Question 1

Free labor migration is more effective at improving welfare in low-income countries than moving capital,because low-income countries do not have much capital per person.

Accepted Answer

A) True 
 B)False  False

Question 2

When the U.S.economy runs a trade __________,it is implicitly asking the rest of the world to __________.

Accepted Answer

A) deficit;finance some of its savings 
B) surplus;finance some of its investment 
C) deficit;finance some of its investment 
D) balance;finance some of its investment 
E) surplus;buy more U.S.-made goods and services 
A) deficit;finance some of its savings 
B) surplus;finance some of its investment 
C) deficit;finance some of its investment 
D) balance;finance some of its investment 
E) surplus;buy more U.S.-made goods and services C

Question 3

If the United States is running persistent trade deficits now,

Accepted Answer

A) it must make loans to the rest of world. 
B) it is expected to run trade surpluses at some point in the future. 
C) it is expected to run trade surpluses now. 
D) it must increase its money supply to buy imports. 
E) it must run a government budget deficit. 
A) it must make loans to the rest of world. 
B) it is expected to run trade surpluses at some point in the future. 
C) it is expected to run trade surpluses now. 
D) it must increase its money supply to buy imports. 
E) it must run a government budget deficit. B

Question 4

If private saving equals private investment and there is a trade deficit,there must be __________;this is called __________.

Accepted Answer

A) a net outflow of savings;the J-curve 
B) a government budget deficit;the twin deficits 
C) a government budget surplus;balanced trade 
D) an excess supply of private savings;a budget surplus 
E) an excess supply of private savings;the investment deficit 
A) a net outflow of savings;the J-curve 
B) a government budget deficit;the twin deficits 
C) a government budget surplus;balanced trade 
D) an excess supply of private savings;a budget surplus 
E) an excess supply of private savings;the investment deficit

Question 5

In the 1970s,farmers were able to "transform" __________ into __________.

Accepted Answer

A) steel;cars 
B) corn;ethanol 
C) corn;cars 
D) beets;sugar 
E) soy;sushi 
A) steel;cars 
B) corn;ethanol 
C) corn;cars 
D) beets;sugar 
E) soy;sushi

Question 6

Worldwide,the trade balance must be:

Accepted Answer

A) unsure. 
B) negative. 
C) positive. 
D) zero. 
E) dependent on the country. 
A) unsure. 
B) negative. 
C) positive. 
D) zero. 
E) dependent on the country.

Question 7

The basic motivation for international trade is that:

Accepted Answer

A) an economy values goods other economies produce more than they value their own excess production. 
B) people like to consume a limited basket of goods. 
C) people like to consume an extended basket of goods. 
D) economies value goods that other economies produces less than they value what they produce. 
E) economies value goods that other economies produce more than they value what they themselves produce. 
A) an economy values goods other economies produce more than they value their own excess production. 
B) people like to consume a limited basket of goods. 
C) people like to consume an extended basket of goods. 
D) economies value goods that other economies produces less than they value what they produce. 
E) economies value goods that other economies produce more than they value what they themselves produce.

Question 8

Given the choice,the world is most efficient under

Accepted Answer

A) autarky. 
B) free trade. 
C) free migration. 
D) protected trade. 
E) monopoly. 
A) autarky. 
B) free trade. 
C) free migration. 
D) protected trade. 
E) monopoly.

Question 9

In addition to the migration of __________ jobs to lower-cost countries,recently we have seen __________ jobs migrate abroad as well.

Accepted Answer

A) financial;automobile 
B) blue collar;white collar 
C) white collar;blue collar 
D) automobile;construction 
E) cement manufacturing;ship building 
A) financial;automobile 
B) blue collar;white collar 
C) white collar;blue collar 
D) automobile;construction 
E) cement manufacturing;ship building

Question 10

According to economic theory,fast-growing countries should be running __________;but the evidence is that in fast-growing countries,__________.

Accepted Answer

A) trade deficits;the permanent income hypothesis holds 
B) trade surpluses;the permanent income hypothesis is wrong 
C) trade deficits;the causality is from exports to growth 
D) balanced trade;people want to smooth their consumption 
E) balanced trade;people do not think about the future 
A) trade deficits;the permanent income hypothesis holds 
B) trade surpluses;the permanent income hypothesis is wrong 
C) trade deficits;the causality is from exports to growth 
D) balanced trade;people want to smooth their consumption 
E) balanced trade;people do not think about the future

Question 11

According to Matthew Slaughter of Dartmouth College,in a study of multinational corporations,he found that:

Accepted Answer

A) for every one job outsourced,about two jobs were created domestically. 
B) for every one job outsourced,about one-half job was created domestically. 
C) for every job outsourced,another was created domestically. 
D) for every two jobs outsourced,about one job was created domestically. 
E) None of the above is correct. 
A) for every one job outsourced,about two jobs were created domestically. 
B) for every one job outsourced,about one-half job was created domestically. 
C) for every job outsourced,another was created domestically. 
D) for every two jobs outsourced,about one job was created domestically. 
E) None of the above is correct.

Question 12

If a country produces a good at a lower opportunity cost than another country,it has an absolute advantage in the production of that good.

Accepted Answer

A) True 
 B)False

Question 13

From the national income identity in the United States,if NX < 0,this must equal:

Accepted Answer

A) the additional borrowing the United States does to finance the gap between investment and domestic savings. 
B) the additional lending the United States does to finance the gap between investment and domestic savings. 
C) the additional lending the United States does to earn a return on its excess savings. 
D) the federal government's budget surplus. 
E) the additional borrowing the U.S.federal government does to finance its budget deficit. 
A) the additional borrowing the United States does to finance the gap between investment and domestic savings. 
B) the additional lending the United States does to finance the gap between investment and domestic savings. 
C) the additional lending the United States does to earn a return on its excess savings. 
D) the federal government's budget surplus. 
E) the additional borrowing the U.S.federal government does to finance its budget deficit.

Question 14

From the national income identity,

Accepted Answer

A) if   . 
B) if   . 
C) if   . 
D) if   . 
E) a and b are correct. 
A) if   . 
B) if   . 
C) if   . 
D) if   . 
E) a and b are correct.

Question 15

-Consider Table 18.1.In autarky,the price of fish in terms of chips is __________ in the West,and in the East the price is __________;therefore,the West has a comparative advantage in __________.

Accepted Answer

A) 2;3;fish 
B) 3;2;chips 
C) 2;3;chips 
D) 1/2;1/3;fish 
E) Not enough information is given. 
A) 2;3;fish 
B) 3;2;chips 
C) 2;3;chips 
D) 1/2;1/3;fish 
E) Not enough information is given.

Question 16

Consider the information in the following table:   
(a)Assuming free movement of labor,and wine is the numéraire good,which country (host country)would labor migrate to? What would the wage be in that country?
(b)Assuming the host country dedicates half its income to the production of each good,what would total production be? What is the wage of each worker? What would consumption per worker be for each good?

Accepted Answer

(a)Because wages are higher in Portugal,

Question 17

About __________ percent of the U.S.GDP is exported.

Accepted Answer

A) 5 
B) 15 
C) 10 
D) 20 
E) 40 
A) 5 
B) 15 
C) 10 
D) 20 
E) 40

Question 18

An explanation of the growth of international trade in the early 1970s is the reduction of institutional trade barriers.

Accepted Answer

A) True 
 B)False

Question 19

From the national income identity we can derive the following relationship for the trade balance (net exports):

Accepted Answer

A) NX = I 
B) NX = I - S 
C) NX = S - I 
D) NX = Y - C - I 
E) NX = C 
A) NX = I 
B) NX = I - S 
C) NX = S - I 
D) NX = Y - C - I 
E) NX = C

Question 20

Explain how trade can be used for international risk sharing.

Accepted Answer

The most extreme example is given in Sec

Free labor migration is more effective at improving welfare in low-income countries than moving capital,because low-income countries do not have much capital per person.

When the U.S.economy runs a trade ,it is implicitly asking the rest of the world to .

If the United States is running persistent trade deficits now,

If private saving equals private investment and there is a trade deficit,there must be ;this is called .

In the 1970s,farmers were able to "transform" into .

Worldwide,the trade balance must be:

The basic motivation for international trade is that:

Given the choice,the world is most efficient under

In addition to the migration of jobs to lower-cost countries,recently we have seen jobs migrate abroad as well.

According to economic theory,fast-growing countries should be running ;but the evidence is that in fast-growing countries,.

According to Matthew Slaughter of Dartmouth College,in a study of multinational corporations,he found that:

If a country produces a good at a lower opportunity cost than another country,it has an absolute advantage in the production of that good.

From the national income identity in the United States,if NX < 0,this must equal:

From the national income identity,

-Consider Table 18.1.In autarky,the price of fish in terms of chips is in the West,and in the East the price is ;therefore,the West has a comparative advantage in __.

About __________ percent of the U.S.GDP is exported.

An explanation of the growth of international trade in the early 1970s is the reduction of institutional trade barriers.

From the national income identity we can derive the following relationship for the trade balance (net exports):

Explain how trade can be used for international risk sharing.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 18: International Trade

Free labor migration is more effective at improving welfare in low-income countries than moving capital,because low-income countries do not have much capital per person.

When the U.S.economy runs a trade __________,it is implicitly asking the rest of the world to __________.

If the United States is running persistent trade deficits now,

If private saving equals private investment and there is a trade deficit,there must be __________;this is called __________.

In the 1970s,farmers were able to "transform" __________ into __________.

Worldwide,the trade balance must be:

The basic motivation for international trade is that:

Given the choice,the world is most efficient under

In addition to the migration of __________ jobs to lower-cost countries,recently we have seen __________ jobs migrate abroad as well.

According to economic theory,fast-growing countries should be running __________;but the evidence is that in fast-growing countries,__________.

According to Matthew Slaughter of Dartmouth College,in a study of multinational corporations,he found that:

If a country produces a good at a lower opportunity cost than another country,it has an absolute advantage in the production of that good.

From the national income identity in the United States,if NX < 0,this must equal:

From the national income identity,

-Consider Table 18.1.In autarky,the price of fish in terms of chips is __________ in the West,and in the East the price is __________;therefore,the West has a comparative advantage in __________.

About __________ percent of the U.S.GDP is exported.

An explanation of the growth of international trade in the early 1970s is the reduction of institutional trade barriers.

From the national income identity we can derive the following relationship for the trade balance (net exports):

Explain how trade can be used for international risk sharing.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

Exchange Rates and International Finance

Parting Thoughts

Filters

When the U.S.economy runs a trade ,it is implicitly asking the rest of the world to .

If private saving equals private investment and there is a trade deficit,there must be ;this is called .

In the 1970s,farmers were able to "transform" into .

In addition to the migration of jobs to lower-cost countries,recently we have seen jobs migrate abroad as well.

According to economic theory,fast-growing countries should be running ;but the evidence is that in fast-growing countries,.

-Consider Table 18.1.In autarky,the price of fish in terms of chips is in the West,and in the East the price is ;therefore,the West has a comparative advantage in __.