Question 1

Which of the following situations would violate the assumptions of the H-O model?

Accepted Answer

A) Doubling all inputs doubled the production of all outputs. 
B) Nation 1 has technology that is different from Nation 2. 
C) Nation 1's trade is balanced. 
D) Nation 2 does not completely specialize in either good. 
A) Doubling all inputs doubled the production of all outputs. 
B) Nation 1 has technology that is different from Nation 2. 
C) Nation 1's trade is balanced. 
D) Nation 2 does not completely specialize in either good. B

Question 2

A nation is said to have a relative abundance of K if it has a:

Accepted Answer

A) greater absolute amount of K 
B) smaller absolute amount of L 
C) higher L/K ratio 
D) lower r/w 
A) greater absolute amount of K 
B) smaller absolute amount of L 
C) higher L/K ratio 
D) lower r/w D

Question 3

The United States can be characterized as relatively capital abundant and labor scarce.Thus,according to the H-O model,

Accepted Answer

A) social welfare in the United States will be reduced by trade. 
B) wages in the United States will be reduced by trade. 
C) the return on capital in the United States will be reduced by trade. 
D) capital-labor ratios in will be changed by trade. 
A) social welfare in the United States will be reduced by trade. 
B) wages in the United States will be reduced by trade. 
C) the return on capital in the United States will be reduced by trade. 
D) capital-labor ratios in will be changed by trade. B

Question 4

The Leontief paradox refers to the empirical finding that U.S.

Accepted Answer

A) import substitutes are more K-intensive than exports 
B) imports are more K-intensive than exports 
C) exports are more L-intensive than imports 
D) exports are more K-intensive than import substitutes 
A) import substitutes are more K-intensive than exports 
B) imports are more K-intensive than exports 
C) exports are more L-intensive than imports 
D) exports are more K-intensive than import substitutes

Question 5

Define and explain factor intensity reversal

Accepted Answer

Factor intensity reversal occurs when,fo

Question 6

According to the H-O model,trade reduces international differences in:

Accepted Answer

A) relative but not absolute factor prices 
B) absolute but not relative factor prices 
C) both relative and absolute factor prices 
D) neither relative nor absolute factor prices 
A) relative but not absolute factor prices 
B) absolute but not relative factor prices 
C) both relative and absolute factor prices 
D) neither relative nor absolute factor prices

Question 7

Which is not an assumption of the H-O model?

Accepted Answer

A) the same technology in both nations 
B) constant returns to scale 
C) complete specialization 
D) equal tastes in both nations 
A) the same technology in both nations 
B) constant returns to scale 
C) complete specialization 
D) equal tastes in both nations

Question 8

If the assumptions of the H-O hold,a country that is relatively capital abundant will have a production possibilities frontier that is

Accepted Answer

A) relatively flat,with a constant slope. 
B) relatively steep,with a constant slope. 
C) relatively flat,with an increasing slope (in absolute value). 
D) relatively steep,with an increasing slope (in absolute value). 
A) relatively flat,with a constant slope. 
B) relatively steep,with a constant slope. 
C) relatively flat,with an increasing slope (in absolute value). 
D) relatively steep,with an increasing slope (in absolute value).

Question 9

The H-O model assumes a world in which factors of production cannot move but goods can.In terms of output prices and factor prices,explain what (if anything)would be different about a world in which there was complete factor mobility but no trade versus a world in which there was absolutely free trade but no factor mobility.

Accepted Answer

In the H-O model,output prices equalize

Question 10

The H-O model is a general equilibrium model because it deals with:

Accepted Answer

A) production in both nations 
B) consumption in both nations 
C) trade between the two nations 
D) all of the above 
A) production in both nations 
B) consumption in both nations 
C) trade between the two nations 
D) all of the above

Question 11

International trade will ______ the price of a nation's abundant resources and _____ the price of a nation's scarce resources

Accepted Answer

A) increase;increase 
B) decrease;decrease 
C) decrease;increase 
D) increase;decrease 
A) increase;increase 
B) decrease;decrease 
C) decrease;increase 
D) increase;decrease

Question 12

We say that commodity Y is K-intensive with respect to X when:

Accepted Answer

A) more K is used in the production of Y than X 
B) less L is used in the production of Y than X 
C) a lower L/K ratio is used in the production of Y than X 
D) a higher K/L is used in the production of X than Y 
A) more K is used in the production of Y than X 
B) less L is used in the production of Y than X 
C) a lower L/K ratio is used in the production of Y than X 
D) a higher K/L is used in the production of X than Y

Question 13

In the H-O model,international trade is based mostly on a difference in:

Accepted Answer

A) technology 
B) factor endowments 
C) economies of scale 
D) tastes 
A) technology 
B) factor endowments 
C) economies of scale 
D) tastes

Question 14

From empirical studies,we conclude that the H-O theory:

Accepted Answer

A) must be rejected 
B) must be accepted without reservations 
C) can be accepted while awaiting further testing 
D) explains all international trade 
A) must be rejected 
B) must be accepted without reservations 
C) can be accepted while awaiting further testing 
D) explains all international trade

Question 15

For factor reversal to occur,two commodities must be produced with:

Accepted Answer

A) sufficiently different elasticity of substitution of factors 
B) the same K/L ratio 
C) technologically-fixed factor proportions 
D) equal elasticity of substitution of factors 
A) sufficiently different elasticity of substitution of factors 
B) the same K/L ratio 
C) technologically-fixed factor proportions 
D) equal elasticity of substitution of factors

Question 16

In the United States,labor unions consistently oppose international trade and support trade barriers.Use the H-O model to explain why.

Accepted Answer

The United States is a capital-abundant

Question 17

a)Identify the conditions that may give rise to trade between two nations.
b)What are some of the assumptions on which the Heckscher-Ohlin theory is based?
c)What does this theory say about the pattern of trade and effect of trade on factor prices?

Accepted Answer

a)Trade can be based on a difference in

Question 18

According to the H-O model,international trade will:

Accepted Answer

A) reduce international differences in per capita incomes 
B) increases international differences in per capita incomes 
C) may increase or reduce international differences in per capita incomes 
D) lead to complete specialization 
A) reduce international differences in per capita incomes 
B) increases international differences in per capita incomes 
C) may increase or reduce international differences in per capita incomes 
D) lead to complete specialization

Question 19

The H-O model is a simplification of a truly general equilibrium model because it deals with:

Accepted Answer

A) two nations 
B) two commodities 
C) two factors of production 
D) all of the above 
A) two nations 
B) two commodities 
C) two factors of production 
D) all of the above

Question 20

A difference in relative commodity prices between nations can be based on a difference in:

Accepted Answer

A) technology 
B) factor endowments 
C) tastes 
D) all of the above 
A) technology 
B) factor endowments 
C) tastes 
D) all of the above

Which of the following situations would violate the assumptions of the H-O model?

A nation is said to have a relative abundance of K if it has a:

The United States can be characterized as relatively capital abundant and labor scarce.Thus,according to the H-O model,

The Leontief paradox refers to the empirical finding that U.S.

Define and explain factor intensity reversal

According to the H-O model,trade reduces international differences in:

Which is not an assumption of the H-O model?

If the assumptions of the H-O hold,a country that is relatively capital abundant will have a production possibilities frontier that is

The H-O model is a general equilibrium model because it deals with:

International trade will __ the price of a nation's abundant resources and _ the price of a nation's scarce resources

We say that commodity Y is K-intensive with respect to X when:

In the H-O model,international trade is based mostly on a difference in:

From empirical studies,we conclude that the H-O theory:

For factor reversal to occur,two commodities must be produced with:

In the United States,labor unions consistently oppose international trade and support trade barriers.Use the H-O model to explain why.

a)Identify the conditions that may give rise to trade between two nations. b)What are some of the assumptions on which the Heckscher-Ohlin theory is based? c)What does this theory say about the pattern of trade and effect of trade on factor prices?

According to the H-O model,international trade will:

The H-O model is a simplification of a truly general equilibrium model because it deals with:

A difference in relative commodity prices between nations can be based on a difference in:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Economic Growth and International Trade

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange

The Income Adjustment Mechanism and Synthesis of Automatic

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past,present,and Future

Filters

Exam 5: Factor Endowments and the Heckscher-Ohlin Theory

Which of the following situations would violate the assumptions of the H-O model?

A nation is said to have a relative abundance of K if it has a:

The United States can be characterized as relatively capital abundant and labor scarce.Thus,according to the H-O model,

The Leontief paradox refers to the empirical finding that U.S.

Define and explain factor intensity reversal

According to the H-O model,trade reduces international differences in:

Which is not an assumption of the H-O model?

If the assumptions of the H-O hold,a country that is relatively capital abundant will have a production possibilities frontier that is

The H-O model is a general equilibrium model because it deals with:

International trade will ______ the price of a nation's abundant resources and _____ the price of a nation's scarce resources

We say that commodity Y is K-intensive with respect to X when:

In the H-O model,international trade is based mostly on a difference in:

From empirical studies,we conclude that the H-O theory:

For factor reversal to occur,two commodities must be produced with:

In the United States,labor unions consistently oppose international trade and support trade barriers.Use the H-O model to explain why.

a)Identify the conditions that may give rise to trade between two nations. b)What are some of the assumptions on which the Heckscher-Ohlin theory is based? c)What does this theory say about the pattern of trade and effect of trade on factor prices?

According to the H-O model,international trade will:

The H-O model is a simplification of a truly general equilibrium model because it deals with:

A difference in relative commodity prices between nations can be based on a difference in:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Economic Growth and International Trade

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange

The Income Adjustment Mechanism and Synthesis of Automatic

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past,present,and Future

Filters

International trade will __ the price of a nation's abundant resources and _ the price of a nation's scarce resources