Question # 1

According to the Heckscher - Ohlin model

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^{Every one automatically gains from trade}

The gainers from trade out number the losers from trade

The scarce factor necessary gains from trade

None of the above

The earliest statement of the principle of comparative advantage in associated with

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Adam Smith

David Ricardo

E . Heckscher

Bertil Ohlin

The exchange rate is kept the same across geographically separate markets by

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Hedging

Speculation

Government regulation

Arbitrage

The "balance of trade" is a record of.

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Exports and imports of financial assets

The current account plus capital account

The net export of goods and services

The value of merchandise exports minus imports

Mercantilism.

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Is the philosophy of free international trade.

Was a system of export promotion and barriers to imports practiced by government .

Was praised by Adam Smith in the Wealth of Nations

Both a and c

Investors engage in ____ when they move funds into foreign currencies in order to take advantage of interest rates abroad the are higher than domestic interest rates.

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Currency arbitrage

Interest arbitrage

Short positions

Long positions

The difference between what consumers have to pay for a particular and what they are willing to pay is known as.

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Consumer surplus

Producer surplus

Dead weight costs

Dead weight surplus

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize.

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Pegged exchange rates

Freely floating exchanged rates

Managed floating exchange rates

Crewing exchange rates.

A product will be traded only if the pre trade price difference between the two countries

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Is less than the cost of transporting it between them

is greater than the cost of transporting it between them

Equals the cost of transporting it between them

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The _____ analyzes the income distribution effects of trade in the short run when resources are immobile among industries.

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Stolpher Samuelson theory

Factor endowment theory.

Specific factor theory

Over lapping demand theory

International trade in good sand services is sometimes used as a substitute for all of the following except.

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Internationals movement of capital

International movement of labor

International movements of technology

Domestic production of different goods and services.

__________ is a said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries infavor of member countries.

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Trade creation

Trade diversion

Trade exclusion

Trade distortion

Dynamic gains from trad could result from

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The stimulus of additional investment spending as markets open

Economies of large scale production as markets open

Additional competition made possible by the opening of markets

All of the above

currency speculation is__________ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations.

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Destabilizing

Stabilizing

Inflationary

Deflationary

The difference between bid rates and ask rates is called the

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Profit

Arbitrage

Spread

Forward transaction

Quotas are government imposed limits on the ___ of goods trade between countries.

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Prices

Quantity

Revenue

Costs

If a country has a bowed out production possibility frontier then production is said to be subject to.

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Constant opportunity costs

Decreasing opportunity costs

First increasing and than decreasing opportunity costs

Increasing opportunity costs

Current account deficits are offset by

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Merchandise trade deficits

Merchandise trade surpluses

Capital /financial account surpluses

Capital /financial account deficits

The comparative advantage model of Ricardo was based on.

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Interindustry specialization and trade

Demand conditions underlying specialization and trade

Income conditions underlying specialization and trade

Most tariffs have

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Only revenue effects

Only protective effects

Both protective ad revenue effects

Neither protective or revenue effects

according to factor price equalization theorem, if country A is labor abundant then once trade opens.

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Wages and rents should fall in A

Wages and rents should rise in A

Wages should rise and rents should fall in A

Wages should fall and rents should rise in A

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