tenta 2023 2 Flashcards
The trade theories we covered during the course have shown that the gains from international trade:
Choose one or no answers:
always harm the owners of specific production factors
increase the economic welfare of all people in all countries involved in trade
increase the economic welfare of all countries involved in trade
typically consider the possible benefits of protectionist measures
always benefit the “winners” by an amount greater than the loss incurred by the “losers”
typically consider the possible benefits of protectionist measures
According to the gravity model, one factor that tends to influence the volume of trade between two countries is:
Choose one or no answers:
the number of different product variants produced by their respective industries
their potential colonial ties
the distance between them
the average weight, or value, of their traded goods
their cultural affinity
the distance between them
To determine if a country has a comparative advantage in producing a particular good, we need in our Ricardian model information about at least _______ unit labor requirements.
Choose one or no answers:
four
two
three
five
one
four
Unit Labor Requirements
Balls Hats
Home 10 20
Foreign 60 30
The table above shows unit labor requirements. Given the information in the table, the opportunity cost of balls in terms of hats in Foreign is:
Choose one or no answers:
6.0
1.5
3.0
0.5
2.0
2.0
International trade in the specific-factors model can have a significant impact on income distribution when
Choose one or no answers:
different countries use different currencies
there is corruption in government operations
the most powerful country dictates the terms of trade
rich countries exploit poor countries
certain production factors are immobile in the short term
certain production factors are immobile in the short term
In the specific-factors model, labor is defined as a
Choose one or no alternatives:
intensive factor
fixed factor
specific factor
mobile factor
variable factor
mobile factor
Figure
Based on the specific-factors model and the figure with production possibility curves above. Assume the economy is in equilibrium at point e. If the wage level in the economy were to rise, the new equilibrium would most likely be at…
Choose one or no alternatives:
point f
point b
point e
point h
point d
point e
Central to the Heckscher-Ohlin model with two goods and two factors of production is that the model’s two countries differ in terms of
Choose one or no alternatives:
labor productivity
military capacity
relative availability of production factors
size of the economies (GDP)
consumption preferences
relative availability of production
The assumption of diminishing marginal returns in the Heckscher-Ohlin model implies that, unlike in the Ricardian model, it is likely that
Choose one or no alternatives:
countries will not be completely specialized in one product
global production will decrease with free trade
comparative advantage will not determine the direction of trade
countries will benefit from free trade
countries will consume outside their production possibility curve
countries will not be completely specialized in one product
Individuals’ consumption preferences can be represented by
Choose one or no alternatives:
isovalue lines
production functions
production possibility curves
terms of trade
indifference curves
indifference curves
If a country that is small in terms of world trade imposes high tariffs on its imports, it would
Choose one or no alternatives:
reduce the population’s marginal propensity to consume
have no effect on its terms of trade
improve the country’s terms of trade
worsen the country’s terms of trade
increase the country’s exports
have no effect on its terms of trade
If we have two countries and certain sectors in these countries are characterized by internal economies of scale, we should not expect
Choose one or no alternatives:
perfect competition within these sectors
increased productivity in both countries
extensive specialization in both countries
intra-industry trade between countries
inter-industry trade between countries
perfect competition within these sectors
A learning curve links ______ to ______ and is an example of ______.
Choose one or no alternatives:
labor productivity; training; increasing marginal returns
unit cost; cumulative production; dynamic increasing returns to scale
unit cost; cumulative production; dynamic decreasing returns to scale
production per year; long-term marginal cost; dynamic increasing returns to scale
production per year; long-term marginal cost; dynamic decreasing returns to scale
unit cost; cumulative production; dynamic increasing returns to scale
If a small country imposes an import tariff (on a good produced without economies of scale), then
Choose one or no alternatives:
domestic consumers will lose out because of it
domestic producers will lose out because of it
the demand curve will shift outward
the world market price for this good will shift
government revenues from tariffs will fall
domestic consumers will lose out because of it
Based on the model we used and the conclusions drawn during lecture 6 on “Trade Policy.” In the exporting country, an export subsidy (on a good produced without economies of scale) will most likely
Choose one or no alternatives:
benefit consumers and increase national welfare
disadvantage consumers but increase national welfare
disadvantage consumers and decrease national welfare
benefit consumers but not affect national welfare
benefit consumers but still decrease national welfare
disadvantage consumers and decrease national welfare
The General Agreement on Tariffs and Trade and the World Trade Organization have resulted in
Choose one or no alternatives:
trade clause on mutual dependence
establishment of global procedures for trade adjustments
reduction of trade barriers through multilateral negotiations
complete protection of intellectual property rights
establishment of the European Union
reduction of trade barriers through multilateral negotiations
China’s economic development over the past decades supports the claim that
Choose one or no alternatives:
“economic miracles” are only to be expected in small countries
growth in a large country cannot be affected by its foreign sector
a reduction in income disparities is a prerequisite for economic growth
central planning and socialism can promote sustainable economic growth
political changes can strongly stimulate export-oriented growth
political changes can strongly stimulate export-oriented growth
The Spencer and Brander model highlights
Choose one or no alternatives:
excess returns on non-competitive markets
excess returns on highly competitive markets
natural competitive advantages for foreign companies in technology-specific sectors, such as the aviation industry
the unique financing situation that prevails in certain technology-specific sectors, such as the aviation industry
the difficulty for technology-specific sectors, such as the aviation industry, to manage without subsidies
excess returns on non-competitive markets
How many British pounds does it cost to buy a pair of American jeans that cost 45 dollars if the exchange rate is 1.60 dollars per pound?
Choose one or no alternatives:
46.6
72
28.125
43.4
0.036
28.125
The return on a financial investment in euros in a Eurozone country measured in dollars is
Choose one or no alternatives:
approximately equal to the interest rate in the Eurozone country plus the dollar’s depreciation against the euro
equal to the interest rate in the Eurozone country plus the inflation rate in the Eurozone country
approximately equal to the interest rate in the Eurozone country minus the dollar’s depreciation against the euro
equal to the dollar’s appreciation rate against the euro
equal to the interest rate in the Eurozone country minus the inflation rate in the Eurozone country
approximately equal to the interest rate in the Eurozone country plus the dollar’s depreciation against the euro
country’s money supply by x percent will lead to
Choose one or no alternatives:
the price level increasing by significantly more than x percent
the price level increasing by (approximately) x percent
the price level increasing by significantly less than x percent
the price level decreasing by (approximately) x percent
the price level remaining unchanged in the long term as the money supply cannot affect the price level in the long term
the price level increasing by (approximately) x percent
Which of the following statements is MOST correct?
Choose one or no alternatives:
In calculating the price level in the USA, relatively little weight will be placed on products produced and consumed within the EU, and in calculating the price level in the EU, relatively high weight will be placed on products produced and consumed within the USA.
In calculating the price level in the USA, relatively high weight will be placed on products produced and consumed in the EU, and in calculating the price level in the EU, relatively high weight will be placed on products produced and consumed in the USA.
In calculating the price level in the USA, relatively little weight will be placed on products produced and consumed in the USA, while in calculating the price level in the EU, relatively high weight will be placed on products produced and consumed within the EU.
In calculating the price level in the USA, relatively high weight will be placed on products produced and consumed in the USA, and in calculating the price level in the EU, relatively high weight will be placed on products produced and consumed within the EU.
In calculating the price level in the USA, relatively little weight will be placed on products produced and consumed in the USA, and in calculating the price level in the EU, relatively little weight will be placed on products produced and consumed within the EU.
In calculating the price level in the USA, relatively high weight will be placed on products produced and consumed in the USA, and in calculating the price level in the EU, relatively high weight will be placed on products produced and consumed within the EU
The real exchange rate,
q
q, is defined in the course as
Choose one or no alternatives:
the price of the domestic basket of goods
the nominal exchange rate in terms of the domestic basket of goods
the price of the foreign basket of goods
the price of the foreign basket of goods in terms of the domestic
the price of the domestic basket of goods in terms of the foreign
the price of the foreign basket of goods in terms of the domestic
Which of the following statements is MOST correct regarding what happens under a fixed exchange rate?
Choose one or no alternatives:
Devaluation causes an increase in production and a decrease in official reserves.
Devaluation causes an increase in production.
Devaluation causes a decrease in production and in official reserves.
Devaluation causes a decrease in production.
Devaluation has no effect on production.
Devaluation causes an increase in production.
