Question 1

(Table: Sales and Payments) What is the total revenue (Price · Quantity) of the agricultural sector?

Accepted Answer

A)  $400 
B)  $500 
C)  $600 
D)  $1,000 
A)  $400 
B)  $500 
C)  $600 
D)  $1,000

Question 2

Which of the following statements about the specific-factors model is true?

Accepted Answer

A)  When exports of a product rise, the increase in export revenue is divided equally among mobile and specific factors of production. 
B)  When imports rise, revenues of firms that compete with imports fall. The decrease in revenue is divided equally among the mobile and specific factors of production. 
C)  When exports of a product rise, factors specific to exports gain less than mobile factors; when imports rise, factors specific to import competing industries gain more than mobile factors. 
D)  When exports of a product rise, factors specific to exports gain more than mobile factors; when imports rise, factors specific to import competing industries lose more than mobile factors. 
A)  When exports of a product rise, the increase in export revenue is divided equally among mobile and specific factors of production. 
B)  When imports rise, revenues of firms that compete with imports fall. The decrease in revenue is divided equally among the mobile and specific factors of production. 
C)  When exports of a product rise, factors specific to exports gain less than mobile factors; when imports rise, factors specific to import competing industries gain more than mobile factors. 
D)  When exports of a product rise, factors specific to exports gain more than mobile factors; when imports rise, factors specific to import competing industries lose more than mobile factors.

Question 3

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

Accepted Answer

A)  increase faster than 
B)  increase slower than 
C)  increase at the same rate as 
D)  decrease faster than 
A)  increase faster than 
B)  increase slower than 
C)  increase at the same rate as 
D)  decrease faster than

Question 4

In an industrialized country, the amount of labor employed in the agriculture sector is:

Accepted Answer

A)  larger than labor employed in the manufacturing sector. 
B)  larger than labor employed in the service sector. 
C)  lower than labor employed in either the manufacturing or the service sector. 
D)  is about the same as labor employed in the service sector. 
A)  larger than labor employed in the manufacturing sector. 
B)  larger than labor employed in the service sector. 
C)  lower than labor employed in either the manufacturing or the service sector. 
D)  is about the same as labor employed in the service sector.

Question 5

In contrast to the Ricardian model, international trade in the two-sector (manufacturing and agriculture) specific-factors model:

Accepted Answer

A)  will lead to gains for all resources. 
B)  will lead to losses for all resources. 
C)  will lead to gains for some resources and losses for other resources. 
D)  will not lead to any in the returns of any resources. 
A)  will lead to gains for all resources. 
B)  will lead to losses for all resources. 
C)  will lead to gains for some resources and losses for other resources. 
D)  will not lead to any in the returns of any resources.

Question 6

What U.S. program compensates workers for losses experienced as a result of trade?

Accepted Answer

The U.S. program that compensates worker

Question 7

In the two-sector (manufacturing and agriculture) specific-factors model, the slope of the production possibilities curve equals:

Accepted Answer

A)  the ratio of marginal products of capital in the two sectors. 
B)  the ratio of marginal products of labor utilized in the two sectors. 
C)  the ratio of outputs produced in the two sectors. 
D)  the ratio of land and capital utilized in the two sectors. 
A)  the ratio of marginal products of capital in the two sectors. 
B)  the ratio of marginal products of labor utilized in the two sectors. 
C)  the ratio of outputs produced in the two sectors. 
D)  the ratio of land and capital utilized in the two sectors.

Question 8

Many examples in this chapter indicate that there are substantial __________ as a result of competition and trade.

Accepted Answer

A)  environmental disasters 
B)  labor shortages and strikes 
C)  gains to the economy 
D)  losses to consumers and workers 
A)  environmental disasters 
B)  labor shortages and strikes 
C)  gains to the economy 
D)  losses to consumers and workers

Question 9

Suppose that the wage is $20 per hour in a two-sector (manufacturing and agriculture) specific-factors model. Currently, the prices of manufactured and agricultural outputs are $5 and $1, respectively; the marginal product of labor in the manufactured sector is 6 units per hour; and the marginal product of labor in the agricultural sector is 10 units per hour. What will happen to the distribution of labor between the two sectors?

Accepted Answer

A)  Nothing will happen. The current allocation of labor between the two sectors is ideal. 
B)  The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the current wage. 
C)  The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the current wage. 
D)  Both the agricultural and the manufacturing sector will demand more labor at the current wage. 
A)  Nothing will happen. The current allocation of labor between the two sectors is ideal. 
B)  The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the current wage. 
C)  The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the current wage. 
D)  Both the agricultural and the manufacturing sector will demand more labor at the current wage.

Question 10

(Table: Sales and Payments) Suppose that the price of the manufactured good rises by 20% with no change in the price of the agricultural good. Wages in both sectors rise by 10%. What is the new value of the rental on land?

Accepted Answer

A)  $550 
B)  $500 
C)  $450 
D)  $400 
A)  $550 
B)  $500 
C)  $450 
D)  $400

Question 11

Suppose that wages in the agricultural and manufacturing sectors are $10 and $20 per hour, respectively, and that the prices of both the agricultural and manufactured good are both $50 per unit. What is the marginal productivity of labor in the manufacturing sector?

Accepted Answer

A)  $1,000 
B)  0.4 units per hour 
C)  2.5 units per hour 
D)  $0.40 
A)  $1,000 
B)  0.4 units per hour 
C)  2.5 units per hour 
D)  $0.40

Question 12

As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry __________, and the marginal product of fixed resources used in the contracting industry __________.

Accepted Answer

A)  rises; falls 
B)  remains the same; remains the same 
C)  changes by exactly the same percentage; changes by exactly the same percentage 
D)  falls; rises 
A)  rises; falls 
B)  remains the same; remains the same 
C)  changes by exactly the same percentage; changes by exactly the same percentage 
D)  falls; rises

Question 13

Suppose that the wage is $20 per hour in a two-sector (manufacturing and agriculture) specific-factors model. Currently, the prices of manufactured and agricultural outputs are $5 and $1, respectively; the marginal product of labor in the manufactured sector is six units per hour; and the marginal product of labor in the agricultural sector is 10 units per hour. What will happen to the rentals on land and capital?

Accepted Answer

In the specific-factors model, there are

Question 14

Because of the "law of diminishing marginal returns" to a factor, as more labor is employed, its marginal product:

Accepted Answer

A)  rises. 
B)  falls. 
C)  stays constant. 
D)  rises disproportionally. 
A)  rises. 
B)  falls. 
C)  stays constant. 
D)  rises disproportionally.

Question 15

Suppose that you are trying to decide between being a factor that is mobile between sectors and one that is specific to a particular sector. What are the relative benefits and costs to becoming specific?

Accepted Answer

When deciding between being a factor tha

Question 16

Describe changes in the share of manufacturing employment in total employment and in manufacturing wages over the past 40 years.

Accepted Answer

Over the past 40 years, there has been a

Question 17

The United States is a significant exporter of many agricultural products. Can the specific-factors model explain substantial increases in the price of agricultural land in the Midwest, where many of U.S. agricultural exports originate?

Accepted Answer

Yes, the specific-factors model can expl

Question 18

In the United States, which workers displaced by trade between 2011 and 2014 were more likely to be reemployed?

Accepted Answer

A)  those in the service industries 
B)  those in the manufacturing industries 
C)  Evidence indicates that there is no difference across industries. 
D)  There is no available evidence on this topic. 
A)  those in the service industries 
B)  those in the manufacturing industries 
C)  Evidence indicates that there is no difference across industries. 
D)  There is no available evidence on this topic.

Question 19

Which of the following best describes changes in U.S. manufacturing employment between 1973 and 2014?

Accepted Answer

A)  Manufacturing employment fell, but manufacturing employment as a share of total U.S. employment rose. 
B)  Manufacturing employment rose, but manufacturing employment as a share of total U.S. employment fell. 
C)  Both manufacturing employment and manufacturing employment as a share of total U.S. employment fell. 
D)  Both manufacturing employment and manufacturing employment as a share of total U.S. employment rose. 
A)  Manufacturing employment fell, but manufacturing employment as a share of total U.S. employment rose. 
B)  Manufacturing employment rose, but manufacturing employment as a share of total U.S. employment fell. 
C)  Both manufacturing employment and manufacturing employment as a share of total U.S. employment fell. 
D)  Both manufacturing employment and manufacturing employment as a share of total U.S. employment rose.

Question 20

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the agricultural good will cause:

Accepted Answer

A)  a decrease in nominal wages in both the agricultural and manufacturing sectors. 
B)  an increase in nominal wages in both the agricultural and manufacturing sectors. 
C)  an increase in both nominal and real wages in both the agricultural and manufacturing sectors. 
D)  an increase in the nominal wage in the agricultural sector and a decrease in nominal wage in the manufacturing sector. 
A)  a decrease in nominal wages in both the agricultural and manufacturing sectors. 
B)  an increase in nominal wages in both the agricultural and manufacturing sectors. 
C)  an increase in both nominal and real wages in both the agricultural and manufacturing sectors. 
D)  an increase in the nominal wage in the agricultural sector and a decrease in nominal wage in the manufacturing sector.

(Table: Sales and Payments) What is the total revenue (Price · Quantity) of the agricultural sector?

Which of the following statements about the specific-factors model is true?

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

In an industrialized country, the amount of labor employed in the agriculture sector is:

In contrast to the Ricardian model, international trade in the two-sector (manufacturing and agriculture) specific-factors model:

What U.S. program compensates workers for losses experienced as a result of trade?

In the two-sector (manufacturing and agriculture) specific-factors model, the slope of the production possibilities curve equals:

Many examples in this chapter indicate that there are substantial __________ as a result of competition and trade.

(Table: Sales and Payments) Suppose that the price of the manufactured good rises by 20% with no change in the price of the agricultural good. Wages in both sectors rise by 10%. What is the new value of the rental on land?

Suppose that wages in the agricultural and manufacturing sectors are $10 and $20 per hour, respectively, and that the prices of both the agricultural and manufactured good are both $50 per unit. What is the marginal productivity of labor in the manufacturing sector?

As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry , and the marginal product of fixed resources used in the contracting industry .

Because of the "law of diminishing marginal returns" to a factor, as more labor is employed, its marginal product:

Suppose that you are trying to decide between being a factor that is mobile between sectors and one that is specific to a particular sector. What are the relative benefits and costs to becoming specific?

Describe changes in the share of manufacturing employment in total employment and in manufacturing wages over the past 40 years.

The United States is a significant exporter of many agricultural products. Can the specific-factors model explain substantial increases in the price of agricultural land in the Midwest, where many of U.S. agricultural exports originate?

In the United States, which workers displaced by trade between 2011 and 2014 were more likely to be reemployed?

Which of the following best describes changes in U.S. manufacturing employment between 1973 and 2014?

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the agricultural good will cause:

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

Filters

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

(Table: Sales and Payments) What is the total revenue (Price · Quantity) of the agricultural sector?

Which of the following statements about the specific-factors model is true?

Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. After trade occurs, the return on capital will ____________ the price of the manufactured good.

In an industrialized country, the amount of labor employed in the agriculture sector is:

In contrast to the Ricardian model, international trade in the two-sector (manufacturing and agriculture) specific-factors model:

What U.S. program compensates workers for losses experienced as a result of trade?

In the two-sector (manufacturing and agriculture) specific-factors model, the slope of the production possibilities curve equals:

Many examples in this chapter indicate that there are substantial __________ as a result of competition and trade.

(Table: Sales and Payments) Suppose that the price of the manufactured good rises by 20% with no change in the price of the agricultural good. Wages in both sectors rise by 10%. What is the new value of the rental on land?

Suppose that wages in the agricultural and manufacturing sectors are $10 and $20 per hour, respectively, and that the prices of both the agricultural and manufactured good are both $50 per unit. What is the marginal productivity of labor in the manufacturing sector?

As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry __________, and the marginal product of fixed resources used in the contracting industry __________.

Because of the "law of diminishing marginal returns" to a factor, as more labor is employed, its marginal product:

Suppose that you are trying to decide between being a factor that is mobile between sectors and one that is specific to a particular sector. What are the relative benefits and costs to becoming specific?

Describe changes in the share of manufacturing employment in total employment and in manufacturing wages over the past 40 years.

The United States is a significant exporter of many agricultural products. Can the specific-factors model explain substantial increases in the price of agricultural land in the Midwest, where many of U.S. agricultural exports originate?

In the United States, which workers displaced by trade between 2011 and 2014 were more likely to be reemployed?

Which of the following best describes changes in U.S. manufacturing employment between 1973 and 2014?

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the agricultural good will cause:

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

Filters

As relative prices in various industries change due to trade, the marginal product of fixed resources used in the expanding industry , and the marginal product of fixed resources used in the contracting industry .