Question 1

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 2

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

Accepted Answer

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

Question 3

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 4

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 5

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 6

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 7

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

Accepted Answer

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

Question 8

Immigration into the U.S. over the past century has caused the percentage of immigrants in the U.S. population to

Accepted Answer

A)  fall steadily until the 1970s and increase thereafter. 
B)  remain relatively constant over the time period. 
C)  fall steadily over the entire century. 
D)  rise steadily over the entire century. 
E)  rise steadily until the 1970s and fall thereafter. 
A)  fall steadily until the 1970s and increase thereafter. 
B)  remain relatively constant over the time period. 
C)  fall steadily over the entire century. 
D)  rise steadily over the entire century. 
E)  rise steadily until the 1970s and fall thereafter.

Question 9

When a country's labor market is in equilibrium in the specific factors model, the wage rate

Accepted Answer

A)  will be the same in both sectors. 
B)  will be higher in the export-competing sector. 
C)  will be higher in the import-competing sector. 
D)  will be higher in the sector where product price is higher. 
E)  will be higher in the sector where product price is lower. 
A)  will be the same in both sectors. 
B)  will be higher in the export-competing sector. 
C)  will be higher in the import-competing sector. 
D)  will be higher in the sector where product price is higher. 
E)  will be higher in the sector where product price is lower.

Question 10

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 11

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. deMill 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. deMill and Gordon Willis. 
E)  Bill Clinton and Monica Lewinsky.

Question 12

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 13

In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase 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)  an ambiguous change; a decrease; an increase 
B)  an ambiguous change; an ambiguous change; an ambiguous change 
C)  a decrease; an ambiguous change; an ambiguous change 
D)  an increase; a decrease; an increase 
E)  an ambiguous change; an increase; a decrease 
A)  an ambiguous change; a decrease; an increase 
B)  an ambiguous change; an ambiguous change; an ambiguous change 
C)  a decrease; an ambiguous change; an ambiguous change 
D)  an increase; a decrease; an increase 
E)  an ambiguous change; an increase; a decrease

Question 14

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 15

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 16

In the two-country model of international labor mobility,

Accepted Answer

A)  migration results in increased global output, although some groups are made worse off. 
B)  migration results in increased global output, and all groups are made better off. 
C)  migration has no effect on global output, although some groups are made worse off. 
D)  migration has no effect on global output, although some groups are made better off. 
E)  migration may reduce global output, although some groups are made better off. 
A)  migration results in increased global output, although some groups are made worse off. 
B)  migration results in increased global output, and all groups are made better off. 
C)  migration has no effect on global output, although some groups are made worse off. 
D)  migration has no effect on global output, although some groups are made better off. 
E)  migration may reduce global output, although some groups are made better off.

Question 17

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 18

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 19

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

Accepted Answer

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

Question 20

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.

Exam 4: Specific Factors and Income Distribution

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

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

In the two-country model of international labor mobility,

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

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

Immigration into the U.S. over the past century has caused the percentage of immigrants in the U.S. population to

When a country's labor market is in equilibrium in the specific factors model, the wage rate

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

The specific factors model was developed by

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

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

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

In the two-country model of international labor mobility,

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

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

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

A country's budget constraint states that

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

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 imported good they are .

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

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