Question 1

A country gains more from international trade the more its terms of trade differ from its autarky price.

Accepted Answer

A) True 
 B)False  True

Question 2

Answer the question(s)below based on the information in the following table
Country
 $$\begin{array} { | c | c | c | } 
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.If countries were to trade along the lines of comparative advantage

Accepted Answer

A) B would export Y to A. 
B) A would import X from A. 
C) neither country would want to trade. 
D) More information is needed to determine the pattern. 
A) B would export Y to A. 
B) A would import X from A. 
C) neither country would want to trade. 
D) More information is needed to determine the pattern. A

Question 3

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good.
 $$\begin{array} { | c | c | c | } 
\hline & \text { Spain } & \text { France } \
\hline \text { Grapes } & 3 & 9 \
\hline \text { Textiles } & 1 & 2 \
\hline
\end{array}$$
-Refer to the table above.France will gain from trade so long as the international price of grapes measured in terms of textiles is below

Accepted Answer

A) $15. 
B) 3. 
C) 5. 
D) 8. 
A) $15. 
B) 3. 
C) 5. 
D) 8. B

Question 4

Explain how trade will tend to emerge along the lines of comparative advantage if markets are allowed to work freely.

Accepted Answer

Comparative advantage is determined by a

Question 5

Answer the question(s)below based on the information in the following table
Country
 $$\begin{array} { | c | c | c | } 
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.If countries were to trade along the lines of absolute advantage

Accepted Answer

A) A would export X to B. 
B) B would import Y from A. 
C) neither country would want to trade. 
D) More information is needed to determine the pattern. 
A) A would export X to B. 
B) B would import Y from A. 
C) neither country would want to trade. 
D) More information is needed to determine the pattern.

Question 6

Answer the question(s)below based on the following diagram of a country in international trade equilibrium.
  
-Refer to the figure above.This country has comparative advantage in good

Accepted Answer

A) S. 
B) T. 
C) Y. 
D) Z. 
A) S. 
B) T. 
C) Y. 
D) Z.

Question 7

A country in autarky does not trade.

Accepted Answer

A) True 
 B)False

Question 8

Can a country have comparative advantage in all products?

Accepted Answer

No,a country can never have comparative

Question 9

The classical theory predicts that

Accepted Answer

A) countries will completely specialize in the production of export goods. 
B) considerable trade will occur between countries with different levels of technology. 
C) small countries could obtain all of the gains from trade when trading with large countries. 
D) All of the above. 
A) countries will completely specialize in the production of export goods. 
B) considerable trade will occur between countries with different levels of technology. 
C) small countries could obtain all of the gains from trade when trading with large countries. 
D) All of the above.

Question 10

If country A has a larger trade triangle than country B,reciprocal demand will lead to an increase in the relative price of A's imports.

Accepted Answer

A) True 
 B)False

Question 11

Mercantilism is another name given to the version of capitalism that has emerged in the globalized world of the 21st century.

Accepted Answer

A) True 
 B)False

Question 12

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good.
 $$\begin{array} { | c | c | c | } 
\hline & \text { Spain } & \text { France } \
\hline \text { Grapes } & 3 & 9 \
\hline \text { Textiles } & 1 & 2 \
\hline
\end{array}$$
-Refer to the table above.If complete specialization occurs,and France has a labor force of 30,000 hours of labor,then after trade begins it will produce

Accepted Answer

A) 2000 units of grapes. 
B) 15,000 units of textiles. 
C) 2000 units of grapes and 6000 units of textiles. 
D) None of the above. 
A) 2000 units of grapes. 
B) 15,000 units of textiles. 
C) 2000 units of grapes and 6000 units of textiles. 
D) None of the above.

Question 13

Starting from a situation where country A which exports good S and imports good T has a larger trade triangle than country B,explain how the process of reciprocal demand leads to international trade equilibrium.

Accepted Answer

If A has a larger trade triangle than B

Question 14

Answer the question(s)below based on the information in the following table
Country
 $$\begin{array} { | c | c | c | } 
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.Country B has absolute advantage in

Accepted Answer

A) Good X. 
B) Good Y. 
C) Neither X nor Y. 
D) Both X and Y. 
A) Good X. 
B) Good Y. 
C) Neither X nor Y. 
D) Both X and Y.

Question 15

Given the input-output relationships in the table below:
$\begin{array}{} 
& &emsp; &emsp; Countries   \
& \text { A } & \text { B } \
\text { Goods } & & \
\text { X } & 8 & 4 \
\text { Y } & 4 & 1
\end{array}$ 
(a) Which country has absolute advantage in which good and why?
(b) Which country has comparative advantage in which good and why?
(c) If A is endowed with 8000 hours of labor,how much X will it produce after trade begins? How much Y? Explain.
(d) What is the allowable range on A's wages relative to B's if trade is flowing between these two countries according to comparative advantage?

Accepted Answer

(a) B (A)has absolute advantage in both

Question 16

Suppose that workers in A can produce 1 unit of S in 3 hours and 1 unit of T in 9 hours.Suppose that the relative price of S in B is 2.Graph the PPF for country A.Indicate the exact slope of the PPF.Show how the autarky equilibrium is determined.Illustrate a hypothetical international trade equilibrium,including production and consumption points,and trade volumes for a given (your assumption-be explicit)but permissible value of the international terms of trade.

Accepted Answer

The autarky price of S in A is 1/3,so th

Question 17

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good.
 $$\begin{array} { | c | c | c | } 
\hline & \text { Spain } & \text { France } \
\hline \text { Grapes } & 3 & 9 \
\hline \text { Textiles } & 1 & 2 \
\hline
\end{array}$$
-Refer to the table above.Spain has comparative advantage in

Accepted Answer

A) grapes. 
B) textiles. 
C) both grapes and textiles. 
D) neither grapes nor textiles. 
A) grapes. 
B) textiles. 
C) both grapes and textiles. 
D) neither grapes nor textiles.

Question 18

An international division of labor will have no effect on total world output because resources are limited.

Accepted Answer

A) True 
 B)False

Question 19

Answer the question(s)below based on the information in the following table
Country
 $$\begin{array} { | c | c | c | } 
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.The relative price of beer in terms of wine in B is

Accepted Answer

A) $4.50. 
B) 2. 
C) 4.5. 
D) $2.00. 
A) $4.50. 
B) 2. 
C) 4.5. 
D) $2.00.

Question 20

In the classical model,the direction of trade is determined by

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) physical advantage. 
D) which way the wind blows. 
A) comparative advantage. 
B) absolute advantage. 
C) physical advantage. 
D) which way the wind blows.

A country gains more from international trade the more its terms of trade differ from its autarky price.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.If countries were to trade along the lines of comparative advantage

Explain how trade will tend to emerge along the lines of comparative advantage if markets are allowed to work freely.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.If countries were to trade along the lines of absolute advantage

Answer the question(s)below based on the following diagram of a country in international trade equilibrium. -Refer to the figure above.This country has comparative advantage in good

A country in autarky does not trade.

Can a country have comparative advantage in all products?

The classical theory predicts that

If country A has a larger trade triangle than country B,reciprocal demand will lead to an increase in the relative price of A's imports.

Mercantilism is another name given to the version of capitalism that has emerged in the globalized world of the 21st century.

Starting from a situation where country A which exports good S and imports good T has a larger trade triangle than country B,explain how the process of reciprocal demand leads to international trade equilibrium.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.Country B has absolute advantage in

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good. Spain France Grapes 3 9 Textiles 1 2 -Refer to the table above.Spain has comparative advantage in

An international division of labor will have no effect on total world output because resources are limited.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.The relative price of beer in terms of wine in B is

In the classical model,the direction of trade is determined by

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Heckscher-Ohlin Model

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Balance of Payments

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

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Exam 3: The Classical Model of International Trade

A country gains more from international trade the more its terms of trade differ from its autarky price.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.If countries were to trade along the lines of comparative advantage

Explain how trade will tend to emerge along the lines of comparative advantage if markets are allowed to work freely.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.If countries were to trade along the lines of absolute advantage

Answer the question(s)below based on the following diagram of a country in international trade equilibrium. -Refer to the figure above.This country has comparative advantage in good

A country in autarky does not trade.

Can a country have comparative advantage in all products?

The classical theory predicts that

If country A has a larger trade triangle than country B,reciprocal demand will lead to an increase in the relative price of A's imports.

Mercantilism is another name given to the version of capitalism that has emerged in the globalized world of the 21st century.

Starting from a situation where country A which exports good S and imports good T has a larger trade triangle than country B,explain how the process of reciprocal demand leads to international trade equilibrium.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.Country B has absolute advantage in

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good. Spain France Grapes 3 9 Textiles 1 2 -Refer to the table above.Spain has comparative advantage in

An international division of labor will have no effect on total world output because resources are limited.

Answer the question(s)below based on the information in the following table Country Goods 3 9 4 2 (numbers indicate hours of labor per unit of output) -Refer to the table above.The relative price of beer in terms of wine in B is

In the classical model,the direction of trade is determined by

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Heckscher-Ohlin Model

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Balance of Payments

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

Filters