Question # 1

That the division of labor is limited by the size of th market best applies to which explanation of trade.

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Factor endowment theory

Product like cycle theory

Economics of scale theory

Over lapping demand theory

A widely used indicator to differentiate developed countries from developing countries is.

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International trade per captia

Real income per capita

Unemployment per capita

Calories per capita

The world trade organization is sometimes criticized for all of the following reasons except.

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If reduces the sovereignty of member countries.

Favors free trade over the quality of the environment

It has no way to solve trade disputes among member countries.

It is a "puppet" of multinational corporations

Debit entries on the balance of payments are the entries that would.

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Mean a loss of foreign exchange

Bring foreign exchange into the country

Indicate a surplus exists

Exist at the bottom line a after all accounts are totaled.

Prohibiting a trade between two people

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Will promote economic efficiency

Probably Will inhibit productive efficiency

Might be necessary if resources are to be put to their most highly valued uses

Will have no effect on other persons.

Those who argue in favor of import protection generally give the impression that such restricted trade will.

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Decrease the level of national security

Provide benefits to some particular industry

Provide benefits to the entire nation

Not yield welfare losses for the nation

Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of.

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Research and development subsides.

Loan guarantees

Low interest rate loans

All of the above

According to the cost based definition of dumping occurs when a firm sells a product abroad at a price that is less than

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Average total cost

Average variable cost

Average fixed cost

Marginal cost

Absolute advantage is determined by

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Actual difference in labor productivity between countries.

Relative difference in labor productivity between countries.

Both a and b

Neither a nor b

The movement to free international trade is most likely to generate short term unemployment in which industries'.

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Industries in which there are neither imports nor exports

Import competing industries.

Industries that sell to domestic and foreign buyers

Industries that sell to only foreign buyers

Which exchange rate mechanism is intended to insulates the balance of payments from short term capital movements while providing exchange rate stability for commercial transactions.

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Dual exchange rates

Managed floating exchange rates

Adjustable pegged exchange rates

Crawling pegged exchange rates.

The arrangement where goods imported from trading partners in the developing world are subject to lower tariff rates than goods from other countries is referred to as.

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Normal trade relation status

Most favored nation status

Generalized system of preferences

A current account surplus implies that

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The country is a net lender to the rest of the world

The country is running a net capital account surplus

Foreign investment in domestic securities is at very low levels

All of the above

The current account includes

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The value of trade in merchandise

Services

Unilateral transfers

All of the above

International trade in goods and services tends to

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Increase all domestic costs and prices

Keep all domestic costs and prices at the same level

Lessen the amount of competition facing home manufactures.

Increase the amount of competition facing home manufacturers

The organization that currently establishes rules of conduct for firms engaging in international trade is the.

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World Bank

International Trade commission

Department of Justice

World Trade Organization

Developing countries that concentrate production in agricultural products or raw materials may face a long run decline in their international terms of trade because of.

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Inelastic demand for these products in advanced countries.

Large increase in the supplies of these products on world markets because of export expansion polices

sluggish demand for these products in advanced countries

All of the above

To help developing nations strengthen their international competitive rises many industrial nations have granted non nations udder the .

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International commodity engravement's program

Multilateral contract program

Generalized system of preferences program

Export led growth program

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

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

A country transactions with the rest of the world are recorded in the

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Balance of international indebtedness

Balance of financial transactions

Balance of payments

Income statement

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