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1)
in the diagram above, what is the amount of tariff revenue collected by the government
when the tariff is in place?
a. $3
b. $6
c.. $18
d. $40
suppose that, at the equilibrium level of income in a country, the country has a current
account (x- m) deficit of 60. the countrys marginal propensity to consume = 0.7, and the
countrys marginal propensity to import = 0.2. if contraction in imports by means of
reducing national income is the method to be used to eliminate the current account deficit,
by how much must national income be reduced?
a. 30
b. 60
c. 120
2) d. 300
3) given the following classical-type table showing the number of days of labor input
required to obtain one unit of output of each of the two commodities in each of the three
countries:
which one of the following statements is correct?
a. if trade is taking place, germany will always be exporting wine
b. if trade is taking place, denmark will always be exporting clothing
c. if trade is taking place, portugal will always be importing clothing
d. if trade is taking place and the terms of trade are 1 clothing:1.6 wine, germany will
be
exporting clothing and denmark and portugal will be importing clothing
4) the eurodollar deposit rate would theoretically be expected to lie __________ the
domestic u.s. deposit rate, and the eurodollar lending rate would theoretically be
expected to lie __________ the u.s. domestic lending rate.
a. below; below
b. below; above
c. above; below
d. above; above
5) if a country grows such that, at constant relative prices, the production of its export
good rises by 5 percent and the production of its import-competing good rises by 15
percent (and these are the only two goods produced in the economy), this production
pattern would be called __________ production effect.
a. a neutral
b. a protrade
c. an antitrade
d. an ultra-antitrade
6) in the situation of transfer pricing by a multinational firm in its trade between plants
located in less developed countries (ldcs) and industrialized countries (ics), the firm,
other things equal, will, if it wants to shift recorded profits from its ldc plants to its ic
plants, record a price on goods sent from ldcs to ics that is __________ than
acomparable free-market price. for goods sent from ics to the ldcs, the firm will
__________ than a comparable free-market price.
a. lower; also want to record a price that is lower
b. lower; want to record a price that is higher
c. higher; want to record a price that is lower
d. higher; also want to record a price that is higher
7) which one of the following is not an assumption in the heckscher-ohlin analysis?
a. constant returns to scale
b. imperfect competition
c. identical production functions across countries
d. identical tastes across countries
8) given the following ricardo-type table showing the amount of labor input required to
produce one unit of output of each of the two goods in each of the two countries:
france has an absolute advantage in __________ and a comparative advantage in
__________.
a. both goods; machines
b. both goods; shirts
c. neither good; machines
d. neither good; shirts
9) in the general equilibrium graph with a production-possibilities frontier (ppf) and
consumer indifference curves,
a. a tariff has the same welfare impact as a subsidy to the import-competing industry
(provided domestic production is the same with each alternative instrument)
b. a tariff reduces both real income and the gains from exchange
c. a tariff reduces consumer welfare only if the tariff is a prohibitive tariff (i.e.,
eliminates all imports)
d. protection shifts the ppf outward but reduces consumerwelfare
10) if the heckscher-ohlin theorem is valid in practice (and assuming that capital and
labor are treated as the only two factors in the real world), then the leontief statistic for
a labor-abundant country would be __________.
a. greater than 1.0
b. equal to 1.0
c. less than 1.0 but greater than zero
d. less than zero
11) with ms = supply of money, v = velocity of money, p = price level, and y = real
output, which one of the following indicates the quantity theory of money expression?
a. msy = pv
b. msp = vy
c. ms = py - v
d. msv = py
12) the use of the most-favored-nation (mfn) principle [or normal trade relations (ntr)]
is an attempt to attain __________ toward competing suppliers of imports to a country.
hence, the arrangement whereby developed countries permit duty-free entry on some
goods coming from developing countries but levy tariffs on the same goods if coming
from other developed countries is __________ the mfn [or ntr] principle.
a. discrimination; a departure from
b. discrimination; an example of
c. nondiscrimination; a departure from
d. nondiscrimination; an example of
