Question 1

The assumption of increasing opportunity costs in the HO model increases the likelihood that

Accepted Answer

A) there will be incomplete specialization in production after trade begins. 
B) countries will be better off with free international trade. 
C) countries will maximize their standards of living from free international trade. 
D) All of the above. 
A) there will be incomplete specialization in production after trade begins. 
B) countries will be better off with free international trade. 
C) countries will maximize their standards of living from free international trade. 
D) All of the above. A

Question 2

Explain carefully why the assumption of identical technology worldwide eliminates the classical basis for international trade.

Accepted Answer

In the classical model,differences in technology between the two countries lead to differences in autarky prices.If one were to replace that assumption with the HO assumption of identical technologies,the autarky prices would be identical,and there would be no reason for trade to begin between the two countries.

Question 3

Suppose that there are two factors,capital and land,and that the United States is relatively capital abundant while Canada is relatively land abundant.According to the HO model,

Accepted Answer

A) Canadian landowners should support Canada-U.S. free trade. 
B) Canadian capital owners should oppose Canada-U.S. free trade. 
C) U.S. capital owners should support Canada-U.S. free trade. 
D) All of the above. 
A) Canadian landowners should support Canada-U.S. free trade. 
B) Canadian capital owners should oppose Canada-U.S. free trade. 
C) U.S. capital owners should support Canada-U.S. free trade. 
D) All of the above. D

Question 4

Describe the controversy surrounding the HO model and the widening of the American income gap.

Accepted Answer

Over the past three decades,real wages i

Question 5

Let Kj and Lj denote the capital and labor stocks of country j (j = A,B),then country A is said to be capital abundant relative to country B if

Accepted Answer

A) KA > KB. B) KA/LA > KB/LB. C) LA < LB. D) All of the above. A) KA > KB. B) KA/LA > KB/LB. C) LA < LB. D) All of the above.

Question 6

According to the Rybczynski theorem,if a country increases its endowment of capital and prices remain constant,then its output of both the capital and labor intensive goods will rise.

Accepted Answer

A) True 
 B)False

Question 7

Even if some people are hurt by international trade,the HO model predicts that free international trade improves the standard of living for the country as a whole.

Accepted Answer

A) True 
 B)False

Question 8

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium.
  
-Refer to the figure above.If this country is labor abundant,then according to the HO theory good X should be ________ intensive.

Accepted Answer

A) capital 
B) labor 
C) both capital and labor 
D) Can't tell without more information 
A) capital 
B) labor 
C) both capital and labor 
D) Can't tell without more information

Question 9

Which of the following theorems predicts that trade benefits the abundant factors of a country and harms the scarce factors?

Accepted Answer

A) The Stolper-Samuelson theorem. 
B) The Rybczynski theorem. 
C) The Heckscher-Ohlin theorem. 
D) None of the above. 
A) The Stolper-Samuelson theorem. 
B) The Rybczynski theorem. 
C) The Heckscher-Ohlin theorem. 
D) None of the above.

Question 10

Explain how free international trade tends to lead to factor price equalization under the assumptions of the HO model.What does this process predict about which groups should be in favor of or opposed to free international trade?

Accepted Answer

Free international trade leads in each c

Question 11

According to the factor price equalization theorem,the ________ factor should oppose free trade policies in any given country.

Accepted Answer

A) abundant 
B) scarce 
C) neither 
D) Can't tell without more information 
A) abundant 
B) scarce 
C) neither 
D) Can't tell without more information

Question 12

The HO model rules out the classical model's basis for trade by assuming that ________ is (are)identical between countries.

Accepted Answer

A) factor endowments 
B) factor intensities 
C) technology 
D) opportunity costs 
A) factor endowments 
B) factor intensities 
C) technology 
D) opportunity costs

Question 13

In the HO model,the production possibility frontier is bowed out due to the assumption of

Accepted Answer

A) identical tastes. 
B) different factor intensities in the production of the two goods. 
C) increasing returns to scale. 
D) Two of the above. 
A) identical tastes. 
B) different factor intensities in the production of the two goods. 
C) increasing returns to scale. 
D) Two of the above.

Question 14

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium.
  
-Refer to the figure above.If Y is labor intensive then according to the HO theory,this country should be ________ abundant.

Accepted Answer

A) capital 
B) labor 
C) both capital and labor 
D) Can't tell without more information 
A) capital 
B) labor 
C) both capital and labor 
D) Can't tell without more information

Question 15

Which of the following is false?

Accepted Answer

A) International differences in tastes, if sufficiently large, could overturn the comparative advantage predictions of the HO model. 
B) The classical and HO models make similar assumptions about international differences in technology. 
C) The HO model predicts that some groups will be hurt by international trade. 
D) Both the classical and the HO models predict that countries gain from international trade. 
A) International differences in tastes, if sufficiently large, could overturn the comparative advantage predictions of the HO model. 
B) The classical and HO models make similar assumptions about international differences in technology. 
C) The HO model predicts that some groups will be hurt by international trade. 
D) Both the classical and the HO models predict that countries gain from international trade.

Question 16

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium.
  
-Refer to the figure above.This country has comparative advantage in

Accepted Answer

A) X. 
B) Y. 
C) both X and Y. 
D) Can't tell without more information. 
A) X. 
B) Y. 
C) both X and Y. 
D) Can't tell without more information.

Question 17

The Heckscher-Ohlin model basically states that countries will specialize and trade those goods in which they have comparative advantage.

Accepted Answer

A) True 
 B)False

Question 18

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium.
  
-Refer to the figure above.This country's exports equal

Accepted Answer

A) CE units of X. 
B) GH units of Y. 
C) CD units of X. 
D) DE units of Y. 
A) CE units of X. 
B) GH units of Y. 
C) CD units of X. 
D) DE units of Y.

Question 19

According to the Heckscher-Ohlin (HO)model the source of comparative advantage is a country's

Accepted Answer

A) technology. 
B) advertising. 
C) factor endowments. 
D) Both A and C. 
A) technology. 
B) advertising. 
C) factor endowments. 
D) Both A and C.

Question 20

According to the HO model,

Accepted Answer

A) everyone automatically gains from trade. 
B) the gainers from trade outnumber the losers from trade. 
C) the scarce factor necessarily gains from trade. 
D) None of the above. 
A) everyone automatically gains from trade. 
B) the gainers from trade outnumber the losers from trade. 
C) the scarce factor necessarily gains from trade. 
D) None of the above.

The assumption of increasing opportunity costs in the HO model increases the likelihood that

Explain carefully why the assumption of identical technology worldwide eliminates the classical basis for international trade.

Suppose that there are two factors,capital and land,and that the United States is relatively capital abundant while Canada is relatively land abundant.According to the HO model,

Describe the controversy surrounding the HO model and the widening of the American income gap.

Let Kj and Lj denote the capital and labor stocks of country j (j = A,B),then country A is said to be capital abundant relative to country B if

According to the Rybczynski theorem,if a country increases its endowment of capital and prices remain constant,then its output of both the capital and labor intensive goods will rise.

Even if some people are hurt by international trade,the HO model predicts that free international trade improves the standard of living for the country as a whole.

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.If this country is labor abundant,then according to the HO theory good X should be ________ intensive.

Which of the following theorems predicts that trade benefits the abundant factors of a country and harms the scarce factors?

Explain how free international trade tends to lead to factor price equalization under the assumptions of the HO model.What does this process predict about which groups should be in favor of or opposed to free international trade?

According to the factor price equalization theorem,the ________ factor should oppose free trade policies in any given country.

The HO model rules out the classical model's basis for trade by assuming that ________ is (are)identical between countries.

In the HO model,the production possibility frontier is bowed out due to the assumption of

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.If Y is labor intensive then according to the HO theory,this country should be ________ abundant.

Which of the following is false?

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.This country has comparative advantage in

The Heckscher-Ohlin model basically states that countries will specialize and trade those goods in which they have comparative advantage.

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.This country's exports equal

According to the Heckscher-Ohlin (HO)model the source of comparative advantage is a country's

According to the HO model,

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Classical Model of International Trade

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Balance of Payments

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

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Exam 4: The Heckscher-Ohlin Model

The assumption of increasing opportunity costs in the HO model increases the likelihood that

Explain carefully why the assumption of identical technology worldwide eliminates the classical basis for international trade.

Suppose that there are two factors,capital and land,and that the United States is relatively capital abundant while Canada is relatively land abundant.According to the HO model,

Describe the controversy surrounding the HO model and the widening of the American income gap.

Let Kj and Lj denote the capital and labor stocks of country j (j = A,B),then country A is said to be capital abundant relative to country B if

According to the Rybczynski theorem,if a country increases its endowment of capital and prices remain constant,then its output of both the capital and labor intensive goods will rise.

Even if some people are hurt by international trade,the HO model predicts that free international trade improves the standard of living for the country as a whole.

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.If this country is labor abundant,then according to the HO theory good X should be ________ intensive.

Which of the following theorems predicts that trade benefits the abundant factors of a country and harms the scarce factors?

Explain how free international trade tends to lead to factor price equalization under the assumptions of the HO model.What does this process predict about which groups should be in favor of or opposed to free international trade?

According to the factor price equalization theorem,the ________ factor should oppose free trade policies in any given country.

The HO model rules out the classical model's basis for trade by assuming that ________ is (are)identical between countries.

In the HO model,the production possibility frontier is bowed out due to the assumption of

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.If Y is labor intensive then according to the HO theory,this country should be ________ abundant.

Which of the following is false?

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.This country has comparative advantage in

The Heckscher-Ohlin model basically states that countries will specialize and trade those goods in which they have comparative advantage.

Answer the question(s)below based on the following diagram of a country that is in international trade equilibrium. -Refer to the figure above.This country's exports equal

According to the Heckscher-Ohlin (HO)model the source of comparative advantage is a country's

According to the HO model,

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Classical Model of International Trade

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Balance of Payments

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

Filters