Question 1

The basic theory of comparative advantage can explain all types of international trade.

Accepted Answer

A) True 
 B)False

Question 2

The effect of international trade on the prices paid to the factors of production:

Accepted Answer

A)  are long-run changes. 
B)  are short-run changes. 
C)  are non-existent and should not be considered. 
D)  are secondary effects and only partially beneficial to both countries. 
E)  None of the above 
A)  are long-run changes. 
B)  are short-run changes. 
C)  are non-existent and should not be considered. 
D)  are secondary effects and only partially beneficial to both countries. 
E)  None of the above

Question 3

After trade opens, the short-run impact on the income of the specific factor used to produce exports will be:

Accepted Answer

A)  a decrease. 
B)  an increase. 
C)  indeterminate, income effects are not known. 
D)  zero. 
E)  only relevant to labor. 
A)  a decrease. 
B)  an increase. 
C)  indeterminate, income effects are not known. 
D)  zero. 
E)  only relevant to labor.

Question 4

In the factor-proportions theory, both countries start with the same factor endowments.

Accepted Answer

A) True 
 B)False

Question 5

If the U.K. is labor abundant (capital scarce) and Nigeria is capital abundant (labor scarce), which of the following statements is true?

Accepted Answer

A)  The U.K. would tend to have a comparative advantage in capital-intensive products. 
B)  Nigeria would tend to have a comparative advantage in labor-intensive products. 
C)  The U.K. would tend to import capital-intensive products. 
D)  Nigeria would tend to import capital-intensive products. 
E)  All of the above 
A)  The U.K. would tend to have a comparative advantage in capital-intensive products. 
B)  Nigeria would tend to have a comparative advantage in labor-intensive products. 
C)  The U.K. would tend to import capital-intensive products. 
D)  Nigeria would tend to import capital-intensive products. 
E)  All of the above

Question 6

How could international trade improve the standard of living in developing countries that are relatively labor abundant?

Accepted Answer

International trade can improve the stan

Question 7

A country will have a comparative disadvantage in goods whose production:

Accepted Answer

A)  uses its relatively abundant resource. 
B)  has a higher wage rate than the other country. 
C)  is not in high demand relative to other countries products. 
D)  intensively uses its relatively scarce factor of production. 
E)  is in low demand in the global market. 
A)  uses its relatively abundant resource. 
B)  has a higher wage rate than the other country. 
C)  is not in high demand relative to other countries products. 
D)  intensively uses its relatively scarce factor of production. 
E)  is in low demand in the global market.

Question 8

The U.S. government program designed to assist workers who have lost their jobs due to competition from imports is known as:

Accepted Answer

A)  the Stopler-Samuelson Act. 
B)  the Factor-Price Relief Act. 
C)  Trade Adjustment Assistance. 
D)  the Extended Unemployment Compensation and Education Act. 
E)  the Davis-Bacon Act. 
A)  the Stopler-Samuelson Act. 
B)  the Factor-Price Relief Act. 
C)  Trade Adjustment Assistance. 
D)  the Extended Unemployment Compensation and Education Act. 
E)  the Davis-Bacon Act.

Question 9

The Stopler-Samuelson theorem gives us an explanation for why certain groups in a society are opposed to free trade.

Accepted Answer

A) True 
 B)False

Question 10

The factor-proportions theory states that a country will have a comparative advantage in and produce the product whose production is relatively intensive in the:

Accepted Answer

A)  tastes and preferences in which the country is relatively abundant. 
B)  technology in which the country is relatively abundant. 
C)  factor of production in which the country is relatively abundant. 
D)  advertising in which the country is relatively abundant. 
E)  All of the above 
A)  tastes and preferences in which the country is relatively abundant. 
B)  technology in which the country is relatively abundant. 
C)  factor of production in which the country is relatively abundant. 
D)  advertising in which the country is relatively abundant. 
E)  All of the above

Question 11

Factor-price equalization means that:

Accepted Answer

A)  trade will have a tendency to equalize the prices of factors of production among countries that trade. 
B)  international trade theory has nothing to do with reality. 
C)  international trade will tend to only equalize the price of labor among countries. 
D)  international trade has no influence on the prices of factors of production in countries that trade. 
E)  trade does not influence factor prices. 
A)  trade will have a tendency to equalize the prices of factors of production among countries that trade. 
B)  international trade theory has nothing to do with reality. 
C)  international trade will tend to only equalize the price of labor among countries. 
D)  international trade has no influence on the prices of factors of production in countries that trade. 
E)  trade does not influence factor prices.

Question 12

Trade lowers prices which tends to increase the welfare of the poor more than the rich.

Accepted Answer

A) True 
 B)False

Question 13

Explain how human capital helps to resolve the Leontief paradox.

Accepted Answer

Human capital refers to the knowledge, s

Question 14

Income inequality:

Accepted Answer

A)  has been rising for decades. 
B)  has fallen since 2000. 
C)  was only a problem in the 1980s. 
D)  is totally caused by changes in trade flows. 
E)  none of the above 
A)  has been rising for decades. 
B)  has fallen since 2000. 
C)  was only a problem in the 1980s. 
D)  is totally caused by changes in trade flows. 
E)  none of the above

Question 15

If a country is labor abundant, it will tend to import products with a high K/L ratio.

Accepted Answer

A) True 
 B)False

Question 16

Labor-abundant countries tend to export labor-intensive goods.

Accepted Answer

A) True 
 B)False

Question 17

A country that is capital abundant relative to another country will have which one of the following advantages?

Accepted Answer

A)  a larger capital stock 
B)  absolutely cheaper capital 
C)  relatively cheaper capital 
D)  faster access to capital 
E)  cheap labor 
A)  a larger capital stock 
B)  absolutely cheaper capital 
C)  relatively cheaper capital 
D)  faster access to capital 
E)  cheap labor

Question 18

If a factor of production cannot easily move from one sector of the economy to another then it is referred to as:

Accepted Answer

A)  a capital-intensive factor. 
B)  a labor-intensive factor. 
C)  a stuck factor. 
D)  a specific factor. 
E)  an unknown factor. 
A)  a capital-intensive factor. 
B)  a labor-intensive factor. 
C)  a stuck factor. 
D)  a specific factor. 
E)  an unknown factor.

Question 19

Which factor stands to gain most from free trade?

Accepted Answer

A)  the factor that is used intensively to produce an import competing good 
B)  the factor that is used intensively to produce a non-traded good 
C)  the factor that is used intensively to produce an exported good 
D)  the relatively scarce factor 
E)  All of the above 
A)  the factor that is used intensively to produce an import competing good 
B)  the factor that is used intensively to produce a non-traded good 
C)  the factor that is used intensively to produce an exported good 
D)  the relatively scarce factor 
E)  All of the above

Question 20

If country A is labor abundant relative to another country, then country A must have a larger labor force than the other country.

Accepted Answer

A) True 
 B)False

The basic theory of comparative advantage can explain all types of international trade.

The effect of international trade on the prices paid to the factors of production:

After trade opens, the short-run impact on the income of the specific factor used to produce exports will be:

In the factor-proportions theory, both countries start with the same factor endowments.

If the U.K. is labor abundant (capital scarce) and Nigeria is capital abundant (labor scarce), which of the following statements is true?

How could international trade improve the standard of living in developing countries that are relatively labor abundant?

A country will have a comparative disadvantage in goods whose production:

The U.S. government program designed to assist workers who have lost their jobs due to competition from imports is known as:

The Stopler-Samuelson theorem gives us an explanation for why certain groups in a society are opposed to free trade.

The factor-proportions theory states that a country will have a comparative advantage in and produce the product whose production is relatively intensive in the:

Factor-price equalization means that:

Trade lowers prices which tends to increase the welfare of the poor more than the rich.

Explain how human capital helps to resolve the Leontief paradox.

Income inequality:

If a country is labor abundant, it will tend to import products with a high K/L ratio.

Labor-abundant countries tend to export labor-intensive goods.

A country that is capital abundant relative to another country will have which one of the following advantages?

If a factor of production cannot easily move from one sector of the economy to another then it is referred to as:

Which factor stands to gain most from free trade?

If country A is labor abundant relative to another country, then country A must have a larger labor force than the other country.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters

Exam 4: Factor Endowments and the Commodity Composition of Trade

The basic theory of comparative advantage can explain all types of international trade.

The effect of international trade on the prices paid to the factors of production:

After trade opens, the short-run impact on the income of the specific factor used to produce exports will be:

In the factor-proportions theory, both countries start with the same factor endowments.

If the U.K. is labor abundant (capital scarce) and Nigeria is capital abundant (labor scarce), which of the following statements is true?

How could international trade improve the standard of living in developing countries that are relatively labor abundant?

A country will have a comparative disadvantage in goods whose production:

The U.S. government program designed to assist workers who have lost their jobs due to competition from imports is known as:

The Stopler-Samuelson theorem gives us an explanation for why certain groups in a society are opposed to free trade.

The factor-proportions theory states that a country will have a comparative advantage in and produce the product whose production is relatively intensive in the:

Factor-price equalization means that:

Trade lowers prices which tends to increase the welfare of the poor more than the rich.

Explain how human capital helps to resolve the Leontief paradox.

Income inequality:

If a country is labor abundant, it will tend to import products with a high K/L ratio.

Labor-abundant countries tend to export labor-intensive goods.

A country that is capital abundant relative to another country will have which one of the following advantages?

If a factor of production cannot easily move from one sector of the economy to another then it is referred to as:

Which factor stands to gain most from free trade?

If country A is labor abundant relative to another country, then country A must have a larger labor force than the other country.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters