Question 1

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

Accepted Answer

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

Question 2

The degree of a factor's specificity is directly related to

Accepted Answer

A) the amount of time required to redeploy the factor to a different industry. 
B) the cost of the factor as a proportion of the long-run total cost of production. 
C) the mobility of the factor,with more mobile factors having more specificity. 
D) technology differences between two countries,with a more advanced technology resulting in more factor specificity. 
E) factor quality,with higher quality factors having a higher level of specificity. 
A) the amount of time required to redeploy the factor to a different industry. 
B) the cost of the factor as a proportion of the long-run total cost of production. 
C) the mobility of the factor,with more mobile factors having more specificity. 
D) technology differences between two countries,with a more advanced technology resulting in more factor specificity. 
E) factor quality,with higher quality factors having a higher level of specificity.

Question 3

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

Accepted Answer

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

Question 4

In the two-country model of international labor mobility

Accepted Answer

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

Question 5

In the two-country model of international labor mobility

Accepted Answer

A) the effect of migration is to cause real wages in the two countries to converge. 
B) the effect of migration is to cause real wages in the two countries to diverge. 
C) labor has only limited international mobility. 
D) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries. 
E) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries. 
A) the effect of migration is to cause real wages in the two countries to converge. 
B) the effect of migration is to cause real wages in the two countries to diverge. 
C) labor has only limited international mobility. 
D) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries. 
E) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries.

Question 6

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to ________ and it ________ as more cloth is produced.

Accepted Answer

A) -MPLF/MPLC;is constant 
B) -MPLF/MPLC;becomes steeper 
C) -MPLF/MPLC;becomes flatter 
D) -MPLC/MPLF;becomes steeper 
E) -MPLC/MPLF;is constant 
A) -MPLF/MPLC;is constant 
B) -MPLF/MPLC;becomes steeper 
C) -MPLF/MPLC;becomes flatter 
D) -MPLC/MPLF;becomes steeper 
E) -MPLC/MPLF;is constant

Question 7

The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food.When then central city,Mudhole,puts in an airstrip,the country is able to engage in trade.If the relative price of cloth in the outside world is 8 units of food,then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.

Accepted Answer

A) cloth;immobile;cloth 
B) food;immobile;food 
C) food;mobile;food 
D) cloth;mobile;cloth 
E) cloth;immobile;food 
A) cloth;immobile;cloth 
B) food;immobile;food 
C) food;mobile;food 
D) cloth;mobile;cloth 
E) cloth;immobile;food

Question 8

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the specific factors model is equal to ________ and it ________ as more cloth is produced.

Accepted Answer

A) -MPLF/MPLC;becomes steeper 
B) -MPLF/MPLC;becomes flatter 
C) -MPLF/MPLC;is constant 
D) -MPLC/MPLF;becomes steeper 
E) -MPLC/MPLF;is constant 
A) -MPLF/MPLC;becomes steeper 
B) -MPLF/MPLC;becomes flatter 
C) -MPLF/MPLC;is constant 
D) -MPLC/MPLF;becomes steeper 
E) -MPLC/MPLF;is constant

Question 9

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

Accepted Answer

A) some resources are immobile in the short run. 
B) of government corruption. 
C) the more powerful country dictates the terms of trade. 
D) rich countries take advantage of poor countries. 
E) different countries use different currencies. 
A) some resources are immobile in the short run. 
B) of government corruption. 
C) the more powerful country dictates the terms of trade. 
D) rich countries take advantage of poor countries. 
E) different countries use different currencies.

Question 10

In the specific factors model,a country's production possibility frontier is ________ because of ________.

Accepted Answer

A) a straight line;diminishing marginal returns 
B) a curved line;diminishing marginal returns 
C) a straight line;constant marginal returns 
D) a curved line;constant marginal returns 
E) a curved line;a limited supply of labor 
A) a straight line;diminishing marginal returns 
B) a curved line;diminishing marginal returns 
C) a straight line;constant marginal returns 
D) a curved line;constant marginal returns 
E) a curved line;a limited supply of labor

Question 11

The effect of trade on specialized employees of exporting industries will be ________ jobs and ________ pay because they are relatively ________.

Accepted Answer

A) more;higher;immobile 
B) fewer;lower;immobile 
C) fewer;lower;mobile 
D) more;lower;immobile 
E) more;higher;mobile 
A) more;higher;immobile 
B) fewer;lower;immobile 
C) fewer;lower;mobile 
D) more;lower;immobile 
E) more;higher;mobile

Question 12

A country's budget constraint states that

Accepted Answer

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

Question 13

In the four-quadrant diagram of the specific factors model,the graph in the upper right 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.

Question 14

The degree of a factor's specificity is inversely related to

Accepted Answer

A) the mobility of the factor,with more mobile factors having less specificity. 
B) the amount of time required to redeploy the factor to a different industry. 
C) the cost of the factor as a proportion of the long-run total cost of production. 
D) technology differences between two countries,with a less advanced technology resulting in less factor specificity. 
E) factor quality,with lower quality factors having a lower level of specificity. 
A) the mobility of the factor,with more mobile factors having less specificity. 
B) the amount of time required to redeploy the factor to a different industry. 
C) the cost of the factor as a proportion of the long-run total cost of production. 
D) technology differences between two countries,with a less advanced technology resulting in less factor specificity. 
E) factor quality,with lower quality factors having a lower level of specificity.

Question 15

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

Accepted Answer

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

Question 16

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

Question 17

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

Accepted Answer

A) less;many factors besides trade affect income distribution 
B) more;those who are harmed are not compensated by those who gain 
C) less;the effects on income distribution are minor and inconsequential 
D) more;the effects on income distribution are major and consequential 
E) less;the wealthy benefit and only the poor lose 
A) less;many factors besides trade affect income distribution 
B) more;those who are harmed are not compensated by those who gain 
C) less;the effects on income distribution are minor and inconsequential 
D) more;the effects on income distribution are major and consequential 
E) less;the wealthy benefit and only the poor lose

Question 18

In the specific factors model,a 5% decrease in the price of food accompanied by a 5% decrease in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.

Accepted Answer

A) no change;no change;no change 
B) an increase;an increase;an increase 
C) a decrease;an increase;an increase 
D) an increase;a decrease;a decrease 
E) a decrease;a decrease;a decrease 
A) no change;no change;no change 
B) an increase;an increase;an increase 
C) a decrease;an increase;an increase 
D) an increase;a decrease;a decrease 
E) a decrease;a decrease;a decrease

Question 19

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

Question 20

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

Exam 4: Specific Factors and Income Distribution

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

The degree of a factor's specificity is directly related to

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

In the two-country model of international labor mobility

In the two-country model of international labor mobility

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to ________ and it ________ as more cloth is produced.

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the specific factors model is equal to ________ and it ________ as more cloth is produced.

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

In the specific factors model,a country's production possibility frontier is ________ because of ________.

The effect of trade on specialized employees of exporting industries will be ________ jobs and ________ pay because they are relatively ________.

A country's budget constraint states that

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

The degree of a factor's specificity is inversely related to

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

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

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

-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 the price of good B increases,the new equilibrium is most likely to be

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 overall are and for fixed factors used to produce the exported good they are .

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to and it as more cloth is produced.

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the specific factors model is equal to and it as more cloth is produced.

In the specific factors model,a country's production possibility frontier is because of .

The effect of trade on specialized employees of exporting industries will be jobs and pay because they are relatively .

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .