TOPIC 6 Flashcards
Transportation cost of trade affects:
a. Pattern of trade
b. Global supply chains
c. boundaries between tradable and non- tradable goods
d. All of the above
d. All of the above
A no-trade world will have which of the following characteristics:
a. Countries will have same relative endowment of production factor
b. Consumers across countries will have identical and homogenous tastes
c. There will be no distortions or externalities
d. All of the above
d. All of the above
In the 2-factor, 2 goods Heckscher-Ohlin model, the two countries differ in
a. Military capabilities
b. Labor productivities
c. Relative availabilities of factor of production
d. Tastes
c. Relative availabilities of factor of production
According to Ricardo, a country will have a comparative advantage in:
a. Industries in which there are neither import nor export
b. Import competing industries
c. Industries that sell to domestic and foreign buyers
d. Industries that sell to only foreign buyers
c. Industries that sell to domestic and foreign buyers
Nations conduct international trade because:
a. Some nation prefers to produce one thing while others produce other things.
b. Resources are not equally distributed among all trading nations.
c. Trade enhance opportunities to accumulate profits.
d. Interest rates are not identical in all trading nations.
b. Resources are not equally distributed among all trading nations.
Which of the following is a determinant of trade?
a. Tastes
b. Per capital income
c. Technological change
d. All of the above
d. All of the above
International Trade is most likely to generate short-term unemployment in:
a. Industries in which there are neither import nor export
b. Import-competing industries
c. Industries that sell to domestic and foreign buyers
d. Industries that sell to only foreign buyers
b. Import-competing industries
According to the theory of comparative advantage, which of the following is NOT a reason why countries trade?
a. Costs are higher in one country than in another
b. Prices are lower in one country than in another
c. The productivity of labor differs across countries and industries
d. Exports give a country a political advantage over other countries that export less.
d. Exports give a country a political advantage over other countries that export less.
The reasons why international trade has strong effects on distribution of income because:
a. Resources cannot move immediately or without cost from one industry to another
b. Industries differ in the factors of production they demand
c. Trade has no effect on distribution of income
d. Bothe A and B
d. Bothe A and B
Which of the following is not a benefit of international trade?
a. High wage level for all domestic workers
b. Lower domestic prices
c. Development of more efficient methods and new products
d. A greater range of consumption choices.
a. High wage level for all domestic workers
Bangladesh is relatively abundant in labor, while Canada is relatively abundant in capital. In both countries the production of shirts is relatively more labor intensive than the production of computers. According to the factor endowment theory (Heckscher-Ohlin model), Bangladesh will have a(n):
a. Absolute advantage in production of shirts and computers
b. Absolute advantage in production of computers
c. Comparative advantage in production of shirts
d. Comparative advantage in production of computers
c. Comparative advantage in production of shirts
Free traders maintain that an open economy is advantageous in that it provides all of the following except:
a. Increased competition for world producers
b. A wider selection of products for consumers
c. The utilization of the most efficient production methods
d. Relatively high wage levels for all domestic workers.
d. Relatively high wage levels for all domestic workers.
A closed economy is one in which?
a. Imports exactly equal exports, so that trade is balanced.
b. Domestic firms invest in industries overseas.
c. The home economy is isolated from foreign trade
d. Saving exactly equals investment at full employment.
c. The home economy is isolated from foreign trade
Ricardian trading principle emphasis the;
a. Demand side of the market
b. Supply side of the market
c. Role of comparative advantage
d. Role of absolute advantage
c. Role of comparative advantage
Under Heckscher-Ohlin Model, international trade can lead to increase in:
a. Consumer welfare only if output of both products is increased
b. Output of both products and consumer welfare in both countries
c. Total production of both products, but not consumer welfare in both countries
d. Consumer welfare in both countries, but not to all production of both products.
b. Output of both products and consumer welfare in both countries
