Question 1

In the specific-factors model, immigration causes __________ in the capital-labor ratio and __________ in the return to capital.

Accepted Answer

A)  increases; decreases 
B)  increases; increases 
C)  decreases; decreases 
D)  decreases; increases 
A)  increases; decreases 
B)  increases; increases 
C)  decreases; decreases 
D)  decreases; increases

Question 2

According to the long-run (Heckscher-Ohlin) model, when FDI takes place, the investment capital generally moves from:

Accepted Answer

A)  southern hemisphere nations to northern hemisphere nations. 
B)  high-wage nations to low-wage nations. 
C)  Eastern Europe to Western Europe. 
D)  privately owned enterprises to government-owned enterprises. 
A)  southern hemisphere nations to northern hemisphere nations. 
B)  high-wage nations to low-wage nations. 
C)  Eastern Europe to Western Europe. 
D)  privately owned enterprises to government-owned enterprises.

Question 3

For the sending country, what will be the long-run effects of immigration on wages and the return to capital?

Accepted Answer

A)  The wage will increase, and the return to capital will decrease. 
B)  The wage will decrease, and the return to capital will increase. 
C)  Both the wage and the return to capital will increase. 
D)  There will be no change in the wage and the return to capital. 
A)  The wage will increase, and the return to capital will decrease. 
B)  The wage will decrease, and the return to capital will increase. 
C)  Both the wage and the return to capital will increase. 
D)  There will be no change in the wage and the return to capital.

Question 4

When FDI occurs, what are the long-run effects of FDI on industry output in the recipient nation?

Accepted Answer

A)  There is no change in either the output of the capital-intensive or the labor-intensive industry. 
B)  The labor-intensive industry expands; the capital-intensive industry contracts. 
C)  The capital-intensive industry expands; the labor-intensive industry contracts. 
D)  Both capital- and labor-intensive industries expand in the same proportion. 
A)  There is no change in either the output of the capital-intensive or the labor-intensive industry. 
B)  The labor-intensive industry expands; the capital-intensive industry contracts. 
C)  The capital-intensive industry expands; the labor-intensive industry contracts. 
D)  Both capital- and labor-intensive industries expand in the same proportion.

Question 5

Which of the following events will cause the production possibility frontier to shift outward (to the right)?

Accepted Answer

A)  a natural disaster that causes widespread damage 
B)  a computer problem that affects all business that rely on computers 
C)  a wave of immigration caused by new, easier rules 
D)  a war that destroys the nation's infrastructure 
A)  a natural disaster that causes widespread damage 
B)  a computer problem that affects all business that rely on computers 
C)  a wave of immigration caused by new, easier rules 
D)  a war that destroys the nation's infrastructure

Question 6

A number of studies of the effect of immigration on U.S. wages have found:

Accepted Answer

A)  no effect on the wages of any educational group. 
B)  significant rises in wages for those without a high school diploma and for college graduates but a negative impact for high school graduates and those with some college education. 
C)  significant declines in wages for those without a high school diploma and for college graduates. 
D)  no effect on other groups but significant declines in wages for high school graduates and those with some college. 
A)  no effect on the wages of any educational group. 
B)  significant rises in wages for those without a high school diploma and for college graduates but a negative impact for high school graduates and those with some college education. 
C)  significant declines in wages for those without a high school diploma and for college graduates. 
D)  no effect on other groups but significant declines in wages for high school graduates and those with some college.

Question 7

Large-scale immigration into the New World, between 1870 and 1913 caused real wages to:

Accepted Answer

A)  decrease in comparison with Europe. 
B)  increase at a slower pace in comparison with Europe. 
C)  increase at a higher pace in comparison with Europe. 
D)  stay constant. 
A)  decrease in comparison with Europe. 
B)  increase at a slower pace in comparison with Europe. 
C)  increase at a higher pace in comparison with Europe. 
D)  stay constant.

Question 8

The combination of legal and illegal immigrants in the United States creates a U-shaped pattern between the number of immigrants and:

Accepted Answer

A)  wages of competing American workers. 
B)  their wages. 
C)  their educational level. 
D)  their jobs. 
A)  wages of competing American workers. 
B)  their wages. 
C)  their educational level. 
D)  their jobs.

Question 9

If we use the short-run (specific-factors) model to model FDI movement from one nation to another, then wages in the recipient nation:

Accepted Answer

A)  decline absolutely. 
B)  rise as a result of an increase in the marginal product of labor. 
C)  are not affected. 
D)  decline relatively, as capital competes with labor but not absolutely. 
A)  decline absolutely. 
B)  rise as a result of an increase in the marginal product of labor. 
C)  are not affected. 
D)  decline relatively, as capital competes with labor but not absolutely.

Question 10

In the long run (the Heckscher-Ohlin model), immigration will lead to:

Accepted Answer

A)  an increase in the production of both the labor-intensive and the capital-intensive goods in the receiving country. 
B)  an increase in the production of the labor-intensive good and a decrease in the production of the capital-intensive good in the receiving country. 
C)  a decrease in the production of both the labor-intensive and the capital-intensive goods in the receiving country. 
D)  a decrease in the production of the labor-intensive and an increase in the production of the capital-intensive good in the receiving country. 
A)  an increase in the production of both the labor-intensive and the capital-intensive goods in the receiving country. 
B)  an increase in the production of the labor-intensive good and a decrease in the production of the capital-intensive good in the receiving country. 
C)  a decrease in the production of both the labor-intensive and the capital-intensive goods in the receiving country. 
D)  a decrease in the production of the labor-intensive and an increase in the production of the capital-intensive good in the receiving country.

Question 11

What limit per nationality does the U.S. government impose for granting permanent visas?

Accepted Answer

The U.S. government imposes a per-countr

Question 12

According to the U.S. Department of Commerce, a foreign direct investment inflow to the United States occurs whenever a foreign company acquires ____ or more of a U.S. firm.

Accepted Answer

A)  10% 
B)  25% 
C)  51% 
D)  100% 
A)  10% 
B)  25% 
C)  51% 
D)  100%

Question 13

Between 1870 and 1913, labor migration from the "Old World" (Europe) to the "New World" (the United States, Canada, and Australia) caused:

Accepted Answer

A)  real wages to rise faster in the New World. 
B)  real wages to fall faster in the Old World. 
C)  real wages to diverge between the New and Old Worlds. 
D)  real wages to converge between the New and Old Worlds. 
A)  real wages to rise faster in the New World. 
B)  real wages to fall faster in the Old World. 
C)  real wages to diverge between the New and Old Worlds. 
D)  real wages to converge between the New and Old Worlds.

Question 14

What is the long-run effect of immigration on capital use in the receiving country?

Accepted Answer

A)  There will be no change because the remaining capital is not mobile. 
B)  Capital will move to the capital-intensive industry. 
C)  The return to capital (rental) will fall. 
D)  Capital will move to the labor-intensive industry. 
A)  There will be no change because the remaining capital is not mobile. 
B)  Capital will move to the capital-intensive industry. 
C)  The return to capital (rental) will fall. 
D)  Capital will move to the labor-intensive industry.

Question 15

In the specific-factors model, emigration causes __________ in the capital-labor ratio and __________ in the return to capital.

Accepted Answer

A)  increases; decreases 
B)  increases; increases 
C)  decreases; decreases 
D)  decreases; increases 
A)  increases; decreases 
B)  increases; increases 
C)  decreases; decreases 
D)  decreases; increases

Question 16

(Figure: Wages in Home and Foreign) Using the graph, what is the value of the gains to the home country if some of its workers are allowed to migrate to the foreign country?

Accepted Answer

A)  200 workers 
B)  $300 
C)  $500 
D)  $7,500 
A)  200 workers 
B)  $300 
C)  $500 
D)  $7,500

Question 17

When factors of production are not fixed (as in the long run) and labor immigrates, capital will:

Accepted Answer

A)  remain fixed because capital is never mobile. 
B)  increase in the capital-intensive industry. 
C)  move to the higher productivity use in the labor-intensive industry until returns are again equalized. 
D)  become idled as owners of capital seek more profitable opportunities. 
A)  remain fixed because capital is never mobile. 
B)  increase in the capital-intensive industry. 
C)  move to the higher productivity use in the labor-intensive industry until returns are again equalized. 
D)  become idled as owners of capital seek more profitable opportunities.

Question 18

According to the short-run (specific-factors) model, how will FDI affect the marginal productivity of labor in the recipient nation?

Accepted Answer

A)  The MPL will rise in the production of both the labor- and capital-intensive goods. 
B)  The MPL will rise only in the production of the labor-intensive good. 
C)  The MPL will rise only in the production of the capital-intensive good. 
D)  The MPL will fall in the production of both the labor- and capital-intensive goods. 
A)  The MPL will rise in the production of both the labor- and capital-intensive goods. 
B)  The MPL will rise only in the production of the labor-intensive good. 
C)  The MPL will rise only in the production of the capital-intensive good. 
D)  The MPL will fall in the production of both the labor- and capital-intensive goods.

Question 19

Economist George Borjas has estimated the net benefits (+) or costs (-) to the United States from labor immigration to be approximately:

Accepted Answer

A)  +10% of GDP. 
B)  -5% of GDP. 
C)  +0.1% to 0.4% of GDP. 
D)  0.5% capital losses and 0.8% labor gains. 
A)  +10% of GDP. 
B)  -5% of GDP. 
C)  +0.1% to 0.4% of GDP. 
D)  0.5% capital losses and 0.8% labor gains.

Question 20

What is the long-run effect of immigration?

Accepted Answer

A)  Output will decrease. 
B)  Factor prices will increase. 
C)  Factor prices will decrease. 
D)  There will be no change in factor prices. 
A)  Output will decrease. 
B)  Factor prices will increase. 
C)  Factor prices will decrease. 
D)  There will be no change in factor prices.

Exam 5: Movement of Labor and Capital Between Countries

In the specific-factors model, immigration causes __________ in the capital-labor ratio and __________ in the return to capital.

According to the long-run (Heckscher-Ohlin) model, when FDI takes place, the investment capital generally moves from:

For the sending country, what will be the long-run effects of immigration on wages and the return to capital?

When FDI occurs, what are the long-run effects of FDI on industry output in the recipient nation?

Which of the following events will cause the production possibility frontier to shift outward (to the right)?

A number of studies of the effect of immigration on U.S. wages have found:

Large-scale immigration into the New World, between 1870 and 1913 caused real wages to:

The combination of legal and illegal immigrants in the United States creates a U-shaped pattern between the number of immigrants and:

If we use the short-run (specific-factors) model to model FDI movement from one nation to another, then wages in the recipient nation:

In the long run (the Heckscher-Ohlin model), immigration will lead to:

What limit per nationality does the U.S. government impose for granting permanent visas?

According to the U.S. Department of Commerce, a foreign direct investment inflow to the United States occurs whenever a foreign company acquires ____ or more of a U.S. firm.

Between 1870 and 1913, labor migration from the "Old World" (Europe) to the "New World" (the United States, Canada, and Australia) caused:

What is the long-run effect of immigration on capital use in the receiving country?

In the specific-factors model, emigration causes __________ in the capital-labor ratio and __________ in the return to capital.

(Figure: Wages in Home and Foreign) Using the graph, what is the value of the gains to the home country if some of its workers are allowed to migrate to the foreign country?

When factors of production are not fixed (as in the long run) and labor immigrates, capital will:

According to the short-run (specific-factors) model, how will FDI affect the marginal productivity of labor in the recipient nation?

Economist George Borjas has estimated the net benefits (+) or costs (-) to the United States from labor immigration to be approximately:

What is the long-run effect of immigration?

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

Topics in International Macroeconomics

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In the specific-factors model, immigration causes in the capital-labor ratio and in the return to capital.

In the specific-factors model, emigration causes in the capital-labor ratio and in the return to capital.