Question # 1

The Hecksher Ohlin theory explains comparative advantage as the result of difference in countries.

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Relative abundance of various resources.

Relative costs of labor

Economies of large scale production.

Research and development expenditures.

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

The difference between bid rates and ask rates is called the

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Profit

Arbitrage

Spread

Forward transaction

A tariff -rate quota

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Is a limit on the number of tariff that a country can place on imports

Uses a single tariff along with import quotas to restrict imports

Is decreased to avoid the price increase caused by simple tariffs

Is a two tier tariff system intended to restrict imports

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

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 least common type of transaction in the foreign exchanges is a.

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Forward transaction

Spot transaction

Swap transaction

None of the above

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

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

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

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

A sudden shift from import tariffs to free trade may induce short term unemployment in.

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Import competing industries

Industries that are only exporters

Industries that sell domestically as well as export

Industries that neither import nor export

Ad valorem tariffs are collected as.

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Fixed amounts of money per unit traded

A percentage of the price of the product

A percentage of the quantity of imports

All of the above

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

The supply of foreign currency tends to be

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Upward sloping

Down ward sloping

Vertical

Any of the above

Anti dumping duties applied to imported goods.

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Are abolished by the world Trade Organization

Result in decreases in consumer surplus for domestic households

Are imposed by industrial countries but not developing countries.

Result in lower priced goods for domestic consumers

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

A tariff can ___________ raise a country's welfare

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Never

Sometimes

always

None of the above

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.

Multinational corporations

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Always produce primary goods

Always produce manufactured goods

Products primary goods or manufactured goods

None of the above

Tariff levels in advanced countries tend to be ___ tariff levels in developing countries.

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Higher than

Equal to

Lower than

There is no general pattern

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