Question 1

When the production possibility frontier shifts out relatively more in one direction,we have

Accepted Answer

A)  biased growth. 
B)  unbiased growth. 
C)  immiserizing growth. 
D)  balanced growth. 
E)  imbalanced growth. 
A)  biased growth. 
B)  unbiased growth. 
C)  immiserizing growth. 
D)  balanced growth. 
E)  imbalanced growth. A

Question 2

-Refer to above figure.Albania refused to engage in international trade for ideological reasons.To maximize its economic welfare it would choose to produce at which point in the diagram above? Suppose the PA/PB at point a was equal to 1.Given this information,in which good (A or
B) does Albania enjoy a comparative advantage?
Now that the Cold War is over, Albania is interested in obtaining economic welfare gains from trade. The relevant international relative price is PA/PB = 2. Albania would therefore choose to produce at which point (a, b, or c)? Given this additional information, in which good does Albania enjoy a comparative advantage?

Accepted Answer

Albania would choose to produce at point a.With no reference to world terms of trade,one cannot establish Albania's comparative advantage.
Later,when Albania discovers that the relative price of A equals twice the price of B,it knows that it has a comparative advantage in A.Therefore Albania would produce at production point b.

Question 3

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

Accepted Answer

A)  the cloth exporter will increase the quantity of cloth produced. 
B)  the cloth exporter will increase the quantity of cloth exported. 
C)  the food exporter will increase the quantity of food exported. 
D)  the cloth exporter will decrease the quantity of cloth exported. 
E)  the country would import more cloth. 
A)  the cloth exporter will increase the quantity of cloth produced. 
B)  the cloth exporter will increase the quantity of cloth exported. 
C)  the food exporter will increase the quantity of food exported. 
D)  the cloth exporter will decrease the quantity of cloth exported. 
E)  the country would import more cloth. A

Question 4

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

Accepted Answer

A)  point c; point b; remain unchanged 
B)  point a; point b; increase 
C)  point c; point b; increase 
D)  point c; point b; decrease 
E)  point a; point c; remain unchanged 
A)  point c; point b; remain unchanged 
B)  point a; point b; increase 
C)  point c; point b; increase 
D)  point c; point b; decrease 
E)  point a; point c; remain unchanged

Question 5

If one observes that Japan was traditionally a net foreign lender,one could conclude that relative to its international trade and financial partners

Accepted Answer

A)  Japan's intertemporal production possibilities are biased toward present consumption. 
B)  Japan's intertemporal production possibilities are biased toward future consumption. 
C)  Japan's intertemporal production possibilities are larger than that of the other countries. 
D)  Japan's intertemporal production possibilities are not biased. 
E)  Japan preferred to consume beyond its production in the present. 
A)  Japan's intertemporal production possibilities are biased toward present consumption. 
B)  Japan's intertemporal production possibilities are biased toward future consumption. 
C)  Japan's intertemporal production possibilities are larger than that of the other countries. 
D)  Japan's intertemporal production possibilities are not biased. 
E)  Japan preferred to consume beyond its production in the present.

Question 6

If two countries with diminishing returns and different marginal rates of substitution between two products were to engage in trade,then

Accepted Answer

A)  the marginal rates of substitution of both would become equal. 
B)  the shapes of their respective production possibility frontiers would change. 
C)  the larger of the two countries would dominate their trade. 
D)  the country with relatively elastic supplies would export more. 
E)  the opportunity costs for the smaller country would increase. 
A)  the marginal rates of substitution of both would become equal. 
B)  the shapes of their respective production possibility frontiers would change. 
C)  the larger of the two countries would dominate their trade. 
D)  the country with relatively elastic supplies would export more. 
E)  the opportunity costs for the smaller country would increase.

Question 7

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

Accepted Answer

A)  point b; point a; increase 
B)  point a; point b; increase 
C)  point c; point b; increase 
D)  point c; point b; decrease 
E)  point a; point c; remain unchanged 
A)  point b; point a; increase 
B)  point a; point b; increase 
C)  point c; point b; increase 
D)  point c; point b; decrease 
E)  point a; point c; remain unchanged

Question 8

An increase in a country's net commodity terms of trade will

Accepted Answer

A)  not always guarantee positive changes in the country's economy. 
B)  always increase the country's economic welfare. 
C)  always increase the country's real income. 
D)  never increase the country's quantity of exports. 
E)  always increase the country's production of its import competing good. 
A)  not always guarantee positive changes in the country's economy. 
B)  always increase the country's economic welfare. 
C)  always increase the country's real income. 
D)  never increase the country's quantity of exports. 
E)  always increase the country's production of its import competing good.

Question 9

If Slovenia were a large country in world trade,then if it imposes a large set of tariffs on its imports,this must

Accepted Answer

A)  decrease the internal price of imports below the world market rate. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  improve the real income of its trade partners. 
A)  decrease the internal price of imports below the world market rate. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  improve the real income of its trade partners.

Question 10

If a small country were to levy a tariff on its imports then this would

Accepted Answer

A)  decrease the country's economic welfare. 
B)  have no effect on that country's economic welfare. 
C)  increase the country's economic welfare. 
D)  change the terms of trade. 
E)  raise prices on its exports in other countries. 
A)  decrease the country's economic welfare. 
B)  have no effect on that country's economic welfare. 
C)  increase the country's economic welfare. 
D)  change the terms of trade. 
E)  raise prices on its exports in other countries.

Question 11

Suppose that a country experiences growth strongly biased toward its export,cloth

Accepted Answer

A)  this will tend to worsen the country's terms of trade. 
B)  this will tend to improve the country's terms of trade. 
C)  this will tend to leave the country's terms of trade unchanged. 
D)  this will tend to worsen the terms of trade for the country's trading partner. 
E)  this will increase the price of cloth relative to the imported good. 
A)  this will tend to worsen the country's terms of trade. 
B)  this will tend to improve the country's terms of trade. 
C)  this will tend to leave the country's terms of trade unchanged. 
D)  this will tend to worsen the terms of trade for the country's trading partner. 
E)  this will increase the price of cloth relative to the imported good.

Question 12

If a country began exporting product A and importing product B,then,as compared to the autarky (no-trade)situation,the marginal cost of product A will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  shift outward. 
D)  shift inward. 
E)  remain the same. 
A)  increase. 
B)  decrease. 
C)  shift outward. 
D)  shift inward. 
E)  remain the same.

Question 13

Other things being equal,a rise in a country's terms of trade increases its welfare.What would happen if we relax the ceteris paribus assumption,and allow for the law of demand to operate internationally?

Accepted Answer

Let us assume that the terms of trade (o

Question 14

If the economy is producing at point a on its production possibility frontier,then

Accepted Answer

A)  all of the country's workers are employed. 
B)  all of the country's workers are specialized in one product. 
C)  all of the country's capital is used for one product. 
D)  all of its capital is used, but not efficiently. 
E)  all of the country's exports are produced in equal amounts. 
A)  all of the country's workers are employed. 
B)  all of the country's workers are specialized in one product. 
C)  all of the country's capital is used for one product. 
D)  all of its capital is used, but not efficiently. 
E)  all of the country's exports are produced in equal amounts.

Question 15

International borrowing and lending may be interpreted as one form of

Accepted Answer

A)  intertemporal trade. 
B)  intermediate trade. 
C)  trade in services. 
D)  unrequited international transfers. 
E)  aid to offset trade advantages. 
A)  intertemporal trade. 
B)  intermediate trade. 
C)  trade in services. 
D)  unrequited international transfers. 
E)  aid to offset trade advantages.

Question 16

Terms of trade refers to

Accepted Answer

A)  the relative price at which trade occurs. 
B)  what goods are imported. 
C)  what goods are exported. 
D)  the volume of trade. 
E)  the tariffs applied to trade. 
A)  the relative price at which trade occurs. 
B)  what goods are imported. 
C)  what goods are exported. 
D)  the volume of trade. 
E)  the tariffs applied to trade.

Question 17

A fall in the real interest rate,all other things held constant,will cause a country's ________ to ________.

Accepted Answer

A)  current consumption: increase 
B)  current consumption: decrease 
C)  terms of trade; improve 
D)  terms of trade; worsen 
E)  welfare level; improve 
A)  current consumption: increase 
B)  current consumption: decrease 
C)  terms of trade; improve 
D)  terms of trade; worsen 
E)  welfare level; improve

Question 18

Tastes of individuals are represented by

Accepted Answer

A)  indifference curves. 
B)  production possibility frontiers. 
C)  isovalue lines. 
D)  production functions. 
E)  the terms of trade. 
A)  indifference curves. 
B)  production possibility frontiers. 
C)  isovalue lines. 
D)  production functions. 
E)  the terms of trade.

Question 19

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

Accepted Answer

A)  the terms of trade of cloth exporters will improve. 
B)  all countries would be better off. 
C)  the terms of trade of food exporters will improve. 
D)  the terms of trade of all countries will improve. 
E)  the terms of trade of cloth exporters will worsen. 
A)  the terms of trade of cloth exporters will improve. 
B)  all countries would be better off. 
C)  the terms of trade of food exporters will improve. 
D)  the terms of trade of all countries will improve. 
E)  the terms of trade of cloth exporters will worsen.

Question 20

If points A and B are two locations on a country's production possibility frontier,then

Accepted Answer

A)  the country could produce either of the two bundles. 
B)  consumers are indifferent between the two bundles. 
C)  producers are indifferent between the two bundles. 
D)  at any point in time, the country could produce both. 
E)  both bundles must have the same relative cost. 
A)  the country could produce either of the two bundles. 
B)  consumers are indifferent between the two bundles. 
C)  producers are indifferent between the two bundles. 
D)  at any point in time, the country could produce both. 
E)  both bundles must have the same relative cost.

When the production possibility frontier shifts out relatively more in one direction,we have

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

If one observes that Japan was traditionally a net foreign lender,one could conclude that relative to its international trade and financial partners

If two countries with diminishing returns and different marginal rates of substitution between two products were to engage in trade,then

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

An increase in a country's net commodity terms of trade will

If Slovenia were a large country in world trade,then if it imposes a large set of tariffs on its imports,this must

If a small country were to levy a tariff on its imports then this would

Suppose that a country experiences growth strongly biased toward its export,cloth

If a country began exporting product A and importing product B,then,as compared to the autarky (no-trade)situation,the marginal cost of product A will

Other things being equal,a rise in a country's terms of trade increases its welfare.What would happen if we relax the ceteris paribus assumption,and allow for the law of demand to operate internationally?

If the economy is producing at point a on its production possibility frontier,then

International borrowing and lending may be interpreted as one form of

Terms of trade refers to

A fall in the real interest rate,all other things held constant,will cause a country's to .

Tastes of individuals are represented by

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

If points A and B are two locations on a country's production possibility frontier,then

Introduction

National Income Accounting and the Balance of Payments

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin 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

Controversies in Trade Policy

Filters

Exam 6: The Standard Trade Model

When the production possibility frontier shifts out relatively more in one direction,we have

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

If one observes that Japan was traditionally a net foreign lender,one could conclude that relative to its international trade and financial partners

If two countries with diminishing returns and different marginal rates of substitution between two products were to engage in trade,then

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

An increase in a country's net commodity terms of trade will

If Slovenia were a large country in world trade,then if it imposes a large set of tariffs on its imports,this must

If a small country were to levy a tariff on its imports then this would

Suppose that a country experiences growth strongly biased toward its export,cloth

If a country began exporting product A and importing product B,then,as compared to the autarky (no-trade)situation,the marginal cost of product A will

Other things being equal,a rise in a country's terms of trade increases its welfare.What would happen if we relax the ceteris paribus assumption,and allow for the law of demand to operate internationally?

If the economy is producing at point a on its production possibility frontier,then

International borrowing and lending may be interpreted as one form of

Terms of trade refers to

A fall in the real interest rate,all other things held constant,will cause a country's ________ to ________.

Tastes of individuals are represented by

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

If points A and B are two locations on a country's production possibility frontier,then

Introduction

National Income Accounting and the Balance of Payments

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin 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

Controversies in Trade Policy

Filters

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

A fall in the real interest rate,all other things held constant,will cause a country's to .