Question 1

Table 2.1. Output Possibilities of the U.S. and the U.K.
  
-Referring to Table 2.1,the United Kingdom gains most from trade if:

Accepted Answer

A)  1 ton of steel trades for 2 televisions 
B)  1 ton of steel trades for 3 televisions 
C)  2 tons of steel trade for 4 televisions 
D)  2 tons of steel trade for 5 televisions 
A)  1 ton of steel trades for 2 televisions 
B)  1 ton of steel trades for 3 televisions 
C)  2 tons of steel trade for 4 televisions 
D)  2 tons of steel trade for 5 televisions

Question 2

For the commodity terms of trade to improve,a country's export price index must rise relative to its import price index over a given time period.

Accepted Answer

A) True 
 B)False

Question 3

MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.

Accepted Answer

A) True 
 B)False

Question 4

A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its production possibilities schedule.

Accepted Answer

A) True 
 B)False

Question 5

The use of indifference curves helps us determine the point:

Accepted Answer

A)  Along the terms-of-trade line a country will choose 
B)  Where a country maximizes its resource productivity 
C)  At which a country ceases to become competitive 
D)  Where the marginal rate of transformation approaches zero 
A)  Along the terms-of-trade line a country will choose 
B)  Where a country maximizes its resource productivity 
C)  At which a country ceases to become competitive 
D)  Where the marginal rate of transformation approaches zero

Question 6

The Ricardian model of comparative advantage is based on all of the following assumptions except:

Accepted Answer

A)  Only two nations and two products 
B)  Product quality varies among nations 
C)  Labor is the only factor of production 
D)  Labor can move freely within a nation 
A)  Only two nations and two products 
B)  Product quality varies among nations 
C)  Labor is the only factor of production 
D)  Labor can move freely within a nation

Question 7

Introducing indifference curves into our trade model permits us to determine:

Accepted Answer

A)  Where a nation chooses to locate along its production possibilities curve in autarky 
B)  The precise location of a nation's production possibilities curve 
C)  Whether absolute cost or comparative cost conditions exist 
D)  The currency price of one product in terms of another product 
A)  Where a nation chooses to locate along its production possibilities curve in autarky 
B)  The precise location of a nation's production possibilities curve 
C)  Whether absolute cost or comparative cost conditions exist 
D)  The currency price of one product in terms of another product

Question 8

According to the price-specie-flow-doctrine,a trade-surplus nation would experience gold outflows,a decrease in its money supply,and a fall in its price level.

Accepted Answer

A) True 
 B)False

Question 9

It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a comparative advantage in everything and the other nation to have a comparative advantage in nothing.

Accepted Answer

A) True 
 B)False

Question 10

Assume 1990 to be the base year.If by the end of 2004 a country's export price index rose from 100 to 125 while its import price index rose from 100 to 125,its terms of trade would equal 100.

Accepted Answer

A) True 
 B)False

Question 11

Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.

Accepted Answer

A) True 
 B)False

Question 12

According to Ricardo,a country will have a comparative advantage in the product in which its:

Accepted Answer

A)  Labor productivity is relatively low 
B)  Labor productivity is relatively high 
C)  Labor mobility is relatively low 
D)  Labor mobility is relatively high 
A)  Labor productivity is relatively low 
B)  Labor productivity is relatively high 
C)  Labor mobility is relatively low 
D)  Labor mobility is relatively high

Question 13

Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos.As the Canadian demand for wheat increases,Canada's equilibrium terms of trade improves.

Accepted Answer

A) True 
 B)False

Question 14

Increasing opportunity costs suggest that:

Accepted Answer

A)  Resources are not perfectly shiftable between the production of two goods 
B)  Resources are fully shiftable between the production of two goods 
C)  A country's production possibilities curve appears as a straight line 
D)  A country's production possibilities curve is bowed inward (i.e., convex) in appearance 
A)  Resources are not perfectly shiftable between the production of two goods 
B)  Resources are fully shiftable between the production of two goods 
C)  A country's production possibilities curve appears as a straight line 
D)  A country's production possibilities curve is bowed inward (i.e., convex) in appearance

Question 15

A terms-of-trade index that equals 150 indicates that compared to the base year:

Accepted Answer

A)  It requires a greater output of domestic goods to obtain the same amount of foreign goods 
B)  It requires a lesser amount of domestic goods to obtain the same amount of foreign goods 
C)  The price of exports has risen from $100 to $150 
D)  The price of imports has risen from $100 to $150 
A)  It requires a greater output of domestic goods to obtain the same amount of foreign goods 
B)  It requires a lesser amount of domestic goods to obtain the same amount of foreign goods 
C)  The price of exports has risen from $100 to $150 
D)  The price of imports has risen from $100 to $150

Question 16

According to Adam Smith,international trade was a "win-win" situation since all nations could enjoy gains from trade.

Accepted Answer

A) True 
 B)False

Question 17

The mercantilists maintained that a free-trade policy best enhances a nation's welfare.

Accepted Answer

A) True 
 B)False

Question 18

Do national security concerns lead to incomplete specialization?

Accepted Answer

Yes.National security concerns

Question 19

Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C.
Figure 2.2. Canadian Trade Possibilities
  
-According to Figure 2.2,exports for Canada total:

Accepted Answer

A)  16 refrigerators 
B)  8 refrigerators 
C)  12 refrigerators 
D)  16 refrigerators. 
A)  16 refrigerators 
B)  8 refrigerators 
C)  12 refrigerators 
D)  16 refrigerators.

Question 20

Table 2.2. Output possibilities for South Korea and Japan
  
-Refer to Table 2.2.With international trade,what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each VCR?

Accepted Answer

A)  1/2 ton of steel 
B)  1 ton of steel 
C)  1-1/2 tons of steel 
D)  2 tons of steel 
A)  1/2 ton of steel 
B)  1 ton of steel 
C)  1-1/2 tons of steel 
D)  2 tons of steel

Table 2.1. Output Possibilities of the U.S. and the U.K. -Referring to Table 2.1,the United Kingdom gains most from trade if:

For the commodity terms of trade to improve,a country's export price index must rise relative to its import price index over a given time period.

MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.

A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its production possibilities schedule.

The use of indifference curves helps us determine the point:

The Ricardian model of comparative advantage is based on all of the following assumptions except:

Introducing indifference curves into our trade model permits us to determine:

According to the price-specie-flow-doctrine,a trade-surplus nation would experience gold outflows,a decrease in its money supply,and a fall in its price level.

It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a comparative advantage in everything and the other nation to have a comparative advantage in nothing.

Assume 1990 to be the base year.If by the end of 2004 a country's export price index rose from 100 to 125 while its import price index rose from 100 to 125,its terms of trade would equal 100.

Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.

According to Ricardo,a country will have a comparative advantage in the product in which its:

Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos.As the Canadian demand for wheat increases,Canada's equilibrium terms of trade improves.

Increasing opportunity costs suggest that:

A terms-of-trade index that equals 150 indicates that compared to the base year:

According to Adam Smith,international trade was a "win-win" situation since all nations could enjoy gains from trade.

The mercantilists maintained that a free-trade policy best enhances a nation's welfare.

Do national security concerns lead to incomplete specialization?

Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C. Figure 2.2. Canadian Trade Possibilities -According to Figure 2.2,exports for Canada total:

Table 2.2. Output possibilities for South Korea and Japan -Refer to Table 2.2.With international trade,what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each VCR?

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

Balance-of-payments Adjustments

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

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Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

Table 2.1. Output Possibilities of the U.S. and the U.K. -Referring to Table 2.1,the United Kingdom gains most from trade if:

For the commodity terms of trade to improve,a country's export price index must rise relative to its import price index over a given time period.

MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.

A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its production possibilities schedule.

The use of indifference curves helps us determine the point:

The Ricardian model of comparative advantage is based on all of the following assumptions except:

Introducing indifference curves into our trade model permits us to determine:

According to the price-specie-flow-doctrine,a trade-surplus nation would experience gold outflows,a decrease in its money supply,and a fall in its price level.

It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a comparative advantage in everything and the other nation to have a comparative advantage in nothing.

Assume 1990 to be the base year.If by the end of 2004 a country's export price index rose from 100 to 125 while its import price index rose from 100 to 125,its terms of trade would equal 100.

Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.

According to Ricardo,a country will have a comparative advantage in the product in which its:

Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos.As the Canadian demand for wheat increases,Canada's equilibrium terms of trade improves.

Increasing opportunity costs suggest that:

A terms-of-trade index that equals 150 indicates that compared to the base year:

According to Adam Smith,international trade was a "win-win" situation since all nations could enjoy gains from trade.

The mercantilists maintained that a free-trade policy best enhances a nation's welfare.

Do national security concerns lead to incomplete specialization?

Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C. Figure 2.2. Canadian Trade Possibilities -According to Figure 2.2,exports for Canada total:

Table 2.2. Output possibilities for South Korea and Japan -Refer to Table 2.2.With international trade,what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each VCR?

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

Balance-of-payments Adjustments

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