Question 1

if labor moves from India to the U.S.:

Accepted Answer

A)  labor in India will benefit. 
B)  the owners of capital in India will lose. 
C)  labor in the U.S. will lose. 
D)  all of the above 
E)  none of the above 
A)  labor in India will benefit. 
B)  the owners of capital in India will lose. 
C)  labor in the U.S. will lose. 
D)  all of the above 
E)  none of the above

Question 2

A country will tend to have a comparative advantage in goods that intensively use their scarce factor of production.

Accepted Answer

A) True 
 B)False

Question 3

The capital-to-labor ratio is only important in the context of international trade.

Accepted Answer

A) True 
 B)False

Question 4

A country will have relatively lower costs of production in goods where production calls for smaller quantities of the abundant factor of production and greater quantities of the scarce factor of production.

Accepted Answer

A) True 
 B)False

Question 5

Assume that the U.S. is labor abundant relative to Japan and that Japan is capital abundant relative to the U.S. What does this mean for international trade between the two countries?

Accepted Answer

The assumption that the U.S. is labor ab

Question 6

The factor-proportions theory identifies the source of comparative advantage as:

Accepted Answer

A)  differences in relative factor endowments between countries. 
B)  similarities in tastes. 
C)  identical production methods. 
D)  similar factor endowments. 
E)  differences in tastes. 
A)  differences in relative factor endowments between countries. 
B)  similarities in tastes. 
C)  identical production methods. 
D)  similar factor endowments. 
E)  differences in tastes.

Question 7

International trade causes the price paid to the abundant factor of production to rise and the price paid to the scarce factor of production to fall.

Accepted Answer

A) True 
 B)False

Question 8

International trade tends to lower the amount of national income received by the scarce factor of production.

Accepted Answer

A) True 
 B)False

Question 9

Leontief's factor-proportions study found that U.S.:

Accepted Answer

A)  imports were more labor intensive than exports. 
B)  imports were more capital intensive than exports. 
C)  imports were primarily agricultural products. 
D)  exports were not internationally competitive. 
E)  was not a competitive nation. 
A)  imports were more labor intensive than exports. 
B)  imports were more capital intensive than exports. 
C)  imports were primarily agricultural products. 
D)  exports were not internationally competitive. 
E)  was not a competitive nation.

Question 10

Which theory explains how international trade affects factor prices?

Accepted Answer

A)  the Leontief paradox 
B)  the factor-proportions theory 
C)  the Stopler-Samuelson theory 
D)  the factor-price equalization theory 
E)  the trade normalization theory. 
A)  the Leontief paradox 
B)  the factor-proportions theory 
C)  the Stopler-Samuelson theory 
D)  the factor-price equalization theory 
E)  the trade normalization theory.

Question 11

There is no tendency for international trade to change the distribution of income in a country.

Accepted Answer

A) True 
 B)False

Question 12

Assume that there are two factors, capital and land, and that the U.S. is relatively capital abundant while Chile is relatively land abundant. According to the factor-proportions model:

Accepted Answer

A)  Chilean landowners should support U.S.-Chile free trade. 
B)  Chilean capitalists should support U.S.-Chile free trade. 
C)  U.S. capitalists should oppose U.S.-Chile free trade. 
D)  U.S. capitalists and Chilean capitalists both oppose free trade. 
E)  There is no support for free trade in either country. 
A)  Chilean landowners should support U.S.-Chile free trade. 
B)  Chilean capitalists should support U.S.-Chile free trade. 
C)  U.S. capitalists should oppose U.S.-Chile free trade. 
D)  U.S. capitalists and Chilean capitalists both oppose free trade. 
E)  There is no support for free trade in either country.

Question 13

According to the Stopler-Samuelson theorem, the abundant factor of production in a country should oppose international trade

Accepted Answer

A) True 
 B)False

Question 14

In general, owners of the abundant factor of production in a country would be opposed to free international trade.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the role of international trade in the economic development of India and South Korea.

Accepted Answer

International trade has played a signifi

Question 16

T. According to the Leontief paradox, U.S. industries with trade surpluses were more labor intensive than industries with a trade deficit.

Accepted Answer

A) True 
 B)False

Question 17

Empirical testing does not apply to economics as all economic theories are derived from real life experiences, and therefore there is no need to test them.

Accepted Answer

A) True 
 B)False

Question 18

The empirical tendency for U.S. exports to appear to be labor intensive is known as the Leontief Paradox.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false?

Accepted Answer

A)  Poor countries tend to have a low K/L ratio. 
B)  Rich countries tend to have a high K/L ratio. 
C)  The K/L ratio is important in determining the productivity of labor. 
D)  The productivity of labor rises as the K/L falls. 
E)  The capital-to-labor ratio affects the composition of trade. 
A)  Poor countries tend to have a low K/L ratio. 
B)  Rich countries tend to have a high K/L ratio. 
C)  The K/L ratio is important in determining the productivity of labor. 
D)  The productivity of labor rises as the K/L falls. 
E)  The capital-to-labor ratio affects the composition of trade.

Question 20

Which of the following industries would be an example of comparative advantage based primarily on R&D?

Accepted Answer

A)  bourbon 
B)  leather footwear 
C)  apparel 
D)  pharmaceuticals 
E)  cloth 
A)  bourbon 
B)  leather footwear 
C)  apparel 
D)  pharmaceuticals 
E)  cloth

if labor moves from India to the U.S.:

A country will tend to have a comparative advantage in goods that intensively use their scarce factor of production.

The capital-to-labor ratio is only important in the context of international trade.

A country will have relatively lower costs of production in goods where production calls for smaller quantities of the abundant factor of production and greater quantities of the scarce factor of production.

Assume that the U.S. is labor abundant relative to Japan and that Japan is capital abundant relative to the U.S. What does this mean for international trade between the two countries?

The factor-proportions theory identifies the source of comparative advantage as:

International trade causes the price paid to the abundant factor of production to rise and the price paid to the scarce factor of production to fall.

International trade tends to lower the amount of national income received by the scarce factor of production.

Leontief's factor-proportions study found that U.S.:

Which theory explains how international trade affects factor prices?

There is no tendency for international trade to change the distribution of income in a country.

Assume that there are two factors, capital and land, and that the U.S. is relatively capital abundant while Chile is relatively land abundant. According to the factor-proportions model:

According to the Stopler-Samuelson theorem, the abundant factor of production in a country should oppose international trade

In general, owners of the abundant factor of production in a country would be opposed to free international trade.

Discuss the role of international trade in the economic development of India and South Korea.

T. According to the Leontief paradox, U.S. industries with trade surpluses were more labor intensive than industries with a trade deficit.

Empirical testing does not apply to economics as all economic theories are derived from real life experiences, and therefore there is no need to test them.

The empirical tendency for U.S. exports to appear to be labor intensive is known as the Leontief Paradox.

Which of the following statements is false?

Which of the following industries would be an example of comparative advantage based primarily on R&D?

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

if labor moves from India to the U.S.:

A country will tend to have a comparative advantage in goods that intensively use their scarce factor of production.

The capital-to-labor ratio is only important in the context of international trade.

A country will have relatively lower costs of production in goods where production calls for smaller quantities of the abundant factor of production and greater quantities of the scarce factor of production.

Assume that the U.S. is labor abundant relative to Japan and that Japan is capital abundant relative to the U.S. What does this mean for international trade between the two countries?

The factor-proportions theory identifies the source of comparative advantage as:

International trade causes the price paid to the abundant factor of production to rise and the price paid to the scarce factor of production to fall.

International trade tends to lower the amount of national income received by the scarce factor of production.

Leontief's factor-proportions study found that U.S.:

Which theory explains how international trade affects factor prices?

There is no tendency for international trade to change the distribution of income in a country.

Assume that there are two factors, capital and land, and that the U.S. is relatively capital abundant while Chile is relatively land abundant. According to the factor-proportions model:

According to the Stopler-Samuelson theorem, the abundant factor of production in a country should oppose international trade

In general, owners of the abundant factor of production in a country would be opposed to free international trade.

Discuss the role of international trade in the economic development of India and South Korea.

T. According to the Leontief paradox, U.S. industries with trade surpluses were more labor intensive than industries with a trade deficit.

Empirical testing does not apply to economics as all economic theories are derived from real life experiences, and therefore there is no need to test them.

The empirical tendency for U.S. exports to appear to be labor intensive is known as the Leontief Paradox.

Which of the following statements is false?

Which of the following industries would be an example of comparative advantage based primarily on R&D?

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