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Page 61
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
146. If the international terms of trade lies beneath (inside) the Mexican cost ratio, Mexico is worse off with trade than
without 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:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
147. Although J. S. Mill recognized that the region of mutually beneficial trade is bounded by the cost ratios of two
countries, it was not until David Ricardo developed the theory of reciprocal demand that the equilibrium terms of trade
could be determined.
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:
Distributing the Gains From Trade
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Page 62
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
148. According to J. S. Mill, if we know the domestic demand expressed by both trading partners for both products, the
equilibrium terms of trade can be defined.
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
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
149. The theory of reciprocal demand asserts that as the U.S. demand for Canadian wheat rises, the equilibrium terms of
trade improve for the United States.
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:
Distributing the Gains From Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
150. Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos. As the
Canadian demand for wheat increases, Canada’s equilibrium terms of trade improves.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
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Page 63
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:
Changing Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
151. The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand
conditions of each nation have a noticeable impact on market prices.
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:
Distributing the Gains From Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
152. The theory of reciprocal demand best applies when one country has a “large” economy and the other country has a
“small” economy.
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:
Distributing the Gains From Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
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Page 64
153. If two nations of approximately the same size and with similar taste patterns participate in international trade, the
gains from trade tend to be shared about equally between them.
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
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
154. The expression “importance of being unimportant” suggests that if one nation is much larger than the other, the larger
nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.
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:
Equilibrium Terms of Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
155. An improvement in a nation’s terms of trade occurs if the prices of its exports rise relative to the prices of its imports
over a given time period.
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
Copyright Cengage Learning. Powered by Cognero.
Page 65
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
156. If a country’s terms of trade worsen, it must exchange fewer exports for a given amount of imports.
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
157. If a country’s terms of trade improve, it must exchange more exports for a given amount of imports.
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
158. The terms of trade represents the rate of exchange between a country’s exports and imports.
a.
True
b.
False
ANSWER:
True
POINTS:
1
Copyright Cengage Learning. Powered by Cognero.
Page 66
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
159. Assume 1990 to be the base year. If by the end of 2004 a country’s export price index rose from 100 to 130 while its
import price index rose from 100 to 115, its terms of trade would equal 113.
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:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
160. Assume 1990 to be the base year. If by the end of 2004 a country’s export price index rose from 100 to 140 while its
import price index rose from 100 to 160, its terms of trade would equal 120.
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:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
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Page 67
161. Assume 1990 to be the base year. If by the end of 2004 a country’s export price index rose from 100 to 125 while its
import price index rose from 100 to 125, its terms of trade would equal 100.
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:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
162. The commodity terms of trade are found by dividing a country’s import price index by its export price index.
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:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
163. For the commodity terms of trade to improve, a country’s export price index must rise relative to its import price
index over a given time period.
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
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
Copyright Cengage Learning. Powered by Cognero.
Page 68
specialization and trade
TOPICS:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
164. For the commodity terms of trade to improve, a country’s import price index must rise relative to its export price
index over a given time period.
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
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Terms-of-Trade Estimates
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
165. Is it possible to add up the preferences of all consumers in an entire nation?
ANSWER:
No. It is impossible to make interpersonal comparisons of satisfaction, and thus it is not
possible to add up preferences.
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Subjective Short Answer
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
166. Who gains more from trade, when nations are of unequal economic size?
ANSWER:
If one nation is significantly larger than the other, the larger nation attains fewer gains from
trade, while the smaller nation captures most of the gains from trade.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
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
167. Is it possible for comparative advantage to change, thus changing the direction of trade?
ANSWER:
Lagging productivity growth may cause a country to lose its comparative advantage. In a two-
product, two-country model, this would change the direction of trade.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
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:
Changing Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
168. Explain the Law of Comparative Advantage.
ANSWER:
The Law of Comparative Advantage asserts that with trade, each country will find it favorable
to specialize in the production of the good of its comparative advantage, and will trade part of
this for the good of its comparative disadvantage. Taking advantage of specialization can
result in production gains.
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Subjective Short Answer
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 Gains from Specialization
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
169. Discuss the pitfalls of outsourcing, especially as experienced by Boeing.
ANSWER:
Boeing outsourced its production capabilities for the Boeing 787 Dreamliner to facilities in
several different countries, each of which made one component part of the aircraft. The plane
would be assembled in the U.S. Boeing also required these manufacturers, as a condition of
getting the contract for production, to fund part of the development of the plane. To save
money, some manufacturers outsourced a portion of their part of the job, causing quality
problems and production delays. B giving up control over its supply chain, Boeing suffered
from delays and parts that did not meet the requirements, and could not be assembled.
Production of the planes was 4 years behind schedule, and costly.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Essay
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:
Comparative Advantage and Global Supply Chains
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
170. Is it possible to estimate the gains from trade?
ANSWER:
When a nation trades, it enjoys a larger income, owing to a wider range of goods available to
consumers. Trade also has a positive influence on productivity levels. However, it is
extremely difficult to measure these gains, since it requires knowledge of what a nation’s
imports would cost if it produced them itself, instead of purchasing them from a less
expensive source abroad.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Essay
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: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
171. Modern trade theory concerns the following questions
a.
What constitutes the basis for trade?
b.
At what terms of trade are products exchange in the world market?
c.
What are the gains from trade regarding production and consumption?
d.
All of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
Copyright Cengage Learning. Powered by Cognero.
Page 71
specialization and trade
TOPICS:
Introduction
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:47 AM
DATE MODIFIED:
7/5/2016 12:17 AM
172. Which theory attempted to explain why a favorable balance of trade could only exist in the short run, since it would
automatically be eliminated in the long run?
a.
b.
c.
d.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:51 AM
DATE MODIFIED:
7/4/2016 7:52 AM
173. Both Adam Smith and David Ricardo
a.
were advocates of free trade and opponents of protectionism
b.
were advocates of protectionism and opponents of free trade
c.
developed trade theories based on the demand side of an economy
d.
maintained that precious metals represented the wealth of a nation
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:54 AM
DATE MODIFIED:
7/5/2016 12:56 AM
174. In Adam Smith’s trade theory, ______ is the only factor of production and is of one quality (homogeneous)
a.
land
b.
labor
c.
capital
d.
entrepreneurship
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Page 72
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Labor markets
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:56 AM
DATE MODIFIED:
7/5/2016 12:57 AM
175. David Ricardo’s simplified trade model is based on all of the assumptions except
a.
costs do not vary with the level of production
b.
the level of technology is fixed for all nations
c.
capital is the only factor of production
d.
perfect competition prevails in all markets
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Productivity and growth
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:59 AM
DATE MODIFIED:
7/5/2016 12:58 AM
176. David Ricardo’s simplified trade model assumes all of the following except
a.
trade is balanced, thus ruling out money flows between nations
b.
firms make production decisions in an attempt to maximize profit
c.
transportation costs are zero
d.
tariffs and quotas are used to protect a nation’s producers from foreign competition
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:04 AM
DATE MODIFIED:
7/4/2016 8:07 AM
Copyright Cengage Learning. Powered by Cognero.
Page 73
177. Which of the following trade theories asserts that within the outer limits of the terms of trade, the actual terms of
trade is determined by the relative strength of each country’s demand for the other country’s product?
a.
theory of reciprocal demand
b.
overlapping demand theory
c.
theory of income determination
d.
theory of negative externalities
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Supply and demand
TOPICS:
Trading under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:08 AM
DATE MODIFIED:
7/4/2016 8:10 AM
178. Referring to the textbook’s example of Babe Ruth, the famous player for the New York Yankees— Ruth switched
from being a pitcher to being an outfielder and batter because of the
a.
principle of absolute advantage
b.
principle of comparative advantage
c.
desire to be a mercantilist
d.
concept to economies of scale
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Perfect competition
TOPICS:
Trading under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:11 AM
DATE MODIFIED:
7/4/2016 8:13 AM
179. All of the following are sources of dynamic gains from trade except
a.
specialization and the reallocation of existing resources
b.
additional saving and investment that occurs over a period of time
c.
economies of large-scale production
d.
economic stimulus provided by increasing levels of competition
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
Copyright Cengage Learning. Powered by Cognero.
Page 74
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Dynamic Gains from Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:14 AM
DATE MODIFIED:
7/4/2016 8:15 AM
180. During the 1980s, U.S. iron ore workers realized dynamic gains from trade due to
a.
diseconomies of large-scale production of iron ore
b.
foreign competition inspiring greater productivity for iron ore producers
c.
higher oil prices resulting in increased cost of producing iron ore
d.
less investment occurring in the iron ore business
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Dynamic Gains from Trade
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:16 AM
DATE MODIFIED:
7/4/2016 8:17 AM
181. The presence of increasing opportunity costs gives rises to production possibilities schedules that are
a.
downward-sloping straight lines
b.
upward-sloping straight lines
c.
bowed outward from the diagram’s origin
d.
bowed inward toward the diagram’s origin
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Productivity and growth
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:17 AM
DATE MODIFIED:
7/4/2016 8:21 AM
182. The United States benefits from outsourcing in all of the following ways except
a.
reduced costs and increased competitiveness for American producers