Question 1

International trade patterns may be influenced by a country's endowment of relatively skilled workers.

Accepted Answer

A) True 
 B)False

Question 2

The empirical study by Leontief provided support for the factor-proportions theory.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not an assumption of the factor-proportions theory?

Accepted Answer

A)  perfect competition in the product and factor markets 
B)  homogeneous labor and capital in both countries 
C)  different tastes and preferences between countries 
D)  constant returns to scale 
E)  constant returns to scale. 
A)  perfect competition in the product and factor markets 
B)  homogeneous labor and capital in both countries 
C)  different tastes and preferences between countries 
D)  constant returns to scale 
E)  constant returns to scale.

Question 4

Describe the effects that international trade has on the distribution of income.

Accepted Answer

International trade can have both positi

Question 5

The factor-proportions theory predicts that the pattern of trade is determined mostly by country differences in factor endowments.

Accepted Answer

A) True 
 B)False

Question 6

Assume that Mexico is a labor-abundant country and capital is scarce. The result of international trade would be that:

Accepted Answer

A)  both labor and capital would get more expensive. 
B)  labor would get more expensive. 
C)  capital would get more expensive. 
D)  both labor and capital would get cheaper. 
E)  factor prices would only change outside Mexico. 
A)  both labor and capital would get more expensive. 
B)  labor would get more expensive. 
C)  capital would get more expensive. 
D)  both labor and capital would get cheaper. 
E)  factor prices would only change outside Mexico.

Question 7

Investment in the labor force that increases the productivity of labor is known as:

Accepted Answer

A)  physical capital. 
B)  the Leontief Paradox. 
C)  human capital. 
D)  K/L capital. 
E)  R&D. 
A)  physical capital. 
B)  the Leontief Paradox. 
C)  human capital. 
D)  K/L capital. 
E)  R&D.

Question 8

Which of the following is true?

Accepted Answer

A)  Trade harms the poor more than the rich. 
B)  Trade harms the rich more than the poor. 
C)  Trade causes lower prices which tends to help the poor more than the rich. 
D)  Trade causes higher prices which tends to help the rich more than the poor. 
E)  none of the above 
A)  Trade harms the poor more than the rich. 
B)  Trade harms the rich more than the poor. 
C)  Trade causes lower prices which tends to help the poor more than the rich. 
D)  Trade causes higher prices which tends to help the rich more than the poor. 
E)  none of the above

Question 9

If comparative advantage in an industry is based mostly on the amount of education and training embodied in the work force, then we would say that the industry is:

Accepted Answer

A)  unskilled-labor intensive. 
B)  physical-capital intensive. 
C)  human-capital intensive. 
D)  None of the above 
E)  all of the above 
A)  unskilled-labor intensive. 
B)  physical-capital intensive. 
C)  human-capital intensive. 
D)  None of the above 
E)  all of the above

Question 10

Why are factor prices so similar in the U.S. and Canada?

Accepted Answer

Factor prices, which include the costs o

Question 11

A country is said to be relatively abundant in capital if it has:

Accepted Answer

A)  a greater absolute amount of capital. 
B)  a smaller absolute amount of labor. 
C)  a higher capital-to-labor ratio. 
D)  a lower capital-to-labor ratio. 
E)  a zero capital-to-labor ratio. 
A)  a greater absolute amount of capital. 
B)  a smaller absolute amount of labor. 
C)  a higher capital-to-labor ratio. 
D)  a lower capital-to-labor ratio. 
E)  a zero capital-to-labor ratio.

Question 12

The Stopler-Samuelson theorem states that with international trade the:

Accepted Answer

A)  scarce factor receives a larger piece of the economic pie and the abundant factor tends to receive a smaller piece. 
B)  larger factor receives a larger piece of the economic pie and the smaller factor tends to receive a smaller piece. 
C)  smaller factor receives a larger piece of the economic pie and the larger factor tends to receive a smaller piece. 
D)  abundant factor receives a larger piece of the economic pie and the scarce factor tends to receive a smaller piece. 
E)  factor prices do not change. 
A)  scarce factor receives a larger piece of the economic pie and the abundant factor tends to receive a smaller piece. 
B)  larger factor receives a larger piece of the economic pie and the smaller factor tends to receive a smaller piece. 
C)  smaller factor receives a larger piece of the economic pie and the larger factor tends to receive a smaller piece. 
D)  abundant factor receives a larger piece of the economic pie and the scarce factor tends to receive a smaller piece. 
E)  factor prices do not change.

Question 13

Suppose that capital in a comparative disadvantage industry cannot move out of that industry in the short run. Describe what happens to the return to capital in the comparative disadvantage and comparative advantage industries.

Accepted Answer

In the short run, if capital in a compar

Question 14

Explain how trade would tend to equalize differences in the prices of factors of production between countries that trade. How would this influence the distribution of income?

Accepted Answer

Trade tends to equalize differences in t

Question 15

International trade impacts the economy by changing its industrial structure.

Accepted Answer

A) True 
 B)False

Question 16

The factor-proportions theory of international trade predicts:

Accepted Answer

A)  who benefits and who loses from trade. 
B)  which factors are abundant. 
C)  the income distribution effects of trade. 
D)  which goods will be exported. 
E)  the size of transportation costs. 
A)  who benefits and who loses from trade. 
B)  which factors are abundant. 
C)  the income distribution effects of trade. 
D)  which goods will be exported. 
E)  the size of transportation costs.

Question 17

Which of the following is not a potential explanation for the Leontief paradox?

Accepted Answer

A)  The U.S. imposed high tariffs on labor-intensive products. 
B)  U.S. exports are intensive in the use of skilled labor. 
C)  The U.S. exports products that intensively use high technology. 
D)  The U.S. is a relatively labor-abundant country. 
E)  U.S. tariffs are too low. 
A)  The U.S. imposed high tariffs on labor-intensive products. 
B)  U.S. exports are intensive in the use of skilled labor. 
C)  The U.S. exports products that intensively use high technology. 
D)  The U.S. is a relatively labor-abundant country. 
E)  U.S. tariffs are too low.

Question 18

The factor-proportions theory is built around differences in factor endowments and different input requirements for each good.

Accepted Answer

A) True 
 B)False

Question 19

In the factor-proportions theory, international trade is caused by country differences in:

Accepted Answer

A)  technology. 
B)  tastes and preferences. 
C)  factor endowments. 
D)  the degree of competition. 
E)  transportation costs. 
A)  technology. 
B)  tastes and preferences. 
C)  factor endowments. 
D)  the degree of competition. 
E)  transportation costs.

Question 20

Countries tend to have a comparative advantage in and export goods:

Accepted Answer

A)  that employ the country's scarce resource. 
B)  that employ the country's relatively abundant resource. 
C)  that the other country has in abundance. 
D)  that the other country is counterfeiting. 
E)  None of the above 
A)  that employ the country's scarce resource. 
B)  that employ the country's relatively abundant resource. 
C)  that the other country has in abundance. 
D)  that the other country is counterfeiting. 
E)  None of the above

International trade patterns may be influenced by a country's endowment of relatively skilled workers.

The empirical study by Leontief provided support for the factor-proportions theory.

Which of the following is not an assumption of the factor-proportions theory?

Describe the effects that international trade has on the distribution of income.

The factor-proportions theory predicts that the pattern of trade is determined mostly by country differences in factor endowments.

Assume that Mexico is a labor-abundant country and capital is scarce. The result of international trade would be that:

Investment in the labor force that increases the productivity of labor is known as:

Which of the following is true?

If comparative advantage in an industry is based mostly on the amount of education and training embodied in the work force, then we would say that the industry is:

Why are factor prices so similar in the U.S. and Canada?

A country is said to be relatively abundant in capital if it has:

The Stopler-Samuelson theorem states that with international trade the:

Suppose that capital in a comparative disadvantage industry cannot move out of that industry in the short run. Describe what happens to the return to capital in the comparative disadvantage and comparative advantage industries.

Explain how trade would tend to equalize differences in the prices of factors of production between countries that trade. How would this influence the distribution of income?

International trade impacts the economy by changing its industrial structure.

The factor-proportions theory of international trade predicts:

Which of the following is not a potential explanation for the Leontief paradox?

The factor-proportions theory is built around differences in factor endowments and different input requirements for each good.

In the factor-proportions theory, international trade is caused by country differences in:

Countries tend to have a comparative advantage in and export goods:

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

International trade patterns may be influenced by a country's endowment of relatively skilled workers.

The empirical study by Leontief provided support for the factor-proportions theory.

Which of the following is not an assumption of the factor-proportions theory?

Describe the effects that international trade has on the distribution of income.

The factor-proportions theory predicts that the pattern of trade is determined mostly by country differences in factor endowments.

Assume that Mexico is a labor-abundant country and capital is scarce. The result of international trade would be that:

Investment in the labor force that increases the productivity of labor is known as:

Which of the following is true?

If comparative advantage in an industry is based mostly on the amount of education and training embodied in the work force, then we would say that the industry is:

Why are factor prices so similar in the U.S. and Canada?

A country is said to be relatively abundant in capital if it has:

The Stopler-Samuelson theorem states that with international trade the:

Suppose that capital in a comparative disadvantage industry cannot move out of that industry in the short run. Describe what happens to the return to capital in the comparative disadvantage and comparative advantage industries.

Explain how trade would tend to equalize differences in the prices of factors of production between countries that trade. How would this influence the distribution of income?

International trade impacts the economy by changing its industrial structure.

The factor-proportions theory of international trade predicts:

Which of the following is not a potential explanation for the Leontief paradox?

The factor-proportions theory is built around differences in factor endowments and different input requirements for each good.

In the factor-proportions theory, international trade is caused by country differences in:

Countries tend to have a comparative advantage in and export goods:

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