Question 1

Spencer and Brander's model highlights the existence of

Accepted Answer

A)  aircraft industries. 
B)  excess returns present in highly competitive markets. 
C)  excess returns, or rents, available in non-competitive markets. 
D)  the futility of government bureaucrats' attempts to build an airplane. 
E)  natural advantages in foreign technology firms. 
A)  aircraft industries. 
B)  excess returns present in highly competitive markets. 
C)  excess returns, or rents, available in non-competitive markets. 
D)  the futility of government bureaucrats' attempts to build an airplane. 
E)  natural advantages in foreign technology firms.

Question 2

The Heckscher-Ohlin, factor-proportions model lends support to the argument that

Accepted Answer

A)  trade tends to worsen the conditions of unskilled labor in rich countries. 
B)  trade tends to worsen the conditions of owners of capital in rich countries. 
C)  trade tends to worsen the conditions of workers in poor countries. 
D)  trade tends to worsen the conditions of workers in rich countries. 
E)  trade tends to worsen the conditions of highly skilled workers in rich countries. 
A)  trade tends to worsen the conditions of unskilled labor in rich countries. 
B)  trade tends to worsen the conditions of owners of capital in rich countries. 
C)  trade tends to worsen the conditions of workers in poor countries. 
D)  trade tends to worsen the conditions of workers in rich countries. 
E)  trade tends to worsen the conditions of highly skilled workers in rich countries.

Question 3

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

Accepted Answer

A)  shipbreaking is generally considered to be a capital-intensive operation and India, being a large country has much capital. 
B)  shipbreaking is a labor-intensive operation in India, and India has many workers since it is such a large country. 
C)  shipbreaking is a labor-intensive operation in India, and India's availability of capital per worker is less than that of its trade partners. 
D)  shipbreaking is a capital-intensive operation elsewhere in the world, and therefore represents a case of a factor intensity reversal. 
E)  India's climate lends itself to the work involved in shipbreaking. 
A)  shipbreaking is generally considered to be a capital-intensive operation and India, being a large country has much capital. 
B)  shipbreaking is a labor-intensive operation in India, and India has many workers since it is such a large country. 
C)  shipbreaking is a labor-intensive operation in India, and India's availability of capital per worker is less than that of its trade partners. 
D)  shipbreaking is a capital-intensive operation elsewhere in the world, and therefore represents a case of a factor intensity reversal. 
E)  India's climate lends itself to the work involved in shipbreaking.

Question 4

The existence of positive externalities due to the impossibility of full appropriability

Accepted Answer

A)  supports the conclusions of the Heckscher-Ohlin model. 
B)  rejects the usefulness of government protectionism. 
C)  supports the concept that the government should support only high-tech industries. 
D)  provides support for government protectionism. 
E)  supports arguments for free trade. 
A)  supports the conclusions of the Heckscher-Ohlin model. 
B)  rejects the usefulness of government protectionism. 
C)  supports the concept that the government should support only high-tech industries. 
D)  provides support for government protectionism. 
E)  supports arguments for free trade.

Question 5

Faced with the evidence of poor working conditions and low wages in the border maquiladoras, Economists

Accepted Answer

A)  shrug their shoulders and ignore the issue. 
B)  agree that trade theory is thus proven hollow and internally inconsistent. 
C)  argue that U.S. consumers should not consume lettuce. 
D)  argue that the poor conditions and low wages are actually improvements for the Mexican workers, and may be cited as gains-from-trade. 
E)  argue that Mexico's generally high overall productivity offsets these conditions. 
A)  shrug their shoulders and ignore the issue. 
B)  agree that trade theory is thus proven hollow and internally inconsistent. 
C)  argue that U.S. consumers should not consume lettuce. 
D)  argue that the poor conditions and low wages are actually improvements for the Mexican workers, and may be cited as gains-from-trade. 
E)  argue that Mexico's generally high overall productivity offsets these conditions.

Question 6

The reason Airbus succeeded in the Brander Spencer example is that

Accepted Answer

A)  Boeing made the first move in this strategic game. 
B)  Europeans tend to be better strategists than corn-fed Americans. 
C)  the Airbus actually was a better plane than the Boeing 747. 
D)  U.S. laws actually prohibit U.S. exporters from bribing foreign officials. 
E)  the subsidy removed the advantage that Boeing gained with their head start in production. 
A)  Boeing made the first move in this strategic game. 
B)  Europeans tend to be better strategists than corn-fed Americans. 
C)  the Airbus actually was a better plane than the Boeing 747. 
D)  U.S. laws actually prohibit U.S. exporters from bribing foreign officials. 
E)  the subsidy removed the advantage that Boeing gained with their head start in production.

Question 7

The reason Airbus succeeded in the Brander Spencer example is that

Accepted Answer

A)  the European government made an explicit subsidy offer, but the U.S. government did not. 
B)  Airbus' prices were better when adjusted for quality and warranty services. 
C)  Boeing traditionally refused to undertake any exchange rate risk in its transactions. 
D)  the U.S. acted in accordance with its ideological reliance on market solutions, whereas the Europeans ignored market and technological factors. 
E)  the Airbus plane benefited from more advanced technology. 
A)  the European government made an explicit subsidy offer, but the U.S. government did not. 
B)  Airbus' prices were better when adjusted for quality and warranty services. 
C)  Boeing traditionally refused to undertake any exchange rate risk in its transactions. 
D)  the U.S. acted in accordance with its ideological reliance on market solutions, whereas the Europeans ignored market and technological factors. 
E)  the Airbus plane benefited from more advanced technology.

Spencer and Brander's model highlights the existence of

The Heckscher-Ohlin, factor-proportions model lends support to the argument that

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

The existence of positive externalities due to the impossibility of full appropriability

Faced with the evidence of poor working conditions and low wages in the border maquiladoras, Economists

The reason Airbus succeeded in the Brander Spencer example is that

The reason Airbus succeeded in the Brander Spencer example is that

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

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

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 12: Controversies in Trade Policy

Spencer and Brander's model highlights the existence of

The Heckscher-Ohlin, factor-proportions model lends support to the argument that

The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since

The existence of positive externalities due to the impossibility of full appropriability

Faced with the evidence of poor working conditions and low wages in the border maquiladoras, Economists

The reason Airbus succeeded in the Brander Spencer example is that

The reason Airbus succeeded in the Brander Spencer example is that

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

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

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