Question # 1

Wassily Leontief used an input output table in order to test the.

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Richardian theory of comparative advantage

Heckscher Ohlin theory of comparative advantage.

Linder theory of overlapping demand

All of the above

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

If a country has a linear production possibilities frontier then production is said to be subject to.

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Constant opportunity costs

Decreasing opportunity costs

First increasing and then decreasing opportunity costs

Increasing opportunity costs

The trade model of the Swedish economists Hackscher and Ohlin maintains that.

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Absolute advantage determines the distribution of the gain from trade

Comparative advantage determines the distribution of the gains from trade.

The division of labor is limited by the size of the world market

A country exports goods for which its resource endowment are most suited.

If export's are a constant proportion of GNP such that E = 18 GNP, find the level of imports that would represent a zero trade balance when GNP = 10,000

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180

555

1,800

5,555

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

If the home country government grants a subsidy on a domestically produced good domestic producers lend to.

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Capture the entire subsidy in the form of higher profits

Increases their level of production

Reduce wages paid to domestic workers

Consider the subsidy as an increase in production cost

If tastes are identical between countries then comparative advantage is determined by

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Supply conditions only

Demand conditions only

Supply and demand conditions

Can't tell without more information.

A tax of 17 percent per imported item would be an example of a

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Ad valorem tariff

Specific tariff

effective tariff

Compound tariff

Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove payments disequilibrium.

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Dual exchange rates

Adjustable pegged exchange rates

Managed floating exchange rates

Crawling pegged exchange rates.

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

According the Hacksher-Ohlin model the source of comparative advantage is a country's

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Technology

Advertising

Factor endowments

both a and c

According to the factor endowment model of Hackshcer and Ohlin countries heavily endowed with land will.

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Devote excessive amounts of resources to agricultural production.

Devote insufficient amounts of resources to agricultural production

Export products that are and intensive.

Import products that are land intensive

__________ 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

If a nation has an open economy it means that the nation.

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Allows private ownership of capital

Has flexible exchange rates

Has fixed exchange rates

Conducts trade with other countries

The factor endearment model of international trade was developed by.

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Adam Smith

David Ricardo

John Stuart Mill

Eli Heckscher and Beril Ohlin

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

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Hedging

Speculation

Government regulation

Arbitrage

To be considered a good candidate for an export cartel a commodity should.

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Be a manufactured good

Be a primary product

Have a high price elasticity of supply

Have a low price elasticity of demand

__________ policies attempt to foster industrialization by establishing high barriers to import of foreign goods to promote local production.

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absolute advantage

Comparative advantage

Export led growth

Import substitution

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

Direct investment and security purchases are classified as.

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Capital account transactions

Current account transactions

Unilateral transfer transactions

Merchandise trade transactions

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