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

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). D

Question 3

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 C

Question 4

With equal technology nations will have equal K/L in production if:

Accepted Answer

A)  factor prices are the same 
B)  tastes are the same 
C)  production functions are the same 
D)  all of the above 
A)  factor prices are the same 
B)  tastes are the same 
C)  production functions are the same 
D)  all of the above

Question 5

The economist who rigorously proved the factor-price equalization theorem was

Accepted Answer

A)  David Ricardo 
B)  Adam Smith 
C)  Paul Samuelson 
D)  Wassily Leontief 
A)  David Ricardo 
B)  Adam Smith 
C)  Paul Samuelson 
D)  Wassily Leontief

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

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 8

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

Question 9

The factor price equalization theorem states that international trade will bring about equalization in

Accepted Answer

A)  relative returns only 
B)  absolute returns only 
C)  both relative and absolute returns 
D)  neither absolute nor relative returns 
A)  relative returns only 
B)  absolute returns only 
C)  both relative and absolute returns 
D)  neither absolute nor relative returns

Question 10

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 11

Consumers demand more of commodity X (the L-intensive commodity)and less of commodity Y (the K-intensive commodity).Suppose that Nation 1 is India,commodity X is textiles,and commodity Y is food.Starting from the no-trade equilibrium position and using the Heckscher-Ohlin model,trace the effect of this change in tastes on India's
a)relative commodity prices and demand for food and textiles,
b)production of both commodities and factor prices,
c)comparative advantage and volume of trade.
d)Do you expect international trade to lead to the complete equalization of relative commodity and factor prices between India and the United States? Why?

Accepted Answer

a)The change in tastes can be visualized

Question 12

List at least four of the assumptions of the Heckscher-Ohlin theory

Accepted Answer

Two nations,two goods,two inputs; the sa

Question 13

According to the factor price equalization theorem,a nation that has a relative capital abundance should specialize in goods that are ______ intensive resulting in an increase in the price of ______.

Accepted Answer

A)  capital; capital 
B)  capital; labor 
C)  labor; capital 
D)  labor; labor 
A)  capital; capital 
B)  capital; labor 
C)  labor; capital 
D)  labor; labor

Question 14

Define and explain factor intensity reversal

Accepted Answer

Factor intensity reversal occurs when,fo

Question 15

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 16

When w/r falls,L/K

Accepted Answer

A)  falls in the production of both commodities 
B)  rises in the production of both commodities 
C)  can rise or fall 
D)  is not affected 
A)  falls in the production of both commodities 
B)  rises in the production of both commodities 
C)  can rise or fall 
D)  is not affected

Question 17

Over the last five decades,relative to the United States,real wages among industrialized countries have

Accepted Answer

A)  become equal. 
B)  moved farther away. 
C)  moved closer together. 
D)  increased, then decreased. 
A)  become equal. 
B)  moved farther away. 
C)  moved closer together. 
D)  increased, then decreased.

Question 18

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 19

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 20

One potential reasonable explanation for the Leontief paradox is that

Accepted Answer

A)  The U.S. exports capital intensive goods 
B)  U.S. labor is more productive than its foreign counterpart 
C)  U.S. tastes were biased strongly in favor of capital intensive goods 
D)  The two factor model that was used was incomplete 
A)  The U.S. exports capital intensive goods 
B)  U.S. labor is more productive than its foreign counterpart 
C)  U.S. tastes were biased strongly in favor of capital intensive goods 
D)  The two factor model that was used was incomplete

Which of the following situations would violate the assumptions 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

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

With equal technology nations will have equal K/L in production if:

The economist who rigorously proved the factor-price equalization theorem was

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

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:

The factor price equalization theorem states that international trade will bring about equalization in

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

List at least four of the assumptions of the Heckscher-Ohlin theory

According to the factor price equalization theorem,a nation that has a relative capital abundance should specialize in goods that are intensive resulting in an increase in the price of .

Define and explain factor intensity reversal

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?

When w/r falls,L/K

Over the last five decades,relative to the United States,real wages among industrialized countries have

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

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

One potential reasonable explanation for the Leontief paradox is that

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

Trade Restrictions: Tariffs

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 Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

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 Answers to Selected Problems on Web

Filters

Exam 5: Factor Endowments and the Heckscherohlin Theory

Which of the following situations would violate the assumptions 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

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

With equal technology nations will have equal K/L in production if:

The economist who rigorously proved the factor-price equalization theorem was

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

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:

The factor price equalization theorem states that international trade will bring about equalization in

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

List at least four of the assumptions of the Heckscher-Ohlin theory

According to the factor price equalization theorem,a nation that has a relative capital abundance should specialize in goods that are ______ intensive resulting in an increase in the price of ______.

Define and explain factor intensity reversal

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?

When w/r falls,L/K

Over the last five decades,relative to the United States,real wages among industrialized countries have

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

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

One potential reasonable explanation for the Leontief paradox is that

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

Trade Restrictions: Tariffs

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 Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

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 Answers to Selected Problems on Web

Filters

According to the factor price equalization theorem,a nation that has a relative capital abundance should specialize in goods that are intensive resulting in an increase in the price of .

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