Exam 3: Gains and Losses From Trade in the Specific-Factors Model

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(Table: Production and Prices in Two Industries) According to the information provided in the table, the wage rate in the agriculture sector is:

(Multiple Choice)

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Question 41

As a general rule, the return to (or rental price of) a specific factor used in a product tends to:

(Multiple Choice)

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Question 42

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of manufactured goods will cause a(n):

(Multiple Choice)

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Question 43

(Table: Home and Foreign Prices for Manufacturing and Agriculture) Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). If the two countries open their markets for trade, then:

(Multiple Choice)

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Question 44

Diminishing returns to labor means:

(Multiple Choice)

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Question 45

Which term below describes a situation in which a nation engages in no trade and produces everything it consumes?

(Multiple Choice)

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Question 46

In an economy in which labor is mobile and homogeneous, the wages between industries will be:

(Multiple Choice)

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Question 47

When there are diminishing returns to labor, the production possibility frontier is _ sloping and __.

(Multiple Choice)

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Question 48

In the two-sector specific-factors model, diminishing returns to labor implies:

(Multiple Choice)

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Question 49

Suppose a government wants to raise money to compensate the losers from trade. In a specific-factors model, the government could tax:

(Multiple Choice)

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Question 50

When there are diminishing marginal returns to factors of production, the PPF is:

(Multiple Choice)

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Question 51

In a two-sector (manufacturing and agriculture) specific-factors model:

(Multiple Choice)

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Question 52

The idea of fair-trade coffee addresses the problem of specific factors. How?

(Short Answer)

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Question 53

(Table: Production and Prices in Two Industries) Using the information from the table, we can expect which of the following to happen in the economy?

(Multiple Choice)

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Question 54

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the marginal product of capital used in manufacturing production when trade occurs?

(Multiple Choice)

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Question 55

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs?

(Multiple Choice)

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Question 56

Suppose that labor is mobile between sectors but that capital and land are specific. Then labor is more likely to benefit from trade when:

(Multiple Choice)

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Question 57

If the wage rate in the agriculture sector is lower than the manufacturing sector, then labor will migrate to the manufacturing sector. This will cause:

(Multiple Choice)

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Question 58

If a nation begins to trade, it will wish to buy (import) the product for which its own relative price is:

(Multiple Choice)

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Question 59

The specific-factors model concludes that if there is a decrease in the relative price in (and a contraction of) one industry, the factor specific to that industry:

(Multiple Choice)

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Question 60

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Exam 3: Gains and Losses From Trade in the Specific-Factors Model

(Table: Production and Prices in Two Industries) According to the information provided in the table, the wage rate in the agriculture sector is:

As a general rule, the return to (or rental price of) a specific factor used in a product tends to:

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of manufactured goods will cause a(n):

(Table: Home and Foreign Prices for Manufacturing and Agriculture) Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). If the two countries open their markets for trade, then:

Diminishing returns to labor means:

Which term below describes a situation in which a nation engages in no trade and produces everything it consumes?

In an economy in which labor is mobile and homogeneous, the wages between industries will be:

When there are diminishing returns to labor, the production possibility frontier is _______ sloping and ________.

In the two-sector specific-factors model, diminishing returns to labor implies:

Suppose a government wants to raise money to compensate the losers from trade. In a specific-factors model, the government could tax:

When there are diminishing marginal returns to factors of production, the PPF is:

In a two-sector (manufacturing and agriculture) specific-factors model:

The idea of fair-trade coffee addresses the problem of specific factors. How?

(Table: Production and Prices in Two Industries) Using the information from the table, we can expect which of the following to happen in the economy?

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the marginal product of capital used in manufacturing production when trade occurs?

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs?

Suppose that labor is mobile between sectors but that capital and land are specific. Then labor is more likely to benefit from trade when:

If the wage rate in the agriculture sector is lower than the manufacturing sector, then labor will migrate to the manufacturing sector. This will cause:

If a nation begins to trade, it will wish to buy (import) the product for which its own relative price is:

The specific-factors model concludes that if there is a decrease in the relative price in (and a contraction of) one industry, the factor specific to that industry:

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Trade and Resources: the Heckscher-Ohlin 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

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When there are diminishing returns to labor, the production possibility frontier is _ sloping and __.