Question 1

In a labor-abundant nation, will workers be more or less favorable to international trade? What about a capital-abundant nation? Why?

Accepted Answer

In a labor-abundant nation, workers may

Question 2

(Figure: A Country's Before and After Trade Equilibria) How many shoes will this nation export?

Accepted Answer

A)  0 
B)  125 
C)  350 
D)  500 
A)  0 
B)  125 
C)  350 
D)  500

Question 3

According to the Stolper-Samuelson theorem, would you expect all workers across the globe to favor limiting trade? Why or why not?

Accepted Answer

According to the Stolper-Samuelson theor

Question 4

Suppose the information given in the following table is for a country with abundant labor. Does this information indicate that the country's trade pattern violates the Heckscher-Ohlin model?

Accepted Answer

The answer of Suppose the information given in the following...

Question 5

In the long run, when factors are mobile, an increase in the relative price of a good will increase the real earnings of the factor used intensively in the production of that good. This is known as:

Accepted Answer

A)  the Heckscher-Ohlin model. 
B)  the Stolper-Samuelson theorem. 
C)  the Ricardian model. 
D)  the specific-factor theorem. 
A)  the Heckscher-Ohlin model. 
B)  the Stolper-Samuelson theorem. 
C)  the Ricardian model. 
D)  the specific-factor theorem.

Question 6

Which of the following offers an explanation for the Leontief paradox?

Accepted Answer

A)  Leontief assumed that U.S. and foreign technologies were not the same. 
B)  Leontief incorporated land and other resources. 
C)  Leontief did not distinguish between skilled and unskilled labor. 
D)  Leontief assumed that the United States was capital intensive. 
A)  Leontief assumed that U.S. and foreign technologies were not the same. 
B)  Leontief incorporated land and other resources. 
C)  Leontief did not distinguish between skilled and unskilled labor. 
D)  Leontief assumed that the United States was capital intensive.

Question 7

Canada and the United States produce computers and chemicals using labor and capital as the only inputs in production. The United States is capital abundant, and Canada is labor abundant. Computer production is more labor intensive than chemical production in both countries. What does the Heckscher-Ohlin model predict will happen to prices of computers or chemicals in the two countries?

Accepted Answer

A)  The price of chemicals should rise in the United States. 
B)  The price of chemicals should fall in the United States. 
C)  The price of computers should fall in Canada. 
D)  The price of chemicals should rise in Canada. 
A)  The price of chemicals should rise in the United States. 
B)  The price of chemicals should fall in the United States. 
C)  The price of computers should fall in Canada. 
D)  The price of chemicals should rise in Canada.

Question 8

If agriculture is a capital-intensive industry in the United States and a labor-intensive industry in India, then:

Accepted Answer

A)  India should export agricultural goods to the United States. 
B)  neither country will have an advantage in agricultural production. 
C)  there is factor-intensity reversal in agricultural production between the two countries. 
D)  it is difficult to determine which country is labor abundant. 
A)  India should export agricultural goods to the United States. 
B)  neither country will have an advantage in agricultural production. 
C)  there is factor-intensity reversal in agricultural production between the two countries. 
D)  it is difficult to determine which country is labor abundant.

Question 9

(Figure: A Country's Before and After Trade Equilibria) What are the pre-trade quantities of shoes and computers produced by this nation?

Accepted Answer

A)  300 shoes; 300 computers 
B)  225 shoes; 175 computers 
C)  225 shoes; 200 computers 
D)  150 shoes; 300 computers 
A)  300 shoes; 300 computers 
B)  225 shoes; 175 computers 
C)  225 shoes; 200 computers 
D)  150 shoes; 300 computers

Question 10

Suppose that Home has 10% of the world's capital, 10% of the world's skilled labor, 40% of the world's unskilled labor, and produces 20% of the world's GDP. What does this information suggest about Home's resource endowments? Explain your answer.

Accepted Answer

This information suggests that Home is r

Question 11

The international equilibrium price (or world price) and quantity for a traded item is determined by:

Accepted Answer

A)  the WTO. 
B)  the U.S. Department of Commerce. 
C)  the intersection of the export supply schedule and the import demand schedule. 
D)  trade negotiations conducted by representatives in the two nations. 
A)  the WTO. 
B)  the U.S. Department of Commerce. 
C)  the intersection of the export supply schedule and the import demand schedule. 
D)  trade negotiations conducted by representatives in the two nations.

Question 12

Consider the Heckscher-Ohlin model and the Stolper-Samuelson theorem. What do they suggest about what are the gainers and the losers from international trade?

Accepted Answer

The Heckscher-Ohlin model and the Stolpe

Question 13

France and Italy only trade with each other. Each produces wine and bread. The production of bread is relatively capital intensive, and the production of wine is relatively labor intensive. France is relatively abundant in capital, while Italy is relatively abundant in labor. Which of the following statements is correct?

Accepted Answer

A)  Italy has a larger labor force than France. 
B)  France has a larger labor force than Italy. 
C)  The ratio of Italy's total capital stock to its labor force is smaller than the same ratio for France. 
D)  The ratio of Italy's total capital stock to its labor force is larger than the same ratio for France. 
A)  Italy has a larger labor force than France. 
B)  France has a larger labor force than Italy. 
C)  The ratio of Italy's total capital stock to its labor force is smaller than the same ratio for France. 
D)  The ratio of Italy's total capital stock to its labor force is larger than the same ratio for France.

Question 14

Leontief suggested that his results were not a paradox once we account for differences in:

Accepted Answer

A)  resource endowments. 
B)  capital stocks. 
C)  labor forces. 
D)  resource productivities. 
A)  resource endowments. 
B)  capital stocks. 
C)  labor forces. 
D)  resource productivities.

Question 15

According to the Stolper-Samuelson theorem, would you expect U.S. skilled workers to benefit from free trade worldwide?

Accepted Answer

According to the Stolper-Samuelson theor

Question 16

The Heckscher-Ohlin model assumes that the factors of production are mobile ______, but immobile _____.

Accepted Answer

A)  in the short run; in the long run 
B)  in the long run; in the short run 
C)  domestically; internationally 
D)  internationally; domestically 
A)  in the short run; in the long run 
B)  in the long run; in the short run 
C)  domestically; internationally 
D)  internationally; domestically

Question 17

Which of the following is NOT an explanation of Leontief's paradox?

Accepted Answer

A)  Leontief did not distinguish between high-skilled and low-skilled labor. 
B)  The United States was not engaged in completely free trade in 1947 as the Heckscher-Ohlin model assumes. 
C)  The data from 1947 might be unusual because the war had recently ended. 
D)  United States' trading partners gave preferential treatment to U.S. exports. 
A)  Leontief did not distinguish between high-skilled and low-skilled labor. 
B)  The United States was not engaged in completely free trade in 1947 as the Heckscher-Ohlin model assumes. 
C)  The data from 1947 might be unusual because the war had recently ended. 
D)  United States' trading partners gave preferential treatment to U.S. exports.

Question 18

There are many real-life examples of factor-intensity (the ratio of capital to labor) differences in the same industries in different nations. How does the Heckscher-Ohlin model handle this?

Accepted Answer

A)  The Heckscher-Ohlin model makes no assumptions about different factor intensities. 
B)  The Heckscher-Ohlin model assumes that all firms require equal amounts of capital and labor just to be on the safe side. 
C)  The Heckscher-Ohlin model ignores the possibility of different factor intensities and instead assumes that each industry has the same factor intensity in every nation. 
D)  Factor-intensity differences do not change the predictive value of the model. 
A)  The Heckscher-Ohlin model makes no assumptions about different factor intensities. 
B)  The Heckscher-Ohlin model assumes that all firms require equal amounts of capital and labor just to be on the safe side. 
C)  The Heckscher-Ohlin model ignores the possibility of different factor intensities and instead assumes that each industry has the same factor intensity in every nation. 
D)  Factor-intensity differences do not change the predictive value of the model.

Question 19

Which of the following statements is true?

Accepted Answer

A)  The Heckscher-Ohlin model offers a reasonable explanation of the pattern of trade and the gains from trade. 
B)  The Heckscher-Ohlin trade model does not offer an explanation of the pattern of trade. 
C)  The Heckscher-Ohlin trade model does not offer an explanation of the gains from trade. 
D)  The Ricardian trade model (with labor as the only input) offers a better explanation of the pattern of trade and the gains from trade than the Heckscher-Ohlin model. 
A)  The Heckscher-Ohlin model offers a reasonable explanation of the pattern of trade and the gains from trade. 
B)  The Heckscher-Ohlin trade model does not offer an explanation of the pattern of trade. 
C)  The Heckscher-Ohlin trade model does not offer an explanation of the gains from trade. 
D)  The Ricardian trade model (with labor as the only input) offers a better explanation of the pattern of trade and the gains from trade than the Heckscher-Ohlin model.

Question 20

The Heckscher-Ohlin Model assumes that:

Accepted Answer

A)  factor endowments are the same in the two countries. 
B)  consumer tastes are different across countries. 
C)  the technologies used to produce the two goods are different in the two countries. 
D)  consumer tastes and technologies are the same in the two countries. 
A)  factor endowments are the same in the two countries. 
B)  consumer tastes are different across countries. 
C)  the technologies used to produce the two goods are different in the two countries. 
D)  consumer tastes and technologies are the same in the two countries.

In a labor-abundant nation, will workers be more or less favorable to international trade? What about a capital-abundant nation? Why?

(Figure: A Country's Before and After Trade Equilibria) How many shoes will this nation export?

According to the Stolper-Samuelson theorem, would you expect all workers across the globe to favor limiting trade? Why or why not?

Suppose the information given in the following table is for a country with abundant labor. Does this information indicate that the country's trade pattern violates the Heckscher-Ohlin model?

In the long run, when factors are mobile, an increase in the relative price of a good will increase the real earnings of the factor used intensively in the production of that good. This is known as:

Which of the following offers an explanation for the Leontief paradox?

If agriculture is a capital-intensive industry in the United States and a labor-intensive industry in India, then:

(Figure: A Country's Before and After Trade Equilibria) What are the pre-trade quantities of shoes and computers produced by this nation?

Suppose that Home has 10% of the world's capital, 10% of the world's skilled labor, 40% of the world's unskilled labor, and produces 20% of the world's GDP. What does this information suggest about Home's resource endowments? Explain your answer.

The international equilibrium price (or world price) and quantity for a traded item is determined by:

Consider the Heckscher-Ohlin model and the Stolper-Samuelson theorem. What do they suggest about what are the gainers and the losers from international trade?

Leontief suggested that his results were not a paradox once we account for differences in:

According to the Stolper-Samuelson theorem, would you expect U.S. skilled workers to benefit from free trade worldwide?

The Heckscher-Ohlin model assumes that the factors of production are mobile __, but immobile _.

Which of the following is NOT an explanation of Leontief's paradox?

There are many real-life examples of factor-intensity (the ratio of capital to labor) differences in the same industries in different nations. How does the Heckscher-Ohlin model handle this?

Which of the following statements is true?

The Heckscher-Ohlin Model assumes that:

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Movement of Labor and Capital Between Countries

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

Exam 4: Trade and Resources: the Heckscher-Ohlin Model

In a labor-abundant nation, will workers be more or less favorable to international trade? What about a capital-abundant nation? Why?

(Figure: A Country's Before and After Trade Equilibria) How many shoes will this nation export?

According to the Stolper-Samuelson theorem, would you expect all workers across the globe to favor limiting trade? Why or why not?

Suppose the information given in the following table is for a country with abundant labor. Does this information indicate that the country's trade pattern violates the Heckscher-Ohlin model?

In the long run, when factors are mobile, an increase in the relative price of a good will increase the real earnings of the factor used intensively in the production of that good. This is known as:

Which of the following offers an explanation for the Leontief paradox?

If agriculture is a capital-intensive industry in the United States and a labor-intensive industry in India, then:

(Figure: A Country's Before and After Trade Equilibria) What are the pre-trade quantities of shoes and computers produced by this nation?

Suppose that Home has 10% of the world's capital, 10% of the world's skilled labor, 40% of the world's unskilled labor, and produces 20% of the world's GDP. What does this information suggest about Home's resource endowments? Explain your answer.

The international equilibrium price (or world price) and quantity for a traded item is determined by:

Consider the Heckscher-Ohlin model and the Stolper-Samuelson theorem. What do they suggest about what are the gainers and the losers from international trade?

Leontief suggested that his results were not a paradox once we account for differences in:

According to the Stolper-Samuelson theorem, would you expect U.S. skilled workers to benefit from free trade worldwide?

The Heckscher-Ohlin model assumes that the factors of production are mobile ______, but immobile _____.

Which of the following is NOT an explanation of Leontief's paradox?

There are many real-life examples of factor-intensity (the ratio of capital to labor) differences in the same industries in different nations. How does the Heckscher-Ohlin model handle this?

Which of the following statements is true?

The Heckscher-Ohlin Model assumes that:

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Movement of Labor and Capital Between Countries

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

The Heckscher-Ohlin model assumes that the factors of production are mobile __, but immobile _.