Question 1

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

Accepted Answer

A)  shipbreaking is generally considered to be a capital-intensive operation and India, being a large country has much capital. 
B)  shipbreaking is a labor-intensive operation in India, and India has many workers since it is such a large country. 
C)  shipbreaking is a labor-intensive operation in India, and India's availability of capital per worker is less than that of its trade partners. 
D)  shipbreaking is a capital-intensive operation elsewhere in the world, and therefore represents a case of a factor intensity reversal. 
E)  India's climate lends itself to the work involved in shipbreaking. 
A)  shipbreaking is generally considered to be a capital-intensive operation and India, being a large country has much capital. 
B)  shipbreaking is a labor-intensive operation in India, and India has many workers since it is such a large country. 
C)  shipbreaking is a labor-intensive operation in India, and India's availability of capital per worker is less than that of its trade partners. 
D)  shipbreaking is a capital-intensive operation elsewhere in the world, and therefore represents a case of a factor intensity reversal. 
E)  India's climate lends itself to the work involved in shipbreaking.

Question 2

It is argued that high-tech industries typically generate new technologies but cannot fully appropriate the commercial benefits associated with their inventions or discoveries. If this is TRUE, then in order to maximize a country's real income, the government should

Accepted Answer

A)  tax the high-tech firms. 
B)  subsidize the high-tech firms. 
C)  protect the high-tech firms. 
D)  outsource high-tech production. 
E)  discourage high-tech investments. 
A)  tax the high-tech firms. 
B)  subsidize the high-tech firms. 
C)  protect the high-tech firms. 
D)  outsource high-tech production. 
E)  discourage high-tech investments.

Question 3

The Shipbreakers of Alang utilize much labor and little capital, thereby supporting the applicability of the

Accepted Answer

A)  factor proportions explanation of the sources of comparative advantage. 
B)  specific factor theory of comparative advantage. 
C)  monopolistic competition theory of comparative advantage. 
D)  scale economies theory of comparative advantage. 
E)  basis of the non-dumping legislation. 
A)  factor proportions explanation of the sources of comparative advantage. 
B)  specific factor theory of comparative advantage. 
C)  monopolistic competition theory of comparative advantage. 
D)  scale economies theory of comparative advantage. 
E)  basis of the non-dumping legislation.

Question 4

In the Brander-Spencer model the subsidy raises profits by more than the subsidy because of

Accepted Answer

A)  the "multiplier" effect of government expenditures. 
B)  the military-industrial complex. 
C)  the forward and backward linkage effects of certain industries. 
D)  the deterrent effect of the subsidy on foreign competition. 
E)  the economies of scale once the company enters the market. 
A)  the "multiplier" effect of government expenditures. 
B)  the military-industrial complex. 
C)  the forward and backward linkage effects of certain industries. 
D)  the deterrent effect of the subsidy on foreign competition. 
E)  the economies of scale once the company enters the market.

Question 5

Spencer and Brander's model highlights the conventional assumption that

Accepted Answer

A)  government involvement in business or in the economy tends to fail. 
B)  government subsidies tend to waste taxpayer's money. 
C)  government subsidies cannot create a successfully competing export. 
D)  government tends to distort when it displaces Adam Smith's Invisible Hand. 
E)  government subsidies can produce profits that exceed the subsidy's value. 
A)  government involvement in business or in the economy tends to fail. 
B)  government subsidies tend to waste taxpayer's money. 
C)  government subsidies cannot create a successfully competing export. 
D)  government tends to distort when it displaces Adam Smith's Invisible Hand. 
E)  government subsidies can produce profits that exceed the subsidy's value.

Question 6

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North-South trade, such as U.S.-Mexico trade

Accepted Answer

A)  must help low-skilled workers on both sides of the border. 
B)  is likely to hurt high-skilled workers in the U.S. 
C)  is likely to hurt low-skilled workers in the U.S. 
D)  is likely to hurt low-skilled workers in Mexico. 
E)  is likely to help highly skilled workers in Mexico. 
A)  must help low-skilled workers on both sides of the border. 
B)  is likely to hurt high-skilled workers in the U.S. 
C)  is likely to hurt low-skilled workers in the U.S. 
D)  is likely to hurt low-skilled workers in Mexico. 
E)  is likely to help highly skilled workers in Mexico.

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

It is argued that high-tech industries typically generate new technologies but cannot fully appropriate the commercial benefits associated with their inventions or discoveries. If this is TRUE, then in order to maximize a country's real income, the government should

The Shipbreakers of Alang utilize much labor and little capital, thereby supporting the applicability of the

In the Brander-Spencer model the subsidy raises profits by more than the subsidy because of

Spencer and Brander's model highlights the conventional assumption that

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North-South trade, such as U.S.-Mexico trade

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

Exam 12: Controversies in Trade Policy

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

It is argued that high-tech industries typically generate new technologies but cannot fully appropriate the commercial benefits associated with their inventions or discoveries. If this is TRUE, then in order to maximize a country's real income, the government should

The Shipbreakers of Alang utilize much labor and little capital, thereby supporting the applicability of the

In the Brander-Spencer model the subsidy raises profits by more than the subsidy because of

Spencer and Brander's model highlights the conventional assumption that

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North-South trade, such as U.S.-Mexico trade

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters