1) in the imitation lag hypothesis, the length of time that elapses between when a new
product is introduced by innovating firms in country i and when consumers in country ii
decide that the new product is a good substitute for products in their current
consumption bundle is known as the __________.
a. imitation lag
b. demand lag
c. net lag
d. product cycle lag
2) labor immigration
a. always produces a net social cost to society
b. clearly appears to result in a net cost to government in the united states
c. in the united states appears to be of relatively less-skilled workers on average than in
the past
d. almost always has a positive effect on the country of origin since it is usually the
less-skilled worker who migrates
3) the presence of an export subsidy (assuming that foreign demand is not
perfectly-inelastic)
a. will increase the price of the export good in the home market and decrease the
well-being of home consumers
b. will decrease the price of the export good in the home market and increase the
well-being of home consumers
c. will lead to a net gain in welfare in the home country since producer surplus is
enhanced
d. can lead to a higher import price in the importing country in the large-country case
4) to which one of the following agreements or groups is the united states not a
signatory or member?
a. apec
b. cafta-dr
c. mercosur
d. nafta
5) if good x from country c faces a 10 percent tariff in country a and a 20 percent tariff
in country b, but if a and b have free trade between each other, then a and b are part of
which one (and only one) of the following types of groupings?
a. free-trade area
b. customs union
c. common market
d. economic union
6) in the following graph showing indifference curves for country a (a1) and for country
b
(b1) in a situation where both countries have the same production-possibilities frontier,
in autarky, px/py in country a is __________ px/py in country b, and, if trade begins,
country a will export good __________.
a. less than; x
b. less than; y
c. greater than; x
d. greater than; y
7) other things equal, which one of the following factors would likely not contribute to
a worsening of the terms of trade of developing countries?
a. heavy reliance on primary product exports
b. the differing price effects of technological change compared to developed countries
c. developing countries attempts to diversify their exports and to include more
manufactured goods in their export bundle
d. differences in the demand characteristics of the developing countries exports and
imports
8) in the following diagram,
at factor prices (w/r)i, good x is the __________, and, at factor prices (w/r)ii, good y is
the __________.
a. labor-intensive good; labor-intensive good
b. labor-intensive good; capital-intensive good
c. capital-intensive good; labor-intensive good
d. capital-intensive good; capital-intensive good
9) if a french citizen places $100,000 in an italian bank and an italian citizen places
$40,000 in a french bank, net international bank lending increased by __________.
a. $40,000
b. $60,000
c. $100,000
d. $140,000
10) in the following diagram, the curve 0abc that relates the market value of ldc
external debt to the face value of the external debt is known as
a. the laffer curve
b. the debt-relief laffer curve
c. the brady curve
d. the prebisch-singer curve
11) assuming a two-country world, suppose that country is income elasticity of demand
for imports is 1.2 and that country iis income elasticity of demand for imports is 0.9.
suppose also that, during 2010, country is gdp grows by 5 percent and country iis gdp
grows by 6 percent. given these income elasticities of demand for imports and these
growth rates and with other things equal, the terms of trade of country i with country ii
during 2010 would __________.
a. improve
b. remain the same as before the growth in the two countries took place
c. deteriorate
d. improve, remain the same as before the growth in the two countries took place, or
deteriorate cannot be determined without more information
12) in international commodity agreements that specify a target range for the price of a
product, if the world price of the good is above the ceiling price, then a buffer stock
agreement would require that the international agency __________ the product and an
export quota agreement would require that countries __________ their exports of the
good.
a. sell; increase
b. sell; decrease
c. buy; increase
d. buy; decrease
13) if relatively labor-abundant country a has a leontief statistic greater than 1.0 and
relatively capital-abundant country b has a leontief statistic less than 1.0, this suggests
that
a. neither country is conforming to the prediction of the heckscher-ohlin theorem
b. both countries are conforming to the prediction of the heckscher-ohlin theorem
c. country a is conforming to the prediction of the heckscher-ohlin theorem but country
b is not
d. country b is conforming to the prediction of the heckscher-ohlin theorem but country
a is not
14) other things equal, in a keynesian income model, the autonomous spending
multiplier will __________ if there is a decrease in the marginal propensity to consume,
and the autonomous spending multiplier __________ if there is a decrease in the
marginal propensity to import (mpm).
a. decrease; also will decrease
b. decrease; will increase
c. increase; will decrease
d. increase; also will increase