Question 1

The introduction of community indifference curves into our trading example focuses attention on the nation's:

Accepted Answer

A)  Income level 
B)  Resource prices 
C)  Tastes and preferences 
D)  Productivity level 
A)  Income level 
B)  Resource prices 
C)  Tastes and preferences 
D)  Productivity level

Question 2

A rise in the price of imports or a fall in the price of exports will:

Accepted Answer

A)  Improve the terms of trade 
B)  Worsen the terms of trade 
C)  Expand the production possibilities curve 
D)  Contract the production possibilities curve 
A)  Improve the terms of trade 
B)  Worsen the terms of trade 
C)  Expand the production possibilities curve 
D)  Contract the production possibilities curve

Question 3

Improvements in productivity may lead to decreasing comparative costs if

Accepted Answer

A)  The assumption of fixed technologies under constant costs is relaxed 
B)  Technologies available to each nation is allowed to differ 
C)  Resource endowments are allowed to vary 
D)  All of the above 
A)  The assumption of fixed technologies under constant costs is relaxed 
B)  Technologies available to each nation is allowed to differ 
C)  Resource endowments are allowed to vary 
D)  All of the above

Question 4

If the international terms of trade settle at a level that is between each country's opportunity cost:

Accepted Answer

A)  There is no basis for gainful trade for either country 
B)  Both countries gain from trade 
C)  Only one country gains from trade 
D)  One country gains and the other country loses from trade 
A)  There is no basis for gainful trade for either country 
B)  Both countries gain from trade 
C)  Only one country gains from trade 
D)  One country gains and the other country loses from trade

Question 5

Unlike the mercantilists,Adam Smith maintained that:

Accepted Answer

A)  Trade benefits one nation only at the expense of another nation 
B)  Government control of trade leads to maximum economic welfare 
C)  All nations can gain from free international trade 
D)  The world's output of goods must remain constant over time 
A)  Trade benefits one nation only at the expense of another nation 
B)  Government control of trade leads to maximum economic welfare 
C)  All nations can gain from free international trade 
D)  The world's output of goods must remain constant over time

Question 6

Concerning international trade restrictions,which of the following is false? Trade restrictions:

Accepted Answer

A)  Limit specialization and the division of labor 
B)  Reduce the volume of trade and the gains from trade 
C)  Cause nations to produce inside their production possibilities curves 
D)  May result in a country producing some of the product of its comparative disadvantage 
A)  Limit specialization and the division of labor 
B)  Reduce the volume of trade and the gains from trade 
C)  Cause nations to produce inside their production possibilities curves 
D)  May result in a country producing some of the product of its comparative disadvantage

Question 7

In autarky equilibrium,a nation realizes the lowest possible level of satisfaction given the constraint of its production possibilities schedule.

Accepted Answer

A) True 
 B)False

Question 8

In a two-product,two-country world,international trade can lead to increases in:

Accepted Answer

A)  Consumer welfare only if output of both products is increased 
B)  Output of both products and consumer welfare in both countries 
C)  Total production of both products,but not consumer welfare in both countries 
D)  Consumer welfare in both countries,but not total production of both products 
A)  Consumer welfare only if output of both products is increased 
B)  Output of both products and consumer welfare in both countries 
C)  Total production of both products,but not consumer welfare in both countries 
D)  Consumer welfare in both countries,but not total production of both products

Question 9

Ricardo's model of comparative advantage assumed all of the following except:

Accepted Answer

A)  In each nation,labor is the only input 
B)  Costs do not vary with the level of production 
C)  Perfect competition prevails in all markets 
D)  Transportation costs rise as distance increases between countries 
A)  In each nation,labor is the only input 
B)  Costs do not vary with the level of production 
C)  Perfect competition prevails in all markets 
D)  Transportation costs rise as distance increases between countries

Question 10

Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions,it could not fully explain the distribution of the gains from trade among trading partners.

Accepted Answer

A) True 
 B)False

Question 11

When nations are of similar size,and have similar taste patterns,the gains from trade

Accepted Answer

A)  Are shared equally between them 
B)  Are impossible to determine 
C)  Are too small,so that trading is not beneficial 
D)  Are determined by the nation that has comparative advantage in the more essential product 
A)  Are shared equally between them 
B)  Are impossible to determine 
C)  Are too small,so that trading is not beneficial 
D)  Are determined by the nation that has comparative advantage in the more essential product

Question 12

Assume that the United States and Canada engage in trade.If the international terms of trade coincides with the Canadian cost ratio,the United States realizes all of the gains from trade with Canada.

Accepted Answer

A) True 
 B)False

Question 13

The basic idea of mercantilism was that wealth consisted of the goods and services produced by a nation.

Accepted Answer

A) True 
 B)False

Question 14

The MacDougall study of comparative advantage hypothesized that in those industries in which U.S.labor productivity was relatively high,U.S.exports to the world should be lower than U.K.exports to the world,after adjusting for wage differentials.

Accepted Answer

A) True 
 B)False

Question 15

When a nation achieves autarky equilibrium:

Accepted Answer

A)  Input price equals final product price 
B)  Labor productivity equals the wage rate 
C)  Imports equal exports 
D)  Production equals consumption 
A)  Input price equals final product price 
B)  Labor productivity equals the wage rate 
C)  Imports equal exports 
D)  Production equals consumption

Question 16

If Canada experiences increasing opportunity costs,its supply schedule of steel will be:

Accepted Answer

A)  Downward-sloping 
B)  Upward-sloping 
C)  Horizontal 
D)  Vertical 
A)  Downward-sloping 
B)  Upward-sloping 
C)  Horizontal 
D)  Vertical

Question 17

If Japan loses competitiveness in computers,Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.

Accepted Answer

A) True 
 B)False

Question 18

Is it possible to estimate the gains from trade?

Accepted Answer

When a nation trades,it enjoys a larger

Question 19

The trading principle formulated by Adam Smith maintained that:

Accepted Answer

A)  International prices are determined from the demand side of the market 
B)  Differences in resource endowments determine comparative advantage 
C)  Differences in income levels govern world trade patterns 
D)  Absolute cost differences determine the immediate basis for trade 
A)  International prices are determined from the demand side of the market 
B)  Differences in resource endowments determine comparative advantage 
C)  Differences in income levels govern world trade patterns 
D)  Absolute cost differences determine the immediate basis for trade

Question 20

International trade is based on the notion that:

Accepted Answer

A)  Different currencies are an obstacle to international trade 
B)  Goods are more mobile internationally than are resources 
C)  Resources are more mobile internationally than are goods 
D)  A country's exports should always exceed its imports 
A)  Different currencies are an obstacle to international trade 
B)  Goods are more mobile internationally than are resources 
C)  Resources are more mobile internationally than are goods 
D)  A country's exports should always exceed its imports

The introduction of community indifference curves into our trading example focuses attention on the nation's:

A rise in the price of imports or a fall in the price of exports will:

Improvements in productivity may lead to decreasing comparative costs if

If the international terms of trade settle at a level that is between each country's opportunity cost:

Unlike the mercantilists,Adam Smith maintained that:

Concerning international trade restrictions,which of the following is false? Trade restrictions:

In autarky equilibrium,a nation realizes the lowest possible level of satisfaction given the constraint of its production possibilities schedule.

In a two-product,two-country world,international trade can lead to increases in:

Ricardo's model of comparative advantage assumed all of the following except:

Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions,it could not fully explain the distribution of the gains from trade among trading partners.

When nations are of similar size,and have similar taste patterns,the gains from trade

Assume that the United States and Canada engage in trade.If the international terms of trade coincides with the Canadian cost ratio,the United States realizes all of the gains from trade with Canada.

The basic idea of mercantilism was that wealth consisted of the goods and services produced by a nation.

The MacDougall study of comparative advantage hypothesized that in those industries in which U.S.labor productivity was relatively high,U.S.exports to the world should be lower than U.K.exports to the world,after adjusting for wage differentials.

When a nation achieves autarky equilibrium:

If Canada experiences increasing opportunity costs,its supply schedule of steel will be:

If Japan loses competitiveness in computers,Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.

Is it possible to estimate the gains from trade?

The trading principle formulated by Adam Smith maintained that:

International trade is based on the notion that:

The International Economy and Globalization

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

The introduction of community indifference curves into our trading example focuses attention on the nation's:

A rise in the price of imports or a fall in the price of exports will:

Improvements in productivity may lead to decreasing comparative costs if

If the international terms of trade settle at a level that is between each country's opportunity cost:

Unlike the mercantilists,Adam Smith maintained that:

Concerning international trade restrictions,which of the following is false? Trade restrictions:

In autarky equilibrium,a nation realizes the lowest possible level of satisfaction given the constraint of its production possibilities schedule.

In a two-product,two-country world,international trade can lead to increases in:

Ricardo's model of comparative advantage assumed all of the following except:

Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions,it could not fully explain the distribution of the gains from trade among trading partners.

When nations are of similar size,and have similar taste patterns,the gains from trade

Assume that the United States and Canada engage in trade.If the international terms of trade coincides with the Canadian cost ratio,the United States realizes all of the gains from trade with Canada.

The basic idea of mercantilism was that wealth consisted of the goods and services produced by a nation.

The MacDougall study of comparative advantage hypothesized that in those industries in which U.S.labor productivity was relatively high,U.S.exports to the world should be lower than U.K.exports to the world,after adjusting for wage differentials.

When a nation achieves autarky equilibrium:

If Canada experiences increasing opportunity costs,its supply schedule of steel will be:

If Japan loses competitiveness in computers,Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.

Is it possible to estimate the gains from trade?

The trading principle formulated by Adam Smith maintained that:

International trade is based on the notion that:

The International Economy and Globalization

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, Debt, and Risk

Filters