Question 1

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

Accepted Answer

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

Question 2

If the U.S. (a large country) imposes a tariff on its imported good, this will tend to

Accepted Answer

A)  improve the terms of trade of the United States. 
B)  have no effect on terms of trade. 
C)  improve the terms of trade of all countries. 
D)  cause a deterioration of U.S. terms of trade. 
E)  raise the world price of the good imported by the United States. 
A)  improve the terms of trade of the United States. 
B)  have no effect on terms of trade. 
C)  improve the terms of trade of all countries. 
D)  cause a deterioration of U.S. terms of trade. 
E)  raise the world price of the good imported by the United States.

Question 3

Suppose that a "small country" experiences growth strongly biased toward its export, cloth,

Accepted Answer

A)  this will have no effect on terms of trade for the country's trading partner. 
B)  this will tend to worsen the country's terms of trade. 
C)  this will tend to improve the country's terms of trade. 
D)  this will tend to worsen terms of trade for the country's trading partner. 
E)  this will tend to improve terms of trade for the country's trading partner. 
A)  this will have no effect on terms of trade for the country's trading partner. 
B)  this will tend to worsen the country's terms of trade. 
C)  this will tend to improve the country's terms of trade. 
D)  this will tend to worsen terms of trade for the country's trading partner. 
E)  this will tend to improve terms of trade for the country's trading partner.

Question 4

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

Accepted Answer

A)  decrease the internal price of imports below the world market rate. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  improve the real income of its trade partners. 
A)  decrease the internal price of imports below the world market rate. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  improve the real income of its trade partners.

Question 5

Rapidly growing developing countries tend to be borrowers on the international capital markets. From this information we may surmise that they have a comparative advantage in

Accepted Answer

A)  future income. 
B)  capital goods. 
C)  disposable income. 
D)  consumer goods. 
E)  present income. 
A)  future income. 
B)  capital goods. 
C)  disposable income. 
D)  consumer goods. 
E)  present income.

Question 6

The meaning of "terms of trade" is

Accepted Answer

A)  the price of a country's exports divided by the price of its imports. 
B)  the amount of exports sold by a country. 
C)  the price conditions bargained for in international markets. 
D)  the quantities of imports received in free trade. 
E)  the tariffs in place between two trading countries. 
A)  the price of a country's exports divided by the price of its imports. 
B)  the amount of exports sold by a country. 
C)  the price conditions bargained for in international markets. 
D)  the quantities of imports received in free trade. 
E)  the tariffs in place between two trading countries.

Question 7

The intertemporal budget constraint is defined as:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

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 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 9

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)  improve the real income of its trade partners. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  increase internal prices above the world market rate. 
A)  improve the real income of its trade partners. 
B)  cause retaliation on the part of its trade partners. 
C)  harm Slovenia's real income. 
D)  improve Slovenia's real income. 
E)  increase internal prices above the world market rate.

Question 10

International borrowing and lending may be interpreted as one form of

Accepted Answer

A)  intertemporal trade. 
B)  intermediate trade. 
C)  trade in services. 
D)  unrequited international transfers. 
E)  aid to offset trade advantages. 
A)  intertemporal trade. 
B)  intermediate trade. 
C)  trade in services. 
D)  unrequited international transfers. 
E)  aid to offset trade advantages.

Question 11

It may be argued that theoretically, international capital movements

Accepted Answer

A)  tend to hurt labor in donor countries. 
B)  tend to hurt the donor countries. 
C)  tend to hurt the recipient countries. 
D)  tend to hurt labor in recipient countries. 
E)  increase future production in donor countries. 
A)  tend to hurt labor in donor countries. 
B)  tend to hurt the donor countries. 
C)  tend to hurt the recipient countries. 
D)  tend to hurt labor in recipient countries. 
E)  increase future production in donor countries.

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

-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 15

An increase in a country's net commodity terms of trade will

Accepted Answer

A)  not always guarantee positive changes in the country's economy. 
B)  always increase the country's economic welfare. 
C)  always increase the country's real income. 
D)  never increase the country's quantity of exports. 
E)  always increase the country's production of its import competing good. 
A)  not always guarantee positive changes in the country's economy. 
B)  always increase the country's economic welfare. 
C)  always increase the country's real income. 
D)  never increase the country's quantity of exports. 
E)  always increase the country's production of its import competing good.

Question 16

-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 c; point b; remain unchanged 
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 c; point b; remain unchanged 
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 17

Terms of trade refers to

Accepted Answer

A)  the relative price at which trade occurs. 
B)  what goods are imported. 
C)  what goods are exported. 
D)  the volume of trade. 
E)  the tariffs applied to trade. 
A)  the relative price at which trade occurs. 
B)  what goods are imported. 
C)  what goods are exported. 
D)  the volume of trade. 
E)  the tariffs applied to trade.

Question 18

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

Accepted Answer

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

Question 19

-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 20

If a country began exporting product A and importing product B, then, as compared to the autarky (no-trade) situation, the marginal cost of product A will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  shift outward. 
D)  shift inward. 
E)  remain the same. 
A)  increase. 
B)  decrease. 
C)  shift outward. 
D)  shift inward. 
E)  remain the same.

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

If the U.S. (a large country) imposes a tariff on its imported good, this will tend to

Suppose that a "small country" experiences growth strongly biased toward its export, cloth,

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

Rapidly growing developing countries tend to be borrowers on the international capital markets. From this information we may surmise that they have a comparative advantage in

The meaning of "terms of trade" is

The intertemporal budget constraint is defined as:

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

International borrowing and lending may be interpreted as one form of

It may be argued that theoretically, international capital movements

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

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

An increase in a country's net commodity terms of trade will

-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 .

Terms of trade refers to

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

If a country began exporting product A and importing product B, then, as compared to the autarky (no-trade) situation, the marginal cost of product A will

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

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 ________.

If the U.S. (a large country) imposes a tariff on its imported good, this will tend to

Suppose that a "small country" experiences growth strongly biased toward its export, cloth,

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

Rapidly growing developing countries tend to be borrowers on the international capital markets. From this information we may surmise that they have a comparative advantage in

The meaning of "terms of trade" is

The intertemporal budget constraint is defined as:

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

International borrowing and lending may be interpreted as one form of

It may be argued that theoretically, international capital movements

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

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

An increase in a country's net commodity terms of trade will

-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 ________.

Terms of trade refers to

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

If a country began exporting product A and importing product B, then, as compared to the autarky (no-trade) situation, the marginal cost of product A will

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters

An import tariff 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.