Question 1

An import tariff will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

Accepted Answer

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

Question 2

An export subsidy will cause the terms of trade of the ________ country to ________ and will ________ the country.

Accepted Answer

A)  importing; suffer; benefit 
B)  importing; improve; harm 
C)  exporting; suffer; harm 
D)  importing; suffer; harm 
E)  exporting; improve; benefit 
A)  importing; suffer; benefit 
B)  importing; improve; harm 
C)  exporting; suffer; harm 
D)  importing; suffer; harm 
E)  exporting; improve; benefit

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

-Suppose Albania is exporting product B, and experienced economic growth biased in favor of product B as seen in the figure above. We are also told that Albania's new consumption point is at point d. Would you still consider the economic growth, which took place biased in favor of B?
 If Albania were a large country how would this growth affect its terms of trade?

Accepted Answer

This is a relatively difficult case. On

Question 6

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

Question 7

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

Accepted Answer

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

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 b, 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?
 What if Albania were a small country?

Accepted Answer

If the production with trade point was p

Question 9

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

Accepted Answer

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

Question 10

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

Accepted Answer

A)  increase its exports. 
B)  have no effect on its terms of trade. 
C)  harm its terms of trade. 
D)  improve its terms of trade. 
E)  decrease its marginal propensity to consume. 
A)  increase its exports. 
B)  have no effect on its terms of trade. 
C)  harm its terms of trade. 
D)  improve its terms of trade. 
E)  decrease its marginal propensity to consume.

Question 11

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

Question 12

-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 13

If Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would

Accepted Answer

A)  decrease its marginal propensity to consume. 
B)  deteriorate its terms of trade. 
C)  increase its exports. 
D)  have no effect on its terms of trade. 
E)  improve its terms of trade. 
A)  decrease its marginal propensity to consume. 
B)  deteriorate its terms of trade. 
C)  increase its exports. 
D)  have no effect on its terms of trade. 
E)  improve its terms of trade.

Question 14

-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

Question 15

If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must

Accepted Answer

A)  have no effect on its terms of trade. 
B)  harm world terms of trade. 
C)  harm its terms of trade. 
D)  decrease its marginal propensity to consume. 
E)  improve its terms of trade. 
A)  have no effect on its terms of trade. 
B)  harm world terms of trade. 
C)  harm its terms of trade. 
D)  decrease its marginal propensity to consume. 
E)  improve its terms of trade.

Question 16

An import tariff will cause the terms of trade of the ________ country to ________ and will ________ the country.

Accepted Answer

A)  importing; improve; benefit 
B)  importing; improve; harm 
C)  exporting; improve; benefit 
D)  exporting; improve; harm 
E)  importing; suffer; harm 
A)  importing; improve; benefit 
B)  importing; improve; harm 
C)  exporting; improve; benefit 
D)  exporting; improve; harm 
E)  importing; suffer; harm

Question 17

The intertemporal budget constraint is defined as:

Accepted Answer

A)  V = DP + DF/(1 + r) 
B)  DP + DF(1 + r) = QP + QF(1 + r) 
C)  DP + DF/(1 + r) = QP + QF/(1 + r) 
D)  DF + DP/(1 + r) = QF + QP/(1 + r) 
E)  V = QP + QF/(1 + r) 
A)  V = DP + DF/(1 + r) 
B)  DP + DF(1 + r) = QP + QF(1 + r) 
C)  DP + DF/(1 + r) = QP + QF/(1 + r) 
D)  DF + DP/(1 + r) = QF + QP/(1 + r) 
E)  V = QP + QF/(1 + r)

Question 18

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

Accepted Answer

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

Question 19

The price of ________ consumption in terms of ________ consumption is ________.

Accepted Answer

A)  future; current; r 
B)  present; future; r 
C)  future; current; 1 + r 
D)  future; current; 1/(1 + r) 
E)  present; future; 1/(1 + r) 
A)  future; current; r 
B)  present; future; r 
C)  future; current; 1 + r 
D)  future; current; 1/(1 + r) 
E)  present; future; 1/(1 + r)

Question 20

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

Accepted Answer

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

An import tariff will cause the relative demand for to and the relative supply for to .

An export subsidy will cause the terms of trade of the country to and will the country.

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

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

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

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

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

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

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

-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 Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would

If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must

An import tariff will cause the terms of trade of the country to and will the country.

The intertemporal budget constraint is defined as:

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

The price of consumption in terms of consumption is .

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

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

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

Exam 6: The Standard Trade Model

An import tariff will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.

An export subsidy will cause the terms of trade of the ________ country to ________ and will ________ the country.

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

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

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

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

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

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

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

-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 Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would

If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must

An import tariff will cause the terms of trade of the ________ country to ________ and will ________ the country.

The intertemporal budget constraint is defined as:

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

The price of ________ consumption in terms of ________ consumption is ________.

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

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

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

An import tariff will cause the relative demand for to and the relative supply for to .

An export subsidy will cause the terms of trade of the country to and will the country.

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

An import tariff will cause the terms of trade of the country to and will the country.

The price of consumption in terms of consumption is .