1)
(this question draws appendix b material.)
given the following diagram showing country as demand for imports schedule for good x
(dimports), the supply of exports schedule to a from the rest of the world of good x(srow),
and the supply of exports schedule to a from the rest of the world of good x when country
a has imposed a specific tariff on imports of good x (srow):
price
quantity
country a:
a. can never improve its welfare by the imposition of this tariff
b. gains welfare from the imposition of this tariff if the area of triangle ghe is larger than
the area of rectangle p0p1e’h
c. gains welfare from the imposition of this tariff if the area of rectangle p2p0hg is larger
than the area of triangle he’e
d. gains welfare if the area of rectangle p0p1eh is larger than the area of rectangle p2p0hg
2) in david humes price-specie-flow doctrine or adjustment mechanism, the assumption
is made that changes in the money supply have an impact on __________. further, the
demand for traded goods is assumed to be __________ with respect to price.
a. prices rather than on output; elastic
b. prices rather than on output; inelastic
c. output rather than on prices; elastic
d. output rather than on prices; inelastic
3) suppose that country is income elasticity of demand for imports (yem) is 0.8. this
yem means that, as country is national income rises, the overall or net effect of its
growth on its trade sector is an __________ overall or net effect. in the context of the
offer curve diagram, if country i is a large country and it grows (and assuming no
growth occurs in its trading partner), this type of net effect means that country is terms
of trade, other things equal, will __________.
a. ultra-antitrade; improve (rise)
b. ultra-antitrade; deteriorate (fall)
c. antitrade; improve (rise)
d. antitrade; deteriorate (fall)
4) given the following payoff matrix for two interdependent firms in duopoly, where the
figure in the lower left of each box shows firm h’s profit and the figure in the upper
right of each box shows firm f’s profit:
firm h __________ a dominant strategy and firm f __________ a dominant strategy.
a. has; also has
b. has; does not have
c. does not have; has
d. does not have; also does not have
5) in the imitation lag hypothesis,
a. the period of most intense export by the innovating country is the imitation lag period
b. the period of most intense export by the innovating country is the demand lag period
c. the period of most intense export by the innovating country is the net lag period
d. technology is identical in all countries at all times
6) empirical tests pertaining to the determinants of intra-industry trade at the country
level tend to suggest that the amount of intra-industry trade
a. of a country is negatively related to the countrys per capita income level
b. between any two countries is negatively related to the geographic distance between
the two countries
c. of a country is negatively related to the countrys total gdp level
d. between any two countries is negatively related to the average income level of the
two countries
7) if, for a consumer, (mua/pa) is greater than (mub/pb), then the consumer
a. has an incentive to consume relatively more of good a, which will increase his/her
mua
b. has an incentive to consume relatively more of good a, which will decrease his/her
mua
c. has an incentive to consume relatively more of good b, which will increase his/her
mub
d. has an incentive to consume relatively more of good b, which will decrease his/her
mub
8)
which one of the following is not an assumption made in the standard 2x2x2
heckscher-ohlin analysis?
a. the production function for a given good is the same in both countries
b. if a particular good is the relatively labor-intensive good at one set of relative factor
prices, then it is also the relatively labor-intensive good at any other set of relative factor
prices
c. a given relative commodity price ratio, say (px/py)1, can be associated with more than
one relative factor price ratio, e.g., say with (w/r)1 as well as with (w/r)2
d. tastes and preferences (i.e., the community indifference curve maps) are identical in the
two countries
9) if the consumption function in a keynesian model is c = 60 + 0.7y, then the
associated saving function is __________.
a. s = – 60 + 0.3y
b. s = – 60 + 0.7y
c. s = 40 + 0.3y
d. s = – 40 + 0.3y
10) in the context of the classical/ricardo model, suppose that, in an industry x, the
productivity of u.s. workers is three times the productivity of chinese workers. at the
same time, suppose that the wage rate paid to chinese workers is 20% of the wage rate
paid to u.s. workers. in this situation, the unit labor cost of producing good x would be
__________ in china than in the united states and therefore, in this two-country
classical/ricardo context, __________.
a. lower; china would export good x to the united states
b. lower; the united states would export good x to china
c. higher; china would export good x to the united states
d. higher; the united states would export good x to china
11) if the united states government imposes a countervailing duty, this duty is being
imposed to offset
a. a foreign subsidy to a good exported to the united states
b. a foreign tariff on u.s. exports of a good
c. a foreign voluntary export restraint (ver) on a good exported to the united states
d. a foreign import quota on u.s. exports of a good
12) if a countrys currencys external value is tied or pegged to the currency values of the
countrys leading trading partners, this arrangement is known as a
a. peg against the sdr
b. managed float
c. peg against a basket of currencies or a composite
d. currency board
13) if labor moves from a labor-abundant country to a capital-abundant country, other
things equal, consideration of the rybczynski theorem suggests that the labor movement
will cause __________ production effect in the labor-abundant country.
a. an ultra-antitrade
b. an antitrade
c. neutral
d. an ultra-protrade
14) in its international investment position in the 1980s, the united states moved from a
position of a __________ at the beginning of the decade to that of a __________ at the
end of the decade.
a. small net debtor; very large net debtor
b. net debtor; net creditor
c. large net creditor; small net creditor
d. net creditor; net debtor
15) the stolper-samuelson theorem suggests that, when a country is opened to
international trade, the real income of the countrys abundant factor of production will
__________ and the real income of the countrys scarce factor of production
__________.
a. rise; also will rise
b. rise; will fall
c. fall; will rise
d. fall; also will fall
16) if demand reversal is the explanation for the leontief paradox, this would imply that
the demand by the united states for labor-intensive goods is relatively __________ and
therefore that u.s. wages would be relatively __________ in comparison to wages in
u.s. trading partners.
a. low; low
b. low; high
c. high; low
d. high; high
17) suppose that, with constant opportunity costs, spain can produce 2,000 units of
clothing if it devotes all of its resources to clothing production and 8,000 units of wheat
if it devotes all of its resources to wheat production. if spain is opened to trade at a
world price ratio of 1 wheat:0.4 clothing (or 1 clothing:2.5 wheat), spain will export
__________; if the world price ratio were 1 wheat:4 clothing (or 1 clothing:2.5 wheat),
spain would __________.
a. wheat; also export wheat
b. wheat; would export clothing
c. clothing; also would export clothing
d. clothing; would be indifferent to trade
18)
in the graph above, the migration of labor would result in __________ in country
iisgross domestic product and __________ in country iis gross national product.
a. an increase; would also result in an increase
b. an increase; would result in a decrease
c. a decrease; would result in an increase
d. a decrease; would also result in a decrease
19) which of the following policies would not be consistent with the mercantilist
balance-of-trade doctrine?
a. payment of high wages to labor
b. import duties on final products
c. export subsidies
d. prohibition of imports of manufactured goods