Question 1

Which of the following terms refers to the extent to which a country is gifted with such resources as land,labor,and capital?

Accepted Answer

A)  Current accounts 
B)  Factor endowments 
C)  National balance 
D)  National accounts 
A)  Current accounts 
B)  Factor endowments 
C)  National balance 
D)  National accounts B

Question 2

Which of the following factors,according to Porter's national Diamond,is most likely to give a country competitive advantage over another country?

Accepted Answer

A)  Natural resources 
B)  Climate 
C)  Skilled labor 
D)  Demographics 
A)  Natural resources 
B)  Climate 
C)  Skilled labor 
D)  Demographics C

Question 3

Variety of goods that a country can produce is limited by the size of the market in industries where economies of scale are important.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

Accepted Answer

A)  Comparative advantage theory 
B)  Ricardo's theory 
C)  New trade theory 
D)  Heckscher-Ohlin theory 
A)  Comparative advantage theory 
B)  Ricardo's theory 
C)  New trade theory 
D)  Heckscher-Ohlin theory

Question 5

According to Adam Smith,A country should specialize in the production of a good when it has _____.

Accepted Answer

A)  an absolute advantage in the production of the good 
B)  a strong domestic demand for the good 
C)  the ability to help country increase its national output 
D)  the necessary raw materials for production 
A)  an absolute advantage in the production of the good 
B)  a strong domestic demand for the good 
C)  the ability to help country increase its national output 
D)  the necessary raw materials for production

Question 6

Which of the following statements is true of the Leontief Paradox?

Accepted Answer

A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory. 
A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory.

Question 7

The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself.

Accepted Answer

A) True 
 B)False

Question 8

Paul Samuelson's critique argues that trade is a positive-sum game in which all countries that participate realize economic gains.

Accepted Answer

A) True 
 B)False

Question 9

A country's balance-of-payments accounts keep track of the _____.

Accepted Answer

A)  basic factor endowments and advanced factor endowments that the nation possesses 
B)  payments to and receipts from other countries for a particular time period 
C)  income taxes paid by domestic firms and the spending on the firms 
D)  total value of taxes paid by domestic firms and the spending on the firms 
A)  basic factor endowments and advanced factor endowments that the nation possesses 
B)  payments to and receipts from other countries for a particular time period 
C)  income taxes paid by domestic firms and the spending on the firms 
D)  total value of taxes paid by domestic firms and the spending on the firms

Question 10

Which of the following is a major limitation of the simple Ricardian model of comparative advantage?

Accepted Answer

A)  The model ignores the principle of diminishing marginal returns. 
B)  The model recommends excessive governmental intervention in trade. 
C)  The outcome of the model suggested by Ricardo is a zero-sum game. 
D)  The model is against the idea of engaging in free trade with nations. 
A)  The model ignores the principle of diminishing marginal returns. 
B)  The model recommends excessive governmental intervention in trade. 
C)  The outcome of the model suggested by Ricardo is a zero-sum game. 
D)  The model is against the idea of engaging in free trade with nations.

Question 11

Which of the following is a major flaw associated with mercantilism?

Accepted Answer

A)  Mercantilists do not support government intervention in trade. 
B)  Mercantilists view trade as a zero-sum game. 
C)  Mercantilists recommend policies to maximize imports. 
D)  Mercantilists recommend countries to maintain a negative trade balance. 
A)  Mercantilists do not support government intervention in trade. 
B)  Mercantilists view trade as a zero-sum game. 
C)  Mercantilists recommend policies to maximize imports. 
D)  Mercantilists recommend countries to maintain a negative trade balance.

Question 12

Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.

Accepted Answer

Perhaps the most contentious implication

Question 13

What are the sources of economies of scale?

Accepted Answer

Economies of scale are unit cost reducti

Question 14

The Heckscher-Ohlin theory argues that the pattern of international trade is determined by differences in factor endowments.

Accepted Answer

A) True 
 B)False

Question 15

A rich country improves its productivity by engaging in free trade with a poor country.This situation supports Paul Samuelson's critique.

Accepted Answer

A) True 
 B)False

Question 16

A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the main principle of mercantilism?

Accepted Answer

A)  Protection of domestic industries is not essential for a nation's welfare. 
B)  Government intervention is not required in global trade. 
C)  Countries should encourage absolute free trade. 
D)  It is in a country's best interests to maintain a trade surplus. 
A)  Protection of domestic industries is not essential for a nation's welfare. 
B)  Government intervention is not required in global trade. 
C)  Countries should encourage absolute free trade. 
D)  It is in a country's best interests to maintain a trade surplus.

Question 18

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

Accepted Answer

A) True 
 B)False

Question 19

Explain the dynamic gains that are generated by opening an economy to trade.

Accepted Answer

First,free trade might increase a countr

Question 20

Porter argues that a nation's firms gain competitive advantage if _____.

Accepted Answer

A)  their domestic consumers lack technical awareness 
B)  they function in a labor intensive market 
C)  the country has abundant supply of unskilled workers 
D)  their domestic consumers are demanding 
A)  their domestic consumers lack technical awareness 
B)  they function in a labor intensive market 
C)  the country has abundant supply of unskilled workers 
D)  their domestic consumers are demanding

Which of the following terms refers to the extent to which a country is gifted with such resources as land,labor,and capital?

Which of the following factors,according to Porter's national Diamond,is most likely to give a country competitive advantage over another country?

Variety of goods that a country can produce is limited by the size of the market in industries where economies of scale are important.

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

According to Adam Smith,A country should specialize in the production of a good when it has _____.

Which of the following statements is true of the Leontief Paradox?

The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself.

Paul Samuelson's critique argues that trade is a positive-sum game in which all countries that participate realize economic gains.

A country's balance-of-payments accounts keep track of the _____.

Which of the following is a major limitation of the simple Ricardian model of comparative advantage?

Which of the following is a major flaw associated with mercantilism?

Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.

What are the sources of economies of scale?

The Heckscher-Ohlin theory argues that the pattern of international trade is determined by differences in factor endowments.

A rich country improves its productivity by engaging in free trade with a poor country.This situation supports Paul Samuelson's critique.

A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.

Which of the following is the main principle of mercantilism?

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

Explain the dynamic gains that are generated by opening an economy to trade.

Porter argues that a nation's firms gain competitive advantage if _____.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 6: International Trade Theory

Which of the following terms refers to the extent to which a country is gifted with such resources as land,labor,and capital?

Which of the following factors,according to Porter's national Diamond,is most likely to give a country competitive advantage over another country?

Variety of goods that a country can produce is limited by the size of the market in industries where economies of scale are important.

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

According to Adam Smith,A country should specialize in the production of a good when it has _____.

Which of the following statements is true of the Leontief Paradox?

The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself.

Paul Samuelson's critique argues that trade is a positive-sum game in which all countries that participate realize economic gains.

A country's balance-of-payments accounts keep track of the _____.

Which of the following is a major limitation of the simple Ricardian model of comparative advantage?

Which of the following is a major flaw associated with mercantilism?

Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.

What are the sources of economies of scale?

The Heckscher-Ohlin theory argues that the pattern of international trade is determined by differences in factor endowments.

A rich country improves its productivity by engaging in free trade with a poor country.This situation supports Paul Samuelson's critique.

A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.

Which of the following is the main principle of mercantilism?

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

Explain the dynamic gains that are generated by opening an economy to trade.

Porter argues that a nation's firms gain competitive advantage if _____.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters