Question 1

The effect of trade on income distribution

Accepted Answer

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

Question 2

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

Accepted Answer

A) an increase in the price of food relative to that of cloth 
B) an increase in the price of cloth relative to that of food 
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 food relative to that of cloth 
B) an increase in the price of cloth relative to that of food 
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 3

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

Question 4

There is a bias in the political process against free trade because

Accepted Answer

A) those who lose from free trade are better organized than those who gain. 
B) the gains from free trade cannot be measured. 
C) those who gain from free trade can't compensate those who lose. 
D) foreign governments make large donations to U.S.political campaigns. 
E) there is a high correlation between the volume of imports and the unemployment rate. 
A) those who lose from free trade are better organized than those who gain. 
B) the gains from free trade cannot be measured. 
C) those who gain from free trade can't compensate those who lose. 
D) foreign governments make large donations to U.S.political campaigns. 
E) there is a high correlation between the volume of imports and the unemployment rate.

Question 5

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

Accepted Answer

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

Question 6

U.S.imports of sugar are limited by an import quota that,according to a study updated in 2013,imposed annual costs on American consumers of

Accepted Answer

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

Question 7

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

Accepted Answer

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

Question 8

In the specific factor model,the effect of an increase in the productivity of labor in the production of cloth will cause a(an)________ in the quantity of labor used to produce cloth,a(an)________ in the quantity of labor used to produce food and a(an)________ in the wage rate.

Accepted Answer

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

Question 9

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

Accepted Answer

A) different industries employ different factors of production. 
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) different industries employ different factors of production. 
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

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

Accepted Answer

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

Question 11

A country's budget constraint states that

Accepted Answer

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

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

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

Question 15

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

Accepted Answer

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

Question 16

Japan's trade policies with regard to rice reflect the fact that

Accepted Answer

A) japanese rice farmers have significant political power. 
B) Japan has a comparative advantage in rice production and therefore exports most of its rice crop. 
C) there would be no gains from trade available to Japan if it engaged in free trade in rice. 
D) there are gains from trade that Japan captures by engaging in free trade in rice. 
E) Japan imports most of the rice consumed in the country. 
A) japanese rice farmers have significant political power. 
B) Japan has a comparative advantage in rice production and therefore exports most of its rice crop. 
C) there would be no gains from trade available to Japan if it engaged in free trade in rice. 
D) there are gains from trade that Japan captures by engaging in free trade in rice. 
E) Japan imports most of the rice consumed in the country.

Question 17

The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________.Assume that output of good Y is measured on the vertical axis,output of good X is measured on the horizontal axis,MPL is the marginal product of labor with a subscript indicating which good,P is the price of a good,and w is the wage rate.

Accepted Answer

A) -MPLY/MPLX;-PX/PY 
B) -PX/PY;-MPLY/MPLX; 
C) -PX/w;-PY/w 
D) -MPLY/w;-MPLF/w 
E) -MPLX/MPLY;-PX/PY 
A) -MPLY/MPLX;-PX/PY 
B) -PX/PY;-MPLY/MPLX; 
C) -PX/w;-PY/w 
D) -MPLY/w;-MPLF/w 
E) -MPLX/MPLY;-PX/PY

Question 18

In the specific factors model,labor is defined as a(an)

Accepted Answer

A) mobile factor. 
B) specific factor. 
C) fixed factor. 
D) variable factor. 
E) intensive factor. 
A) mobile factor. 
B) specific factor. 
C) fixed factor. 
D) variable factor. 
E) intensive factor.

Question 19

The specific factors model was developed by

Accepted Answer

A) Paul Samuelson and Ronald Jones. 
B) Adam Smith and David Ricardo. 
C) Richard Nixon and Robert Kennedy. 
D) C.B.deMille and Gordon Willis. 
E) Bill Clinton and Monica Lewinsky. 
A) Paul Samuelson and Ronald Jones. 
B) Adam Smith and David Ricardo. 
C) Richard Nixon and Robert Kennedy. 
D) C.B.deMille and Gordon Willis. 
E) Bill Clinton and Monica Lewinsky.

Question 20

In the specific factors model,a country's production function 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

Exam 4: Specific Factors and Income Distribution

The effect of trade on income distribution

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

-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

There is a bias in the political process against free trade because

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

U.S.imports of sugar are limited by an import quota that,according to a study updated in 2013,imposed annual costs on American consumers of

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

In the specific factor model,the effect of an increase in the productivity of labor in the production of cloth will cause a(an)________ in the quantity of labor used to produce cloth,a(an)________ in the quantity of labor used to produce food and a(an)________ in the wage rate.

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

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

A country's budget constraint states that

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

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

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 ________.

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

Japan's trade policies with regard to rice reflect the fact that

In the specific factors model,labor is defined as a(an)

The specific factors model was developed by

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

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

In the specific factor model,the effect of an increase in the productivity of labor in the production of cloth will cause a(an) in the quantity of labor used to produce cloth,a(an) in the quantity of labor used to produce food and a(an) in the wage rate.

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

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 .

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