Question 1

What is the likely attitude of owners of capital and land toward immigration?

Accepted Answer

A)  They are likely to support closing the borders to foreign labor. 
B)  They are likely to support more open borders and an influx of workers. 
C)  They are not likely to worry about immigration issues, 
D)  They are likely to reject legislation easing rules on immigration. 
A)  They are likely to support closing the borders to foreign labor. 
B)  They are likely to support more open borders and an influx of workers. 
C)  They are not likely to worry about immigration issues, 
D)  They are likely to reject legislation easing rules on immigration.

Question 2

According to the Rybczynski theorem, how will immigration of unskilled labor from Mexico to the United States affect the Mexican economy?

Accepted Answer

A)  Mexico's production of capital-intensive products will decrease. 
B)  Mexico's production of labor-intensive products will decrease. 
C)  Wages of Mexican workers will increase. 
D)  Wages of Mexican workers will decrease. 
A)  Mexico's production of capital-intensive products will decrease. 
B)  Mexico's production of labor-intensive products will decrease. 
C)  Wages of Mexican workers will increase. 
D)  Wages of Mexican workers will decrease.

Question 3

According to the Rybczynski theorem, why will labor immigration lead to a long-run increase in output in a labor-intensive industry and a decrease in the output of a capital-intensive industry?

Accepted Answer

The Rybczynski theorem is an economic pr

Question 4

In the long run, which of the following will occur if the U.S. federal government eliminates restrictions on migration of Mexican workers to the United States?

Accepted Answer

A)  The United States' total K/L ratio will rise. 
B)  Mexico's total K/L ratio will fall. 
C)  Wages of American workers who compete with Mexican workers for jobs will rise. 
D)  The returns to U.S. owners of capital will remain unchanged. 
A)  The United States' total K/L ratio will rise. 
B)  Mexico's total K/L ratio will fall. 
C)  Wages of American workers who compete with Mexican workers for jobs will rise. 
D)  The returns to U.S. owners of capital will remain unchanged.

Question 5

In the specific-factors model, labor migration from Mexico to the United States will cause _________ in U.S. low-skilled wages and _________ in Mexican low-skilled wages.

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 6

In the long run, immigration will lead to a rightward shift in the receiving country's production possibilities frontier. This shift will:

Accepted Answer

A)  favor the labor-intensive good. 
B)  favor the capital-intensive good. 
C)  equally favor the labor-intensive and the capital-intensive good. 
D)  cause an increase in the production of the labor-intensive good and a decrease in the capital-intensive good. 
A)  favor the labor-intensive good. 
B)  favor the capital-intensive good. 
C)  equally favor the labor-intensive and the capital-intensive good. 
D)  cause an increase in the production of the labor-intensive good and a decrease in the capital-intensive good.

Question 7

What is the overall long-run impact of labor immigration on returns to factors of production?

Accepted Answer

A)  Returns to labor will increase and returns to capital will decrease. 
B)  Returns to labor and returns to capital will both increase. 
C)  Both relative and absolute returns to factors of production will not change. 
D)  Both relative and absolute returns to factors of production will increase. 
A)  Returns to labor will increase and returns to capital will decrease. 
B)  Returns to labor and returns to capital will both increase. 
C)  Both relative and absolute returns to factors of production will not change. 
D)  Both relative and absolute returns to factors of production will increase.

Question 8

In the short-run (specific-factors) model, foreign direct investment is expected to cause a(n) ________in the return to capital and a(n) ________in the return to land in the receiving country.

Accepted Answer

A)  decrease; decrease 
B)  increase; decrease 
C)  decrease; increase 
D)  increase; increase 
A)  decrease; decrease 
B)  increase; decrease 
C)  decrease; increase 
D)  increase; increase

Question 9

The results of the influx of workers into Miami in 1980 as a consequence of the Mariel boat lift and from Russia to Israel in 1989 after the fall of the Soviet Union:

Accepted Answer

A)  included lower wages in Miami but higher wages in Israel. 
B)  included lower wages in Israel but higher wages in Miami. 
C)  surprised most people because there was no reduction in wages in either area. 
D)  included lower wages in both regions, confirming that immigration hurts domestic workers. 
A)  included lower wages in Miami but higher wages in Israel. 
B)  included lower wages in Israel but higher wages in Miami. 
C)  surprised most people because there was no reduction in wages in either area. 
D)  included lower wages in both regions, confirming that immigration hurts domestic workers.

Question 10

Foreign direct investment that takes the form of purchasing an existing plant is often called:

Accepted Answer

A)  acquisition FDI. 
B)  greenfield FDI. 
C)  requisition FDI. 
D)  brownstone FDI. 
A)  acquisition FDI. 
B)  greenfield FDI. 
C)  requisition FDI. 
D)  brownstone FDI.

Question 11

During the past 10 to 20 years, a considerable amount of foreign capital has flowed into China. What is an implication of capital flow on the composition of Chinese trade?

Accepted Answer

A)  There should be no change in the composition of China's trade. 
B)  There should be a shift toward the export of more labor-intensive products. 
C)  There should be a shift toward the export of more capital-intensive products. 
D)  There should be a shift toward the import of more capital-intensive products. 
A)  There should be no change in the composition of China's trade. 
B)  There should be a shift toward the export of more labor-intensive products. 
C)  There should be a shift toward the export of more capital-intensive products. 
D)  There should be a shift toward the import of more capital-intensive products.

Question 12

In spring 2010, an explosion on an offshore oil-drilling rig caused 11 deaths and a major oil spill in the Gulf of Mexico. Shortly thereafter, the U.S. government declared a moratorium on oil drilling in U.S. territorial waters in the Gulf of Mexico and a re-examination of offshore drilling regulations. What were the expected short- and long-run effects of these actions on labor in Gulf coastal states?

Accepted Answer

The expected short-run effects of the mo

Question 13

The international movement of factors of production:

Accepted Answer

A)  is prohibited by the Geneva Convention. 
B)  is completely free of restrictions everywhere in the world. 
C)  tends to make the prices paid to factors of production among countries diverge over time. 
D)  tends to make the prices paid to the factors of production among countries converge over time. 
A)  is prohibited by the Geneva Convention. 
B)  is completely free of restrictions everywhere in the world. 
C)  tends to make the prices paid to factors of production among countries diverge over time. 
D)  tends to make the prices paid to the factors of production among countries converge over time.

Question 14

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

Accepted Answer

A)  an increase in the wages paid to laborers in the receiving country. 
B)  an increase in the rent paid to capital- and land-owners in the receiving country. 
C)  an increase in the rent paid to capital-owners and a decrease in the rent paid to land-owners in the receiving country. 
D)  no change in the either the wages paid to laborers or the rent paid to capital- and land-owners in the receiving country. 
A)  an increase in the wages paid to laborers in the receiving country. 
B)  an increase in the rent paid to capital- and land-owners in the receiving country. 
C)  an increase in the rent paid to capital-owners and a decrease in the rent paid to land-owners in the receiving country. 
D)  no change in the either the wages paid to laborers or the rent paid to capital- and land-owners in the receiving country.

Question 15

Which is the best approach to analyzing migration in the long run?

Accepted Answer

A)  the specific-factors model with no resource mobility across borders 
B)  the specific-factors model with free movement of labor across borders 
C)  the Heckscher-Ohlin model with free movement of labor across borders 
D)  the Heckscher-Ohlin model with no resource mobility across borders 
A)  the specific-factors model with no resource mobility across borders 
B)  the specific-factors model with free movement of labor across borders 
C)  the Heckscher-Ohlin model with free movement of labor across borders 
D)  the Heckscher-Ohlin model with no resource mobility across borders

Question 16

When we use the specific-factors model to study immigration, we assume that:

Accepted Answer

A)  land is immobile internationally but capital and labor are internationally mobile. 
B)  labor is used to move between countries as well as industries, while still keeping capital and land specific to each industry. 
C)  land, labor, and capital are internationally mobile. 
D)  land, labor, and capital are internationally immobile, but capital and land are specific to each industry. 
A)  land is immobile internationally but capital and labor are internationally mobile. 
B)  labor is used to move between countries as well as industries, while still keeping capital and land specific to each industry. 
C)  land, labor, and capital are internationally mobile. 
D)  land, labor, and capital are internationally immobile, but capital and land are specific to each industry.

Question 17

When Irish immigrants first came to the United States, they were widely discriminated against. A century after a wave of Irish immigration, however, Americans generally look favorably on Irish heritage. How can our models explain this?

Accepted Answer

There are a few factors that could expla

Question 18

Suppose labor and capital are the only two resources used for production. In the short run:

Accepted Answer

A)  only capital can move freely between sectors. 
B)  only labor can move freely between sectors. 
C)  both capital and labor can move freely between sectors. 
D)  both resources are restricted in their movement. 
A)  only capital can move freely between sectors. 
B)  only labor can move freely between sectors. 
C)  both capital and labor can move freely between sectors. 
D)  both resources are restricted in their movement.

Question 19

In 2013, what percentage of the U.S. population was foreign-born?

Accepted Answer

A)  3.5% 
B)  14.3% 
C)  23.5% 
D)  33.5% 
A)  3.5% 
B)  14.3% 
C)  23.5% 
D)  33.5%

Question 20

How can we model the long-run effect of FDI flows on wages and rentals?

Accepted Answer

A)  Use a simple supply-and-demand approach. 
B)  Use the Ricardian comparative advantage model. 
C)  Use the Heckscher-Ohlin model with the assumption that capital can migrate. 
D)  Use the Rybczynski theorem. 
A)  Use a simple supply-and-demand approach. 
B)  Use the Ricardian comparative advantage model. 
C)  Use the Heckscher-Ohlin model with the assumption that capital can migrate. 
D)  Use the Rybczynski theorem.

Exam 5: Movement of Labor and Capital Between Countries

What is the likely attitude of owners of capital and land toward immigration?

According to the Rybczynski theorem, how will immigration of unskilled labor from Mexico to the United States affect the Mexican economy?

According to the Rybczynski theorem, why will labor immigration lead to a long-run increase in output in a labor-intensive industry and a decrease in the output of a capital-intensive industry?

In the long run, which of the following will occur if the U.S. federal government eliminates restrictions on migration of Mexican workers to the United States?

In the specific-factors model, labor migration from Mexico to the United States will cause _________ in U.S. low-skilled wages and _________ in Mexican low-skilled wages.

In the long run, immigration will lead to a rightward shift in the receiving country's production possibilities frontier. This shift will:

What is the overall long-run impact of labor immigration on returns to factors of production?

In the short-run (specific-factors) model, foreign direct investment is expected to cause a(n) ________in the return to capital and a(n) ________in the return to land in the receiving country.

The results of the influx of workers into Miami in 1980 as a consequence of the Mariel boat lift and from Russia to Israel in 1989 after the fall of the Soviet Union:

Foreign direct investment that takes the form of purchasing an existing plant is often called:

During the past 10 to 20 years, a considerable amount of foreign capital has flowed into China. What is an implication of capital flow on the composition of Chinese trade?

The international movement of factors of production:

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

Which is the best approach to analyzing migration in the long run?

When we use the specific-factors model to study immigration, we assume that:

When Irish immigrants first came to the United States, they were widely discriminated against. A century after a wave of Irish immigration, however, Americans generally look favorably on Irish heritage. How can our models explain this?

Suppose labor and capital are the only two resources used for production. In the short run:

In 2013, what percentage of the U.S. population was foreign-born?

How can we model the long-run effect of FDI flows on wages and rentals?

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

Filters

In the specific-factors model, labor migration from Mexico to the United States will cause _ in U.S. low-skilled wages and _ in Mexican low-skilled wages.

In the short-run (specific-factors) model, foreign direct investment is expected to cause a(n) in the return to capital and a(n) in the return to land in the receiving country.