Tenta 2 OM1 Flashcards
Since 1994, ____ has ensured compliance with international trade regulations.
Choose one or no option:
WTO
U.S. Congress
European Union
G7
GATT
WTO
The gravity model explains why…
Choose one or no option:
countries with oil reserves tend to export oil
trade between Sweden and Germany is larger than that between Sweden and Spain
intra-industry trade is more important than other forms of trade between neighboring countries
capital-rich countries export goods whose production is capital-intensive
European countries often rely on natural resources
trade between Sweden and Germany is larger than that between Sweden and Spain
The Ricardian model of trade attributes gains from trade associated with the principle of comparative differences to…
Choose one or no option:
differences in preferences
differences in resources (factors of production)
differences in the level of technology
gravitational relationship between countries
differences in labor productivity
differences in labor productivity
unit labor requirements
Home. TYG. Balls
10. 20
Abroad 60 30
We have two countries, Home and Abroad. Two goods can be produced: fabric (meters) and balls (units). Given the information on unit labor requirements in each sector and country as provided in the table above…
Choose one or no option:
Home has a comparative advantage in producing both fabric and balls.
Home has a comparative advantage in producing balls.
Neither of the countries has a comparative advantage in producing balls.
Abroad has a comparative advantage in producing balls.
Neither of the countries has a comparative advantage in producing fabric.
Abroad has a comparative advantage in producing balls.
When a country’s labor market is in equilibrium in the specific-factor model, wages are:
Choose one or no option:
higher in the sector where the product price is lower
higher in the import-competing sector
higher in the export-competing sector
the same in both sectors
higher in the sector where the product price is higher
the same in both sectors
Figure
Based on the specific-factor model and the figure with production possibility curves above. Assume the economy is in equilibrium at point e. If the price of good A increases, the new equilibrium will most likely be at…
Choose one or no option:
point f
point h
point e
point d
point b
point d
One way in which the Heckscher-Ohlin model differs from the Ricardian model on comparative advantages is that the former assumes that countries trading with each other have identical ___.
Choose one or no option:
access to production factors
population sizes
technological level (technologies)
opportunity costs
production levels
technological level (technologies)
If Australia has relatively more land per worker and Belgium has relatively more capital per worker, then in trade between these two countries:
Choose one or no option:
the relative price of the land-intensive good will rise in Australia
the relative price of the capital-intensive good will fall in Belgium
the relative price of the capital-intensive good will rise in Australia
the relative price of the land-intensive good will rise in Belgium
the relative prices of goods will differ between Australia and Belgium
the relative price of the land-intensive good will rise in Australia
A country cannot produce a combination of goods at a value that is higher than a point where:
Choose one or no option:
the isovalue line is below the production possibilities curve
the isovalue line is tangent to the indifference curve
the isovalue line intersects the production possibilities curve
the isovalue line is tangent to the production possibilities curve
the isovalue line is above the production possibilities curve
the isovalue line is tangent to the production possibilities curve
If a large country imposes a small tariff on its imported goods, this will lead to:
Choose one or no option:
a deterioration in the country’s terms of trade
unchanged terms of trade
an increase in the world market price of the goods the country imports
an improvement in the country’s terms of trade
an improvement in all countries’ terms of trade
an improvement in the country’s terms of trade
The market’s long-term supply curve (price at different production levels) is _____ with internal economies of scale and ______ with external economies of scale.
Choose one or no option:
horizontal; upward-sloping
upward-sloping; downward-sloping
upward-sloping; horizontal
downward-sloping; downward-sloping
downward-sloping; horizontal
downward-sloping; downward-sloping
It is more likely that a particular company will conduct horizontal FDI if it sees that its:
Choose one or no option:
trade costs are high, and there are external economies of scale
trade costs are low, and there are internal economies of scale
trade costs are high, and there are internal economies of scale
trade costs are low, and there are no economies of scale
trade costs are low, and there are external economies of scale
trade costs are high, and there are internal economies of scale
Based on the analytical tools we reviewed in Lecture 5 when discussing cost-benefit analyses of a tariff. If a country is large relative to its trading partners, an import tariff on the country’s imported goods will lead to a welfare gain for the country in terms of the terms of trade gain (tip: think of the rectangle that represents this gain) exceeding the sum of the (losses from) …
Choose one or no option:
producer surplus
the protectionist effect plus the improvement in the state budget
consumer disadvantage and redistribution effect
production distortion and consumption distortion (which add up to the efficiency loss)
state budget improvement and redistribution effect
production distortion and consumption distortion (which add up to the efficiency loss)
Which of the following goals is a country most likely to fulfill by imposing an import tariff?
Choose one or no option:
Higher competition between domestic and foreign firms
Higher domestic employment
Greater supply of various consumer goods
Greater profits for domestic firms
Lower domestic consumer prices
Greater profits for domestic firms
Which of the options is the BEST continuation of the following sentence? The optimal tariff (“optimum tariff”) …
Choose one or no option:
is the best tariff a country can obtain through a negotiation round with compromises within the WTO
is a theoretical possibility but in practice will not be relevant for a small country due to the risk of countermeasures by other countries
is the tariff that maximizes the terms of trade gain
is a theoretical possibility but in practice will not be relevant for a large country due to the risk of countermeasures by other countries
is the tariff that maximizes the difference between the terms of trade gain and the terms of trade loss
is a theoretical possibility but in practice will not be relevant for a large country due to the risk of countermeasures by other countries
What trade policy strategy have developing countries used to limit the import of manufactured goods to protect domestic producers of these goods:
Choose one or no option:
export subsidies
import substitution
export-promoting efforts
multilateral contracts
international trade agreements
import substitution
If companies within an industry generate knowledge that other companies can utilize without paying for it, this industry can be characterized by:
Choose one or no option:
social benefit exceeds private benefit
private benefit exceeds social costs
social costs exceed private benefit
social benefit undermines private benefit
social costs exceed private costs
social benefit exceeds private benefit
One could argue that high-tech companies generate technology and knowledge that they themselves cannot fully exploit commercially. If this is true, then a country should, to maximize its own income:
Choose one or no option:
make the country less attractive for investments in high-tech companies
subsidize high-tech companies
relocate high-tech production abroad
protect high-tech companies
tax high-tech companies
subsidize high-tech companies
How many British pounds would it cost to buy an American good that costs 45 dollars if the exchange rate is 1.80 dollars per British pound?
Choose one or no option:
30 British pounds
25 British pounds
10 British pounds
40 British pounds
20 British pounds
25 British pounds
Assume the expected exchange rate in one year for the euro in terms of the dollar is 1.113 USD per euro. The current exchange rate is 1.05 USD per euro. The interest rate on deposits in dollars (in the USA) is 10%, while the interest rate on deposits in euros (in the euro area) is 4%. Based on the approximate formula,
Choose one or no option:
the interest rate parity condition holds
the interest rate parity condition holds in a year but not today
the interest rate parity condition does not hold
the interest rate parity condition holds today but not in a year
it is not possible to say whether the interest rate parity condition holds or not
the interest rate parity condition holds
An increase in a country’s money supply results in
Choose one or no option:
an appreciation of the country’s currency on the foreign exchange market, while a decrease in the money supply results in a depreciation of the country’s currency.
a depreciation of the country’s currency on the foreign exchange market, while a decrease in the money supply results in an appreciation of the country’s currency.
a depreciation of the country’s currency on the foreign exchange market, while a decrease in the money supply results in a further depreciation of the country’s currency.
no effect on the value of the country’s currency on the foreign exchange market.
an appreciation of its currency in the domestic market and an appreciation in the foreign market.
a depreciation of the country’s currency on the foreign exchange market, while a decrease in the money supply results in an appreciation of the country’s currency.
Which of the following statements BEST describes the long-term exchange rate of the dollar against the euro, all else being equal?
Choose one or no option:
A certain increase in the money supply in the USA in the long term leads to a proportional decrease (appreciation) of the nominal exchange rate for the dollar against the euro.
A certain increase in the money supply in the USA in the long term leads to a proportional increase (depreciation) of the nominal exchange rate for the dollar against the euro.
A faster increase in the money supply in the USA leads to a decrease (appreciation) of the long-term nominal exchange rate for the dollar against the euro.
A faster increase in the money supply within the euro area leads to an increase (depreciation) of the long-term nominal exchange rate for the dollar against the euro.
A certain increase in the money supply within the euro area in the long term leads to a proportional increase (depreciation) of the nominal exchange rate for the dollar against the euro.
A certain increase in the money supply in the USA in the long term leads to a proportional increase (depreciation) of the nominal exchange rate for the dollar against the euro.
In the short term, a temporary increase in government spending will
Choose one or no option:
shift the DD curve to the left and decrease production
shift the DD curve to the right and increase production
shift the DD curve to the left and appreciate the currency
shift the DD curve to the right and decrease production
shift the DD curve to the left and increase production
shift the DD curve to the right and increase production
Which of the following BEST describes the deliberate political decision to increase the currency’s value (reduce the nominal exchange rate, E)?
Choose one or no option:
Accumulation
Appreciation
Depreciation
Devaluation
Revaluation
Revaluation
