Question 1

A country's budget constraint states that

Accepted Answer

A)  real income in the exporting country must be equal to real income in the importing country. 
B)  unless a country engages in trade, the value of goods consumed cannot exceed the value of goods produced. 
C)  a country will engage in trade only if the value of goods consumed exceeds the value of goods produced. 
D)  a country will engage in trade only if the value of goods produced exceeds the value of goods consumed. 
E)  whether or not a country engages in trade, the value of goods consumed must be equal to the value of goods produced. 
A)  real income in the exporting country must be equal to real income in the importing country. 
B)  unless a country engages in trade, the value of goods consumed cannot exceed the value of goods produced. 
C)  a country will engage in trade only if the value of goods consumed exceeds the value of goods produced. 
D)  a country will engage in trade only if the value of goods produced exceeds the value of goods consumed. 
E)  whether or not a country engages in trade, the value of goods consumed must be equal to the value of goods produced.

Question 2

In the specific factors model, which of the following will increase the quantity of labor used in cloth production?

Accepted Answer

A)  a decrease in the price of labor 
B)  an increase in the price of cloth relative to that of food 
C)  an equal percentage decrease in the price of food and cloth 
D)  an equal percentage increase in the price of food and cloth 
E)  an increase in the price of food relative to that of cloth 
A)  a decrease in the price of labor 
B)  an increase in the price of cloth relative to that of food 
C)  an equal percentage decrease in the price of food and cloth 
D)  an equal percentage increase in the price of food and cloth 
E)  an increase in the price of food relative to that of cloth

Question 3

In the specific factors model, the effects of trade on welfare are ________ for mobile factors, ________ for fixed factors used to produce the exported good, and ________ for fixed factors used to produce the imported good.

Accepted Answer

A)  ambiguous; positive; negative 
B)  positive; positive; positive 
C)  ambiguous; negative; positive 
D)  positive; ambiguous; ambiguous 
E)  negative; ambiguous; ambiguous 
A)  ambiguous; positive; negative 
B)  positive; positive; positive 
C)  ambiguous; negative; positive 
D)  positive; ambiguous; ambiguous 
E)  negative; ambiguous; ambiguous

Question 4

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed annual losses on American consumers of

Accepted Answer

A)  $2,000,000. 
B)  $1,500,000. 
C)  $1,000,000,000. 
D)  $370,000. 
E)  $200,000. 
A)  $2,000,000. 
B)  $1,500,000. 
C)  $1,000,000,000. 
D)  $370,000. 
E)  $200,000.

Question 5

In the specific factors model, which of the following is treated as a specific factor?

Accepted Answer

A)  capital 
B)  technology 
C)  cloth 
D)  food 
E)  labor 
A)  capital 
B)  technology 
C)  cloth 
D)  food 
E)  labor

Question 6

In the specific factors model, a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

Accepted Answer

A)  remain constant; decrease; decrease 
B)  increase by less then 5%; decrease; increase 
C)  remain constant; increase; increase 
D)  increase by more then 5%; increase; remain unchanged 
E)  increase by 5%; remain unchanged; remain unchanged 
A)  remain constant; decrease; decrease 
B)  increase by less then 5%; decrease; increase 
C)  remain constant; increase; increase 
D)  increase by more then 5%; increase; remain unchanged 
E)  increase by 5%; remain unchanged; remain unchanged

Question 7

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If there is an increase in the wage rate, the new equilibrium is most likely to be

Accepted Answer

A)  point e. 
B)  point d. 
C)  point b. 
D)  point h. 
E)  point f. 
A)  point e. 
B)  point d. 
C)  point b. 
D)  point h. 
E)  point f.

Question 8

In the two-country model of international labor mobility

Accepted Answer

A)  the long-run equilibrium assumes countries' policies place significant restrictions on migration. 
B)  the long-run equilibrium assumes that desired migration exceeds actual migration. 
C)  the long-run equilibrium assumes that actual migration exceeds desired migration. 
D)  the long-run equilibrium is the result of a divergence of the real wages in the two countries. 
E)  the long-run equilibrium assumes that desired and actual migration are equal. 
A)  the long-run equilibrium assumes countries' policies place significant restrictions on migration. 
B)  the long-run equilibrium assumes that desired migration exceeds actual migration. 
C)  the long-run equilibrium assumes that actual migration exceeds desired migration. 
D)  the long-run equilibrium is the result of a divergence of the real wages in the two countries. 
E)  the long-run equilibrium assumes that desired and actual migration are equal.

Question 9

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good B increases, the new equilibrium is most likely to be

Accepted Answer

A)  point b. 
B)  point h. 
C)  point f. 
D)  point d. 
E)  point e. 
A)  point b. 
B)  point h. 
C)  point f. 
D)  point d. 
E)  point e.

Question 10

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the labor supply increases due to immigration, the new equilibrium is most likely to be

Accepted Answer

A)  point f. 
B)  point d. 
C)  point b. 
D)  point e. 
E)  point h. 
A)  point f. 
B)  point d. 
C)  point b. 
D)  point e. 
E)  point h.

Question 11

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If a war reduces the country's capital stock by 40%, the new equilibrium is most likely to be

Accepted Answer

A)  point f. 
B)  point h. 
C)  point e. 
D)  point b. 
E)  point d. 
A)  point f. 
B)  point h. 
C)  point e. 
D)  point b. 
E)  point d.

Question 12

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $________, or an average consumer cost of over ________ per year for every job saved in the U.S sugar industry.

Accepted Answer

A)  $3 billion; $10 
B)  $105 million; $3 
C)  $2 billion; $110 
D)  $3.5 billion; $3,000,000 
E)  $370 million; $20 
A)  $3 billion; $10 
B)  $105 million; $3 
C)  $2 billion; $110 
D)  $3.5 billion; $3,000,000 
E)  $370 million; $20

Question 13

The effect of trade on income distribution

Accepted Answer

A)  implies that there are no real gains from trade. 
B)  is insignificant in the short run. 
C)  can be significant in the short run. 
D)  refutes the model of comparative advantage. 
E)  is positive for all segments of an economy. 
A)  implies that there are no real gains from trade. 
B)  is insignificant in the short run. 
C)  can be significant in the short run. 
D)  refutes the model of comparative advantage. 
E)  is positive for all segments of an economy.

Question 14

In the specific factors model, the effects of trade on welfare overall are ________ and for fixed factors used to produce the imported good they are ________.

Accepted Answer

A)  ambiguous; positive 
B)  positive; negative 
C)  positive; positive 
D)  positive; ambiguous 
E)  negative; positive 
A)  ambiguous; positive 
B)  positive; negative 
C)  positive; positive 
D)  positive; ambiguous 
E)  negative; positive

Question 15

A worker who has invested in ________ skills will be ________ mobile than would otherwise be the case.

Accepted Answer

A)  occupation-specific; less 
B)  occupation-nominal; less 
C)  occupation-specific; more 
D)  ethical; less 
E)  ethical; more 
A)  occupation-specific; less 
B)  occupation-nominal; less 
C)  occupation-specific; more 
D)  ethical; less 
E)  ethical; more

Question 16

In the specific factors model, which of the following is treated as a specific factor?

Accepted Answer

A)  food 
B)  land 
C)  labor 
D)  technology 
E)  cloth 
A)  food 
B)  land 
C)  labor 
D)  technology 
E)  cloth

Question 17

Those who will lose from free trade are ________ factors in sectors that produce goods that are ________.

Accepted Answer

A)  mobile; also imported 
B)  mobile; exported 
C)  immobile; exported 
D)  mobile; untraded 
E)  immobile; also imported 
A)  mobile; also imported 
B)  mobile; exported 
C)  immobile; exported 
D)  mobile; untraded 
E)  immobile; also imported

Question 18

The Ricardian two-country, two-good model predicts that there are potential benefits from trade, but NOT

Accepted Answer

A)  when both countries have the same types of technology available. 
B)  when one country has significantly lower wages than the other country. 
C)  the mechanism that determines which country will specialize in which good. 
D)  the effect of trade on income distribution. 
E)  when one country has an absolute advantage in the production of both goods. 
A)  when both countries have the same types of technology available. 
B)  when one country has significantly lower wages than the other country. 
C)  the mechanism that determines which country will specialize in which good. 
D)  the effect of trade on income distribution. 
E)  when one country has an absolute advantage in the production of both goods.

Question 19

International trade can have important effects on the distribution of income because

Accepted Answer

A)  different industries employ different factors of production. 
B)  rich countries take advantage of poor countries. 
C)  of government corruption. 
D)  different countries use different currencies. 
E)  the more powerful country dictates the terms of trade. 
A)  different industries employ different factors of production. 
B)  rich countries take advantage of poor countries. 
C)  of government corruption. 
D)  different countries use different currencies. 
E)  the more powerful country dictates the terms of trade.

Question 20

In the four-quadrant diagram of the specific factors model, the graph in the upper left quadrant is a country's

Accepted Answer

A)  production possibility frontier. 
B)  labor allocation constraint. 
C)  production function for food. 
D)  production function for cloth. 
E)  labor supply curve. 
A)  production possibility frontier. 
B)  labor allocation constraint. 
C)  production function for food. 
D)  production function for cloth. 
E)  labor supply curve.

Exam 4: Specific Factors and Income Distribution

A country's budget constraint states that

In the specific factors model, which of the following will increase the quantity of labor used in cloth production?

In the specific factors model, the effects of trade on welfare are ________ for mobile factors, ________ for fixed factors used to produce the exported good, and ________ for fixed factors used to produce the imported good.

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed annual losses on American consumers of

In the specific factors model, which of the following is treated as a specific factor?

In the specific factors model, a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If there is an increase in the wage rate, the new equilibrium is most likely to be

In the two-country model of international labor mobility

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good B increases, the new equilibrium is most likely to be

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the labor supply increases due to immigration, the new equilibrium is most likely to be

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If a war reduces the country's capital stock by 40%, the new equilibrium is most likely to be

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $________, or an average consumer cost of over ________ per year for every job saved in the U.S sugar industry.

The effect of trade on income distribution

In the specific factors model, the effects of trade on welfare overall are ________ and for fixed factors used to produce the imported good they are ________.

A worker who has invested in ________ skills will be ________ mobile than would otherwise be the case.

In the specific factors model, which of the following is treated as a specific factor?

Those who will lose from free trade are ________ factors in sectors that produce goods that are ________.

The Ricardian two-country, two-good model predicts that there are potential benefits from trade, but NOT

International trade can have important effects on the distribution of income because

In the four-quadrant diagram of the specific factors model, the graph in the upper left quadrant is a country's

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

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

Controversies in Trade Policy

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

In the specific factors model, the effects of trade on welfare are for mobile factors, for fixed factors used to produce the exported good, and for fixed factors used to produce the imported good.

In the specific factors model, a 5% increase in the price of food accompanied by a 0% increase in the price of cloth will cause wages to , the production of cloth to , and the production of food to .

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $, or an average consumer cost of over per year for every job saved in the U.S sugar industry.

In the specific factors model, the effects of trade on welfare overall are and for fixed factors used to produce the imported good they are .

A worker who has invested in skills will be mobile than would otherwise be the case.

Those who will lose from free trade are factors in sectors that produce goods that are .