Deck 5: Movement of Labor and Capital Between Countries

Question 1

One example of emigration from Europe was during the
Period between 1870 and 1913.Wages grew rather
Than declined in the destination nations of the United
States, Canada, and Australia.Why?

A)The economic theory did not predict well.
B)Workers from Europe were highly skilled and raised the equilibrium wage.
C)The government stepped in and raised the minimum wage.
D)Wages rose due to the industrial revolution and higher levels of capital but grew more slowly because of
The immigration.

Answer 1

D

Question 2

If a person leaves Sweden to work in the United States,
She is said to ________ from Sweden and __________
To the United States.

A)immigrate; emigrate
B)emigrate; immigrate
C)immigrate; immigrate
D)emigrate; emigrate

Answer 2

B

Question 3

Large­scale immigration into the New World, between
1870 and 1913 caused the real wages to:

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.

Answer 3

B

Question 4

The immigration of Russian Jews to Israel:

A)increased the population of Israel and caused wages to plummet.
B)decreased the native population of Israel.
C)increased the population of skilled workers but did not decrease wages.
D)caused wages of skilled workers to decrease.

Question 5

Which group of U.S.citizens competes with illegal
Immigrants in the United States?

A)medical doctors
B)high school dropouts
C)college graduates
D)all U.S.citizens

Question 6

When some factors are fixed, it is a short­run model.
This is called ____________ model.

A)the Heckscher­Ohlin
B)the Ricardian
C)the specific­factors
D)the purchasing power parity

Question 7

The results of the influx of workers into Miami in 1980
As a consequence of the Mariel boatlift and from Russia
To Israel in 1989 after the fall of the Soviet Union:

A)were different: wages fell in Miami but rose in Israel.
B)were similar: wages fell in Israel but rose in Miami.
C)surprised most people because the outcome was no reduction in wages in either area.
D)were that wages fell in both regions, confirming that immigration hurts domestic workers.

Question 8

Emigration and immigration are:

A)when workers leave and workers come in.
B)two ways of saying workers are coming in.
C)when workers come in and workers leave.
D)two ways of saying workers leave.

Question 9

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

A)decreased the rate of growth of real wages in the New World and increased the rate of growth of real
Wages in the Old World.
B)increased the rate of growth of real wages in the New World and decreased the rate of growth of real
Wages in the Old World.
C)decreased the rate of growth of real wages in both the New and Old Worlds.
D)increased the rate of growth of real wages in both the New and Old Worlds.

Question 10

The specific­factors model can also apply to recent
Immigration into the United States.There are two
Major categories of U.S.immigrants:

A)male and female.
B)young and middle­aged.
C)very low skilled and highly educated and skilled.
D)middle­income artisans and performance artists.

Question 11

U.S.immigrants from Mexico are mainly _________
Workers and U.S.immigrants from India are mainly
___________ workers.

A)low­skilled; highly skilled
B)middle­income artisans; performance artists
C)male; female
D)younger; older

Question 12

Interesting real­life examples tell us that labor
Migration often:

A)reduces wages in both the source nation and the destination nation.
B)has no negative effect on wages in the destination nation.
C)increases labor productivity.
D)changes the labor market so that competition for workers rises.

Question 13

The Mariel boatlift of Cuban immigrants into Miami
Caused the:

A)population of unskilled workers in Miami to decline.
B)population of skilled workers in Miami to decline.
C)supply of labor to increase, but it did not decrease the wages.
D)wages of all workers to decline.

Question 14

When we use the specific­factors model to study
Immigration, we assume that:

A)land is immobile internationally but capital and labor are internationally mobile.
B)land and capital are immobile internationally but labor is internationally mobile.
C)land, labor, and capital are internationally mobile.
D)land, labor, and capital are internationally immobile.

Question 15

When the supply of labor increases, according to the
Specific­factors model, which of the following is NOT
Likely to happen?

A)The number of workers employed will increase.
B)The wages for workers will decline.
C)The marginal product of labor shifts to the right.
D)The overall wage in the economy increases in the short run.

Question 16

The large­scale labor migration that occurred during
1870 to 1913 from Europe to America ____ wages in
The destination nations and ____ wages in the source
Nations, thus leading to _____ of wages between the
Regions.

A)lowered; raised; convergence
B)raised; raised; divergence
C)lowered; lowered; divergence
D)raised; lowered; convergence

Question 17

To study labor migration using the specific­factors
Model, we assume ________ and ________ cannot
Move within the domestic economy, but we allow
________ to move both domestically and
Internationally.

A)land; capital; labor
B)labor; land; capital
C)land; loanable funds; capital
D)labor; capital; land

Question 18

Which model can we use to analyze the short­run
Effects of migration?

A)specific­factors
B)Ricardian
C)Heckscher­Ohlin
D)purchasing power parity

Question 19

The specific­factors model predicts that after
Immigration, the equilibrium wage in both industries in
The destination nation:

A)rises.
B)falls.
C)remains the same.
D)cannot be determined with the information given.

Question 20

When the supply of labor increases, according to the
Specific­factors model, which of the following is likely to
Happen in the sending country?

A)The number of workers employed will decrease.
B)The wages for workers will rise.
C)The marginal product of labor shifts to the right.
D)All of these are likely to happen in the sending country.

Question 21

In the specific­factors model, migration of labor will
Cause:

A)the wage to rise in the receiving country and the wage to fall in the sending country.
B)the wage to fall in the receiving country and the wage to rise in the sending country.
C)the wage to rise in both the receiving and sending countries.
D)the wage to fall in both the receiving and sending countries.

Question 22

U.S.and European immigration policies are best
Described as welcoming:

A)all foreign workers.
B)foreign workers in most industries.
C)foreign workers in select industries.
D)no foreign workers.

Question 23

Foreign­born workers in the United States tend to:

A)be poorly educated (high school dropouts) or very highly educated (graduate degrees).
B)be mainly very poorly educated.
C)be mainly very highly educated.
D)have educational levels similar to U.S.­born workers.

Question 24

In the United States the share of foreign­born workers
With 12 years of education or less is:

A)less than 10%.
B)less than 50%.
C)more than 70%.
D)negligible.

Question 25

Emigration causes __________ in the capital-labor
Ratio and __________ in the return to capital.

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

Question 26

In destination countries, as immigration occurs and
More labor is employed, in the short run, wages fall
And the rental (return to) of land and capital (fixed
Resources):

A)are unaffected.
B)both rise.
C)both fall.
D)rise for one and fall for the other.

Question 27

What is the likely attitude of owners of capital and land
Toward 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 28

The combination of legal and illegal immigrants in the
United States creates a U­shaped pattern between the
Number of immigrants and:

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

Question 29

In destination countries, as immigration occurs and
More labor is employed, in the short run, wages fall
And the marginal products of land and capital (fixed
Resources):

A)are unaffected.
B)both rise.
C)both fall.
D)rise for one and fall for the other.

Question 30

If capital is specific to manufacturing and land is
Specific to agriculture, then migration of labor from
Low­income to high­income countries will cause:

A)the wage to rise in the high­income country and the wage to fall in the low­income country.
B)the wage to fall in the high­income country and the wage to rise in the low­income country.
C)the wage to rise in both the high­income and low­ income countries.
D)the wage to fall in both the high­income and low­ income countries.

Question 31

The H1­B visa program is designed:

A)to keep out undocumented workers.
B)to encourage bright U.S.college students to study abroad.
C)to attract scientists and engineers from other nations to help U.S.industry prosper.
D)to have a way to force foreign students to go back to their native lands after graduation.

Question 32

Immigration causes __________ in the capital-labor
Ratio and __________ in the return to capital.

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

Question 33

Of the 10% of the U.S.work force with advanced
(Master's, other professional, and Ph.D.) degrees, the
Share of those who are foreign born is:

A)more than 50%.
B)between 16 and 40%.
C)less than 15%.
D)less than 5%.

Question 34

Because most immigrants into the United States are
Either highly skilled or unskilled, the majority of
Workers:

A)see very little impact on their wages as a result of immigration.
B)have difficulty finding jobs and getting raises because of all the competition from immigrants.
C)feel a big hit on wages and unemployment.
D)must rely on trade adjustment assistance for help retraining and relocating.

Question 35

Illegal immigrants into the United States tend to
Compete mainly with:

A)highly educated American workers.
B)poorly educated American workers.
C)all American workers.
D)one another.

Question 36

In the specific­factors model, immigration causes:

A)a rightward shift in the receiving country's production possibilities frontier.
B)a leftward shift in the receiving country's production possibilities frontier.
C)no change in the receiving country's production possibilities frontier.
D)a rightward shift in the sending country's production possibilities frontier.

Question 37

In the specific­factors model, labor migration from
Mexico to the United States will cause _________ in
U)S.low­skilled wages and _________ in Mexican low­
Skilled wages.

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

Question 38

The effect of immigration on industry output in the
Short run is:

A)to lower it across all industry.
B)to raise it in sectors that do not get immigrant workers but lower it where immigrants are employed.
C)that, surprisingly, additional workers are employed, but there is no effect on industry output.
D)that it raises industry output overall, and the rise is skewed so industries employing immigrants rise by
More-thus shifting the PPF.

Question 39

Which legislation would U.S.labor unions support?

A)legislation to eliminate all restrictions on immigration
B)legislation to increase direct foreign investment in the United States
C)legislation to ease rules on immigration
D)Labor unions would support all of these measures.

Question 40

Legal immigrants into the United States tend to
Compete mainly with:

A)highly educated American workers.
B)poorly educated American workers.
C)all American workers.
D)one another.

Question 41

In the long run, immigration will lead to a rightward
Shift in the receiving country's production possibilities
Frontier.As a result, this shift will:

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

Question 42

In the long run (the HO model), immigration will lead
To:

A)an increase in the production of both the labor­ intensive and the capital­intensive goods in the
Receiving country.
B)an increase in the production of the labor­intensive 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 capital­intensive goods in the
Receiving country.
D)a decrease in the production of the labor­intensive and an increase in the production of the capital­
Intensive good in the receiving country.

Question 43

Consider an economy that only produces steel and
Shoes; steel is capital intensive and shoes are labor
Intensive.How will emigration of labor from this
Economy affect production?

A)Production of both the labor­intensive and the capital­intensive good will rise.
B)Production of both the labor­intensive and capital­ intensive good will fall.
C)Production of the labor­intensive good will rise and production of the capital­intensive good will fall.
D)Production of the labor­intensive good will fall and production of the capital­intensive good will rise.

Question 44

Suppose labor and capital are the only two resources
Used for production.In the long run:

A)both capital and labor can move freely between sectors.
B)only labor can move between sectors.
C)only capital can move between sectors.
D)both capital and labor are blocked from moving between sectors.

Question 45

Consider a hypothetical economy in which only
Computers and shoes are produced.If two resources
Are being used, labor and capital, then any increase in
Immigration in the long run:

A)will decrease wages in the shoe industry.
B)will decrease wages in the computer industry.
C)will increase wages in the shoe industry.
D)will keep wages constant because marginal products do not change.

Question 46

In the HO model, a "box diagram" describes the
Distribution of:

A)output between the two producing sectors in a country.
B)output between the two countries of the model.
C)labor and capital between the two producing sectors of a country.
D)labor between the two countries of the model.

Question 47

For the sending country, what will be the long­run
Effects of immigration on wages 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 48

In the long run (the HO model), immigration will lead
To:

A)an increase in the wage and a decrease in the return to capital in the receiving country.
B)an increase in both the wage and the return to capital in the receiving country.
C)a decrease in the wage and an increase in the return to capital in the receiving country.
D)no change in the wage and the return to capital in the receiving country.

Question 49

In the long run, immigration will shift the sending
Country's production possibilities frontier inward.This
Shift will cause:

A)a larger decline in the potential output of the capital­intensive good.
B)a larger decline in the potential output of the labor­ intensive good.
C)equal declines in the potential output of both the labor­intensive and the capital­intensive good.
D)a decline in the potential output of the labor­ intensive good and an increase in the potential output
Of the capital­intensive good.

Question 50

In the specific­factors model, how will immigration
Affect the sending country's production possibilities
Frontier?

A)It will shift it to the right.
B)It will shift it to the left.
C)It will not affect its production possibilities curve.
D)Immigration will first shift it to the left, then shift it back to its original position.

Question 51

In an economy with two industries, an increase in
Immigration will:

A)cause employment to increase in both in the long run.
B)cause employment to increase in one and decrease in the other in the short run.
C)cause employment to increase in one and decrease in the other in the long run.
D)cause a decline in wages in both industries in the long run.

Question 52

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?

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 53

Consider an economy that only produces steel and
Shoes; steel is capital intensive and shoes are labor
Intensive.Which industry has a lower capital­labor
Ratio?

A)steel
B)shoes
C)neither steel nor shoes
D)The capital­labor ratios are identical in steel and shoes.

Question 54

Consider an economy that only produces steel and
Shoes; steel is capital intensive and shoes are labor
Intensive.How will emigration of labor from this
Economy affect the marginal productivity of labor?

A)It will fall.
B)It will not change.
C)It will rise.
D)It will fall in the short run and rise in the long run.

Question 55

Because the capital­labor ratio will be unchanged in the
Long run, how will immigration affect the MPs and
Returns to factors of production?

A)They will not change.
B)They will fall.
C)They will rise.
D)They will rise in the short run, but fall in the long run.

Question 56

Consider a hypothetical economy in which only
Computers and shoes are produced and in which
Computer production is capital intensive as compared
With shoe production.If two resources are being used,
Labor and capital, then the capital­labor ratio would be:

A)higher in the shoe industry.
B)lower in the computer industry.
C)the same in both industries.
D)higher in the computer industry.

Question 57

In the long run (the HO model), immigration will lead
To:

A)an increase in the price of both the labor­intensive and the capital­intensive goods in the receiving
Country.
B)an increase in the price of the labor­intensive good and a decrease in the price of the capital­intensive
Good in the receiving country.
C)a decrease in the price of both the labor­intensive and the capital­intensive goods in the receiving
Country.
D)no change in the price of either the labor­intensive or the capital­intensive good in the receiving country.

Question 58

Consider a hypothetical economy in which only
Computers and shoes are produced and in which
Computer production is capital intensive compared with
Shoe production.If two resources are being used, labor
And capital, then any increase in immigration in the
Long run:

A)will cause the capital­labor ratio to increase in the computer industry.
B)will cause the capital­labor ratio to increase in the shoe industry.
C)will cause the capital­labor ratio to increase in both the industries.
D)will increase the number of workers employed in the shoe industry.

Question 59

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

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 60

In order to analyze migration in the long run, it is
Appropriate to use:

A)the specific­factors model with free movement of labor across borders.
B)the Heckscher­Ohlin model with free movement of labor across borders.
C)the Ricardian model with no movement of labor across borders.
D)the PPF modified for three goods, three factors of production (all fixed), and three nations.

Question 61

What is the effect of immigration in the long run?

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

Question 62

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

A)Mexico's production of capital­intensive products will increase.
B)Mexico's production of labor­intensive products will decrease.
C)Wages of Mexican workers will increase.
D)Wages of Mexican workers will decrease.

Question 63

The hypothesis that the results of a long­run
Heckscher­Ohlin model with labor immigration will
Result in an increase in production for the labor­
Intensive industry while reducing production in the
Capital­intensive industry is known as the _____
Theorem.

A)Stolper­Samuelson
B)specific­factors
C)Ricardian
D)Rybczynski

Question 64

Skill­biased technological changes:

A)benefit educated workers more than uneducated workers.
B)benefit all workers equally.
C)benefit uneducated workers more than educated workers.
D)benefit no workers.

Question 65

What is the overall long­run impact of labor
Immigration on returns to factors of production?

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 66

In the Heckscher­Ohlin model, which of the following is
The term used to describe the absorption of an increase
In a factor with changes in sector outputs without any
Change in factor prices?

A)factor price insensitivity
B)factor price equalization
C)factor price theorem
D)factor price absorption

Question 67

What is the long­run effect of immigration on capital
Use in the receiving country?

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

Question 68

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

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

Question 69

According to the Rybczynski theorem, how will
Immigration affect the sending country's production of
Labor­intensive and capital­intensive goods?

A)Production of the labor­intensive goods will increase and production of capital­intensive goods will decrease.
B)Production of both labor­intensive and the capital­ intensive goods will increase.
C)Production of labor­intensive goods will decrease and production of capital­intensive goods will increase.
D)Production of both labor­intensive and capital­ intensive goods will decrease.

Question 70

"Greenfield investment" is defined as:

A)a takeover of an existing company.
B)the construction of a new factory in a foreign company.
C)the hiring of at least 25 workers in a foreign company.
D)renting space in an office building.

Question 71

In the short­run (specific­factors) model, foreign direct
Investment is expected to ________ the marginal
Product of labor and ________ wages in the receiving
Country.

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

Question 72

In the long run (the HO model), immigration will lead
To:

A)a rightward shift in the receiving country's production possibilities frontier.
B)a leftward shift in the receiving country's production possibilities frontier.
C)no change in the receiving country's production possibilities frontier.
D)a rightward shift in the sending country's production possibilities frontier.

Question 73

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?

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

Question 74

In the Heckscher­Ohlin model with two goods and two
Factors, an increase in one factor will cause:

A)an increase in the production of the good that uses the factor intensively.
B)a decrease in the production of the good that use the factor intensively.
C)an increase in the production of the good that does not use the factor intensively.
D)no change in the production of both goods.

Question 75

According to the Rybczynski theorem, immigration will
Cause:

A)an increase in the output of the labor­intensive good and a decrease in the output of the capital­intensive
Good in the receiving country.
B)an increase in the output of both the labor­intensive and the capital­intensive goods in the receiving
Country.
C)a decrease in the output of the labor­intensive good and an increase in the output of the capital­intensive
Good in the receiving country.
D)decreases in the output of both the labor­intensive and the capital­intensive good in the receiving country.

Question 76

Foreign direct investment that takes the form of a new
Startup facility is called:

A)acquisition FDI.
B)greenfield FDI.
C)intermediary FDI.
D)brownfield FDI.

Question 77

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.

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

Question 78

Which of the following is NOT a long­run impact of
Labor immigration?

A)Production of labor­intensive industries will increase.
B)Production of capital­intensive industries will decrease.
C)There will be a shift of labor and capital into labor­ intensive industries.
D)The PPF will shift inward.

Question 79

If we use the short­run (specific­factors) model to
Model FDI movement from one nation to another, then
Wages in the recipient nation:

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

Question 80

A corollary to the Rybczynski theorem is that in the
Long run, prices of factors will not be affected.This is
Known as:

A)the Friedman corollary.
B)the Marshall­Lerner condition.
C)the factor price insensitivity result.
D)the Stolper­Samuelson prediction.