factor Accumulation

Overcoming Diminishing Returns: Technology As an Externality

Technological Progress As Creative Destruction

International Trade and Technological Progress

Multi-Sector Models and International Trade

International Trade and Technology Transfers

Restating the Case for Free Trade

Filters