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DATE MODIFIED:
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93. In Figure 2.4 one ton of wheat can be produced at a cost of
a.
one and two-thirds cars
b.
two and one-third cars
c.
three fifths of a car
d.
three sevenths of a car
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 2.4
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
94. According to the mercantilists, a nation’s welfare would improve if it maintained a surplus of exports over imports.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
95. The mercantilists maintained that a free-trade policy best enhances a nation’s welfare.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
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NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
96. The mercantilists contended that because one nation’s gains from trade come the expense of its trading partners, not all
nations could simultaneously realize gains from trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
97. According to the price-specie-flow-doctrine, a trade-surplus nation would experience gold outflows, a decrease in its
money supply, and a fall in its price level.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
98. The trade theories of Adam Smith and David Ricardo viewed the determination of competitiveness from the demand
side of the market.
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a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
99. According to the principle of absolute advantage, international trade is beneficial to the world if one nation has an
absolute cost advantage in the production of one good while the other nation has an absolute cost advantage in the other
good.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
100. The principle of absolute advantage asserts that mutually beneficial trade can occur even if one nation is absolutely
more efficient in the production of all goods.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
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specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
101. The basis for trade is explained by the principle of absolute advantage according to David Ricardo and the principle
of comparative advantage according to Adam Smith.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
102. The principle of comparative advantage contends that a nation should specialize in and export the good in which its
absolute advantage is smallest or its absolute disadvantage is greatest.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
103. The Ricardian theory of comparative advantage assumes only two nations and two products, labor can move freely
within a nation, and perfect competition exists in all markets.
a.
True
b.
False
ANSWER:
True
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POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
104. Assume that the United States is more efficient than the United Kingdom in the production of all goods. Mutually
beneficial trade is possible according to the principle of absolute advantage, but is impossible according to the principle of
comparative advantage.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
105. It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a
comparative advantage in everything and the other nation to have a comparative advantage in nothing.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
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DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
106. Ricardo’s theory of comparative advantage was of limited relevance to the real world since it assumed that labor was
only one of several factors of production.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
107. Compared to Ricardian trade theory, modern trade theory provides a more general view of comparative advantage
since it is based on all factors of production rather than just labor.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
108. Constant opportunity costs suggest that the relative cost of producing one product in terms of the other will remain
the same no matter where a nation chooses to locate on its production-possibilities schedule.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
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HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
109. There are two explanations of constant opportunity costs: (1) factors of production are imperfect substitutes for each
other; (2) all units of a given factor have different qualities.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
110. With increasing opportunity costs, a nation totally specializes in the production of the commodity of its comparative
advantage; with constant opportunity costs, a nation partially specializes in the production of the commodity of its
comparative advantage.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
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111. A nation’s trade triangle denotes its exports, imports, and terms of trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
112. International trade leads to increased welfare if a nation can achieve a post-trade consumption point lying inside of
its production-possibilities schedule.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
113. If the U.S. post-trade consumption point lies along its production possibilities schedule, the United States achieves a
higher level of welfare with trade than without trade.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
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specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
114. If productivity in the German computer industry grows faster than it does in the Japanese computer industry, the
opportunity cost of each computer produced in Japan increases relative to the opportunity cost of a computer produced in
Germany.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
115. If Japan loses competitiveness in computers, Japanese computer workers lose jobs to foreign computer workers and
the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
116. With constant opportunity costs, a nation will achieve the greatest possible gains from trade if it partially specializes
in the production of the commodity of its comparative disadvantage.
a.
True
b.
False
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ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
117. By reducing the overall volume of trade, import restrictions tend to reduce a nation’s gains from trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
118. According to the principle of comparative advantage, an open trading system results in resources being channeled
from uses of low productivity to those of high productivity.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Distributing the Gains From Trade
KEYWORDS:
BLOOM’S: Understand
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DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
119. With increasing opportunity costs, comparative advantage depends on a nation’s supply conditions and demand
conditions; with constant opportunity costs, comparative advantage depends only on demand conditions.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
120. The existence of exit barriers tends to delay the closing of inefficient firms that face international competitive
disadvantages.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Exit Barriers
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
121. MacDougall’s empirical study of comparative advantage was based on the notion that a product’s labor cost is
underlaid by labor productivity and the wage rate.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Empirical Evidence on Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
122. The MacDougall study of comparative advantage hypothesized that in those industries in which U.S. labor
productivity was relatively high, U.S. exports to the world should be lower than U.K. exports to the world, after adjusting
for wage differentials.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Empirical Evidence on Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
123. The basic idea of mercantilism was that wealth consisted of the goods and services produced by a nation.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
124. According to Adam Smith, international trade was a “win-win” situation since all nations could enjoy gains from
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Page 53
trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
125. The price-specie-flow mechanism illustrated why one nation’s gains from trade were accompanied by another
country’s losses.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
126. Complete specialization usually occurs under the assumption of increasing opportunity costs.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
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Page 54
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
127. Adam Smith contended that gold, silver, and other precious metals constituted the wealth of a nation.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
128. The price-specie-flow mechanism illustrated why nations could not maintain trade surpluses or trade deficits over the
long run.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
129. The marginal rate of transformation equals the absolute slope of a country’s production possibilities schedule.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
Copyright Cengage Learning. Powered by Cognero.
Page 55
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
130. Assume that Germany has higher labor productivity and higher wage levels than France. Germany can produce a
commodity more cheaply than France if its productivity differential more than offsets its wage differential.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
131. Ricardo’s theory of comparative advantage does not take into account demand conditions when determining relative
commodity prices.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
Copyright Cengage Learning. Powered by Cognero.
Page 56
132. If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a
good at a higher labor cost than Mexico.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
133. If Argentina has a comparative advantage over Brazil in beef relative to coffee, Argentina will specialize in beef
production.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
134. Modern trade theory recognizes that the pattern of world trade is governed by both demand conditions and supply
conditions.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
Copyright Cengage Learning. Powered by Cognero.
Page 57
specialization and trade
TOPICS:
Comparative Advantage Extended to Many Products an
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
135. A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its
production possibilities schedule.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
136. In autarky equilibrium, a nation realizes the lowest possible level of satisfaction given the constraint of its production
possibilities schedule.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
137. A nation benefits from international trade if it can achieve a higher indifference curve than it can in autarky.
a.
True
b.
False
ANSWER:
True
POINTS:
1
Copyright Cengage Learning. Powered by Cognero.
Page 58
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
138. A nation realizes maximum gains from trade at the point where the international terms-of-trade line is tangent to its
community indifference curve.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
139. The Ricardian theory of comparative advantage could fully explain the distribution of the gains from trade among
trading partners.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
Copyright Cengage Learning. Powered by Cognero.
Page 59
140. Because the Ricardian theory of comparative advantage was based only on a nation’s demand conditions, it could not
fully explain the distribution of the gains from trade among trading partners.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
141. Because the Ricardian theory of comparative advantage was based only on a nation’s supply conditions, it could only
determine the outer limits within which the equilibrium terms of trade would lie.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
142. The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
Copyright Cengage Learning. Powered by Cognero.
Page 60
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
143. Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries’
domestic cost ratios.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
144. Assume that the United States and Canada engage in trade. If the international terms of trade coincides with the U.S.
cost ratio, the United States realizes all of the gains from trade with Canada.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
145. Assume that the United States and Canada engage in trade. If the international terms of trade coincides with the
Canadian cost ratio, the United States realizes all of the gains from trade with Canada.
a.
True
b.
False