Question 1

A capital-intensive good is one with a low K/L ratio.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Trade has no impact whatsoever on the distribution of income.

Accepted Answer

A) True 
 B)False

Question 4

Why would international trade have a tendency to equalize the prices of the factors of production between two countries that trade with one another?

Accepted Answer

International trade tends to equalize th

Question 5

The factor-proportions theory is a simplification of international trade between countries because it is explained using:

Accepted Answer

A)  two countries. 
B)  two goods. 
C)  two factors of production. 
D)  all of the above 
E)  None of the above 
A)  two countries. 
B)  two goods. 
C)  two factors of production. 
D)  all of the above 
E)  None of the above

Question 6

In the 1950s, Leontief found that U.S. imports utilize _____ K/L ratio than America's exports.

Accepted Answer

A)  a higher 
B)  a lower 
C)  the same 
D)  a smaller 
E)  an indeterminate 
A)  a higher 
B)  a lower 
C)  the same 
D)  a smaller 
E)  an indeterminate

Question 7

International trade would tend to equalize the prices of factors of production between countries that trade with one another.

Accepted Answer

A) True 
 B)False

Question 8

If a capital-abundant country freely trades with a labor-abundant country, there will be a tendency for:

Accepted Answer

A)  wages to rise relative to the price paid to capital in the capital-abundant country. 
B)  wages to fall relative to the price paid to capital in the capital-abundant country. 
C)  wages to rise relative to the price paid to capital in both countries. 
D)  wages to fall relative to the price paid to capital in both countries. 
E)  the price of labor and capital to stay the same. 
A)  wages to rise relative to the price paid to capital in the capital-abundant country. 
B)  wages to fall relative to the price paid to capital in the capital-abundant country. 
C)  wages to rise relative to the price paid to capital in both countries. 
D)  wages to fall relative to the price paid to capital in both countries. 
E)  the price of labor and capital to stay the same.

Question 9

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

Accepted Answer

A)  the same technology in both countries 
B)  constant returns to scale 
C)  complete specialization 
D)  equal tastes and preferences in both countries 
E)  perfect competition. 
A)  the same technology in both countries 
B)  constant returns to scale 
C)  complete specialization 
D)  equal tastes and preferences in both countries 
E)  perfect competition.

Question 10

Constant returns to scale implies:

Accepted Answer

A)  as the amount of labor and capital doubles the resulting output remains the same. 
B)  as the amount of labor and capital doubles the resulting output more than doubles. 
C)  as the amount of labor and capital doubles the resulting output doubles. 
D)  as the amount of labor and capital doubles the resulting output increases by a very small amount. 
E)  None of the above. 
A)  as the amount of labor and capital doubles the resulting output remains the same. 
B)  as the amount of labor and capital doubles the resulting output more than doubles. 
C)  as the amount of labor and capital doubles the resulting output doubles. 
D)  as the amount of labor and capital doubles the resulting output increases by a very small amount. 
E)  None of the above.

Question 11

The factor-proportions theory of international trade states that countries would tend to export products that intensively utilize their abundant factor of production.

Accepted Answer

A) True 
 B)False

Question 12

Changes in industrial structure:

Accepted Answer

A)  cause changes in the returns to the factor of production. 
B)  cause changes in the price of the traded goods. 
C)  do not cause changes in the distribution of a country's income. 
D)  cause changes in a country's comparative advantage. 
E)  do not influence factor prices. 
A)  cause changes in the returns to the factor of production. 
B)  cause changes in the price of the traded goods. 
C)  do not cause changes in the distribution of a country's income. 
D)  cause changes in a country's comparative advantage. 
E)  do not influence factor prices.

Question 13

Which theory explains how international trade affects the distribution of income?

Accepted Answer

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

Question 14

If a country is well endowed with labor relative to capital, the factor-proportions theory predicts that it will:

Accepted Answer

A)  export labor-intensive goods and import capital-intensive goods. 
B)  import labor-intensive goods and export capital-intensive goods. 
C)  neither import nor export capital-intensive goods. 
D)  neither import nor export labor-intensive goods. 
E)  the K/L ratio is high. 
A)  export labor-intensive goods and import capital-intensive goods. 
B)  import labor-intensive goods and export capital-intensive goods. 
C)  neither import nor export capital-intensive goods. 
D)  neither import nor export labor-intensive goods. 
E)  the K/L ratio is high.

Question 15

U.S. exports appear to be labor intensive because they contain a large amount of human capital.

Accepted Answer

A) True 
 B)False

Question 16

If capital per worker in a country is relatively high, then it is probably true that GDP per capita is relatively high as well.

Accepted Answer

A) True 
 B)False

Question 17

Industrial structure refers to:

Accepted Answer

A)  the percentage of output that is accounted for by each industry within a country. 
B)  the output that is accounted for by each industry within a country. 
C)  the types of industries in a country. 
D)  the percentage of industries that account for a country's exports. 
E)  the prices of the factors of production. 
A)  the percentage of output that is accounted for by each industry within a country. 
B)  the output that is accounted for by each industry within a country. 
C)  the types of industries in a country. 
D)  the percentage of industries that account for a country's exports. 
E)  the prices of the factors of production.

A capital-intensive good is one with a low K/L ratio.

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

Trade has no impact whatsoever on the distribution of income.

Why would international trade have a tendency to equalize the prices of the factors of production between two countries that trade with one another?

The factor-proportions theory is a simplification of international trade between countries because it is explained using:

In the 1950s, Leontief found that U.S. imports utilize _____ K/L ratio than America's exports.

International trade would tend to equalize the prices of factors of production between countries that trade with one another.

If a capital-abundant country freely trades with a labor-abundant country, there will be a tendency for:

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

Constant returns to scale implies:

The factor-proportions theory of international trade states that countries would tend to export products that intensively utilize their abundant factor of production.

Changes in industrial structure:

Which theory explains how international trade affects the distribution of income?

If a country is well endowed with labor relative to capital, the factor-proportions theory predicts that it will:

U.S. exports appear to be labor intensive because they contain a large amount of human capital.

If capital per worker in a country is relatively high, then it is probably true that GDP per capita is relatively high as well.

Industrial structure refers to:

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

A capital-intensive good is one with a low K/L ratio.

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

Trade has no impact whatsoever on the distribution of income.

Why would international trade have a tendency to equalize the prices of the factors of production between two countries that trade with one another?

The factor-proportions theory is a simplification of international trade between countries because it is explained using:

In the 1950s, Leontief found that U.S. imports utilize _____ K/L ratio than America's exports.

International trade would tend to equalize the prices of factors of production between countries that trade with one another.

If a capital-abundant country freely trades with a labor-abundant country, there will be a tendency for:

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

Constant returns to scale implies:

The factor-proportions theory of international trade states that countries would tend to export products that intensively utilize their abundant factor of production.

Changes in industrial structure:

Which theory explains how international trade affects the distribution of income?

If a country is well endowed with labor relative to capital, the factor-proportions theory predicts that it will:

U.S. exports appear to be labor intensive because they contain a large amount of human capital.

If capital per worker in a country is relatively high, then it is probably true that GDP per capita is relatively high as well.

Industrial structure refers to:

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