30 multiple choice 4 essay questions 2 hours to do the exam Exam is about: H-O model Specific factors model Ricardian Model

1. Mercantilists believe that:
Answer

A. Any kind of trade is a bad trade

B. Importing goods is beneficial for the economy

C. Exporting goods will leave fewer goods for the local economy

D. Exports are good and imports are bad
1 points
Question 2
1.
The term "real wages" refers to:
Answer

A. A worker's hourly wage in dollars

B. The productivity of a worker's labor

C. The purchasing power of a worker's wage

D. The productivity of a worker's capital
1 points
Question 3
1.
Diminishing returns to labor means that:
Answer

A. The marginal product of labor declines as the amount of capital
combined with labor in a sector increases.

B. The marginal product of labor declines as the amount of combined with
labor in a sector increases.

C. The marginal product of labor declines as the amount of labor used in a
sector increases

D. The marginal product of capital declines as the amount of labor used in a
sector increases.
1 points
Question 4
1.
In the Ricardian model, wages are equal across industries because:
Answer

A. Employers care for their workers

B. Workers prefer to work in exporting industries

C. Workers are freely mobile between industries

D. Workers are freely mobile between countries
1 points
Question 5
1.
Suppose Portugal has 700 workers and 26,000 units of capital and France has
18,000 workers and 700 units of capital. Technology is identical in both
countries. Assume that wine is the capital-intensive good and cloth is the labor-
intensive good. Which of the following statements is correct if the nations start
trading with each other?
Answer

A. Wages in France will decrease

B. Rental rates in Portugal will increase

C. Wages will increase in Portugal.

D. Rental rates in France will increase
1 points
Question 6
1.
A "specific" factor of production is:
Answer

A. Not transferable to other types of production and can only be used for
the product in question.

B. A set quantity for each unit produced

C. The opposite of a general factor, meaning that it must fit within certain
narrow quality parameters

D. Critical to the production of the good of service
1 points
Question 7
1.
What entries are used to calculate the bilateral trade balance of a country?
Answer

A. Unemployment and inflation in a country

B. exports and per capita income

C. per capita income and imports of a country

D. exports and imports of a country
1 points
Question 8
1.
In the specific-factors model, suppose that a country has a comparative
advantage in manufacturing output. Will workers be better off or worse off
following the opening of trade with other countries?
Answer

A. Workers may be better off or worse off because the real wage in terms of
the agricultural good falls and the real wage in terms of the
manufactured good rises

B. Workers will be better off because both nominal and real wages increase

C. Workers may be better off or worse off because the real wage in terms of
the agricultural good rises and the real wages in terms of the
manufactured good falls

D. Workers will be better off because their nominal wage increases
1 points
Question 9
1.
The argument that trade generates gains for all workers may not be true because:
Answer

A. A more realistic assumption includes capital and land as factors of
production and recognizes that trade will generate gains for some factors
and losses for others.

B. Greedy corporations exploit workers.

C. Some workers lack skills and training and cannot find jobs

D. Technological gains are concentrated among low-skilled workers.
1 points
Question 10
1.
In the specific-factors model, an increase in the price of the agricultural good
will cause:
Answer

A. An increase in nominal wages in both the agricultural and manufacturing
sectors

B. A decrease in nominal wages in both the agricultural and manufacturing
sectors

C. An increase in both nominal and real wages in both the agricultural and
manufacturing sectors

D. An increase in the nominal wage in the agricultural sector and a decrease
in nominal wage in the manufacturing sector
1 points
Question 11
1.
Briefly summarize some of the critiques of the so-called "free trade orthodoxy"
outlined in the assigned readings from Real World Globalization.
Answer
Question 12
1.
In a capital-intensive industry, the capital/labor ratio will:
Answer

A. Rise as the country's capital stock rises.

B. Fall as the country's capital stock falls.

C. Rise as the wage/rental ratio falls

D. Fall as the wage/rental ratio falls.
1 points
Question 13
1.
Use the following information to answer the question below using the Specific-
Factors model.
Computers: Sales revenue: PC . QC = 150
Payments to labor: W . LC = 75
Payments to capital: RK . K = 75
Barley: Sales revenue: PB . QB = 150
Payments to labor: W . LB = 70
Payments to land: RT . T = 80

If the price of computers was to fall e.g. to fall by 10% (the...