Question 1

A country cannot produce a mix of products with a higher value than where

Accepted Answer

A)  the isovalue line is tangent to the production possibility frontier. 
B)  the isovalue line intersects the production possibility frontier. 
C)  the isovalue line is above the production possibility frontier. 
D)  the isovalue line is below the production possibility frontier. 
E)  the isovalue line is tangent with the indifference curve. 
A)  the isovalue line is tangent to the production possibility frontier. 
B)  the isovalue line intersects the production possibility frontier. 
C)  the isovalue line is above the production possibility frontier. 
D)  the isovalue line is below the production possibility frontier. 
E)  the isovalue line is tangent with the indifference curve.

Question 2

An export subsidy has the opposite effect on terms of trade to the effect of an import tariff.Domestically a tariff will raise the price of the import good,deteriorating the domestic terms of trade.A production subsidy for the export product will lower the local price of the export good,lowering the domestic terms of trade for the country.Hence the export subsidy and the import tariff have the same effect.This analysis seems to contradict the first sentence in this paragraph.Discuss this paradox.

Accepted Answer

While this (Lerner)equivalence may well

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)  world relative quantity of cloth supplied will increase. 
B)  world relative quantity of cloth supplied and demanded will increase. 
C)  world relative quantity of cloth supplied and demanded will decrease. 
D)  world relative quantity of cloth demanded will decrease. 
E)  world relative quantity of food will increase. 
A)  world relative quantity of cloth supplied will increase. 
B)  world relative quantity of cloth supplied and demanded will increase. 
C)  world relative quantity of cloth supplied and demanded will decrease. 
D)  world relative quantity of cloth demanded will decrease. 
E)  world relative quantity of food will increase.

Question 4

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

Accepted Answer

A)  the world terms of trade differ from its domestic relative costs. 
B)  the country specializes in one product. 
C)  the country avoids international trade. 
D)  the world terms of trade equal the domestic relative costs. 
E)  the country's domestic production value equals world relative value. 
A)  the world terms of trade differ from its domestic relative costs. 
B)  the country specializes in one product. 
C)  the country avoids international trade. 
D)  the world terms of trade equal the domestic relative costs. 
E)  the country's domestic production value equals world relative value.

Question 5

The meaning of "terms of trade" is

Accepted Answer

A)  the price of a country's exports divided by the price of its imports. 
B)  the amount of exports sold by a country. 
C)  the price conditions bargained for in international markets. 
D)  the quantities of imports received in free trade. 
E)  the tariffs in place between two trading countries. 
A)  the price of a country's exports divided by the price of its imports. 
B)  the amount of exports sold by a country. 
C)  the price conditions bargained for in international markets. 
D)  the quantities of imports received in free trade. 
E)  the tariffs in place between two trading countries.

Question 6

An export subsidy will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

Accepted Answer

A)  exports; decrease; exports; increase 
B)  imports; decrease; imports; increase 
C)  imports; increase; imports; decrease 
D)  exports; increase; exports; decrease 
E)  exports; increase; imports; decrease 
A)  exports; decrease; exports; increase 
B)  imports; decrease; imports; increase 
C)  imports; increase; imports; decrease 
D)  exports; increase; exports; decrease 
E)  exports; increase; imports; decrease

Question 7

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

Accepted Answer

A)  this will have no effect on terms of trade for the country's trading partner. 
B)  this will tend to worsen the country's terms of trade. 
C)  this will tend to improve the country's terms of trade. 
D)  this will tend to worsen terms of trade for the country's trading partner. 
E)  this will tend to improve terms of trade for the country's trading partner. 
A)  this will have no effect on terms of trade for the country's trading partner. 
B)  this will tend to worsen the country's terms of trade. 
C)  this will tend to improve the country's terms of trade. 
D)  this will tend to worsen terms of trade for the country's trading partner. 
E)  this will tend to improve terms of trade for the country's trading partner.

Question 8

-Suppose,as a result of various dynamic factors associated with exposure to international competition,Albania's economy grew,and is now represented by the rightmost production possibility frontier in the figure above.If its point of production with trade was point c,would you consider this growth to be export-biased or import biased? If Albania were a large country with respect to the world trade of A and B,how would this growth affect Albania's terms of trade? Its real income?

Accepted Answer

If point c is the production point with

A country cannot produce a mix of products with a higher value than where

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

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

The meaning of "terms of trade" is

An export subsidy will cause the relative demand for to and the relative supply for to .

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

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

A country cannot produce a mix of products with a higher value than where

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

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

The meaning of "terms of trade" is

An export subsidy will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

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

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

An export subsidy will cause the relative demand for to and the relative supply for to .