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34 Cards in this Set

  • Front
  • Back

Transportation cost of trade affects:

a) pattern of trade
b) boundaries between tradable and non-tradable goods
c) Global supply chains
d) all of the above

d) all of the above

Underlying the application of the monopolistic competition model to trade is the idea that trade:
a) increases market size
b) allows companies to charge higher price
c) increases consumer choices
d) decreases the number of firms in an industry

a) increases market size

A no-trade world will have which of the following characteristics:


a) Countries will have same relative endowments of production factors


b) Consumers across countries will have identical and homogenous tastes


c) There will be no distortions or externalities


d) all of the above

d) all above

Which of the following trade policies limits specified quantity of goods to be imported at one tariff rate.


a) Quota


b) Import tariff
c) Specific tariff
d) All of the above

a) Quota

In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
a) Military capabilities
b) labour productivities
c) relative availabilities of factors of production
d) tastes

c) relative availabilites of factors of production

Since 1980s which of the following changes has happened in the world trade?
a) Share of "north-north" trade has decreased in total merchandise exports
b) Share of "south--south" trade has increased in total merchandise eports
c) share of agriculture produce has decreased in total merchandise exports
d) all of the above

d) all of the above

According to Ricardo, a country will have a comparative advantage in:


a) Industries in which there are neither imports nor exports


b) import competiting industries
c) Industries that sell to domestic and foreign buyers
d) industries that sell to only foreign buyers

c) industries that sell to domestic and foreign buyers

Nations conduct international trade because:
a) Some nations prefer to produce one thing while others produce other things.
b) Resources are not equally distributed among all trading nations.
c) Trade enhances opportunities to accumulate profits.
d) Interest rates are not identical in all trading nations

b) Resources are not equally distributed among all trading nations.

Which of the following is a determinant of trade?
a) Tastes
b) Per capita income
c) Technological change


d) All of the above

d) All of the above

International Trade is most likely to generate short-term unemployment in:
a) Industries in which there are neither imports nor exports
b) Import-competing industries
c) Industries that sell to domestic and foreign buyers.
d) Industries that sell to only foreign buyers

b) Import-competing industries

According to the theory of comparative advantage, which of the following is NOT a reason why countries trade?


a) Costs are higher in one country than in another.
b) Prices are lower in one country than in another.
c) The productivity of labour differs across countries and industries.


d) Exports give a country a political advantage over other countries that export less.

d) Exports give a country a political advantage over other countries that export less.

The reason why international trade has strong effects on the distribution of income is because:
a) Resources cannot move immediately or without cost from one industry to another.


b) Industries differ in the factors of production they demand


c) both a & b


d) Trade has no effect on distribution of income.

c) both a & b

New trade theory assumes the following:
a) Increasing returns to scale
b) Imperfect competition


c) Product differentiation


d) all of th above

d) all of the above

A vertical foreign direct investment (FDI) is:
a) breaking up the production chain and parts being transferred to the affiliated location
b) Mainly driven by production cost differences between countries.
c) both a and b
d. none of the above

c) both a & b

Which of the following is not a benefit of international trade?
a) High wage levels for all domestic workers


b) Lower domestic prices
c) Development of more efficient methods and new products.
d) A greater range of consumption choices.

a) High wage levels for all domestic workers

Bangladish is relatively abundant in labour, while Canada is relatively abundant in capital. In both countries the production of shirts is relatively more labour intensive than the production of computers. According to the factor endowment theory, Bangladish will have a(n)

a) Absolut advantage in production of shirts and computers.
b) Absolute advantage in prodcution of computers
c) Comparative advantage in production of shirts.
d) Comparative advantage in production of computers.

Which of the following policies permits a specifid quantity of goods to be improted at one tariff rate and applies a higher tariff rate to imports avobe this quantity?


a) Tariff quota


b) Import tariff
c) Specific tariff
d) All of the above

a) Tariff quota

A country's workers union attempted to win the approval of legislation that would moderate the practice of foreign sourcing on the part of auto manufacturers. Which of the following best represents this legislation.

a) Voluntary export quotas


b) export subsidies


c) tariff quotas


d) local content requirement

Which of the following explains intra-industry trade.


a) Wrong industrial classification


b) Product differantiation


c) Economics of scale


d) All of the above

d) All of the above

Free traders maintain that an open economy is advantageous in that it provides all of the following except:


a) Increased competition for world producers


b) A wider selection of products for consumers


c) The utilization of the most efficient production methods.


d) Relatively high wage levels for all domestic workers.

d) Relatively high wage levels for all domestic workers.

The fact that Germany both imports and exports cars is an example of:


a) Intraindustry trade


b) Interindustry trade


c) Perfect competition.


d) Imperfect competition.

a) Intraindustry trade

Who benefits from tariff protection?


a) Domestic consumers on the good produced


b) Domestic producers of the good produced


c) Foreign producers of the good produced


d) Foreign consumers of the good produced.

b) Domestic producers of the good produced?

A closed economy is one in which:


a) Imports exactly equal exports, so that trade is balanced.


b) Domestic firms invest in industries overseas.


c) The home economy is isolated from foreign trade


d) Saving exactly equals investment at full employment.

c) The home economy is islated from foreign trade.

Which of the following statements would a mercantilist NOT agree with?


a) Imports are desirable


b) Trade is a zero-sum activity.
c) The purpose of trade is to amass revenues from exports.
d) Policies should promote exports and discourage imports.

a) Imports are desirable.

Which of the following is one of the conclusions of New Trade Theory?


a) Countries as a while must gain from trade.


b) A country can only hurt itself by using government policies to promote exports.


c) Consumers gain from the increased variety of goods that trade makes available


d) A country may export a good or import it, but not both.

c) Consumers gain from the increased variety of goods that trade makes available

Total value of annual global trade - in recent years - is most likely to be:


a) € 40 billion


b) € 40 trillion


c) € 4 billion


d) € 4 trillion

b) 40 trillion

According to the Ricardo's principle, specialisation and trade increase a nation's total output since:


a) Resources are directed to their highest productivity


b) The output of the nation's trading partner declines


c) The nation can produce outside of its production possibilities curve.


d) The problem of unemployment is eliminated.

a) Resources are directed to their highest productivity

What determines the pattern of specialisation and trade in industries with external economies of scale?
a) Product differentiation


b) Monopolistic competition


c) Historical contingency


d) None of the above

c) historical competition
The reason why a cluster of firms may be more efficient than in individual firm is because a cluster enables:

a) Specialised suppliers


b) Imperfect competition


c) Product differentiation


d) All of the above

d) all of the above

A horizontal foreign direct investment (FDI) is


a) Starting a similar production process (by the parent firm) elswhere in the world


b) Locating a production near a firm's large customer bases.


c) Both a and b.


d) None of the above.

c) both a & b

David Ricardo's trading principle emphasis the:


a) Demand side of the market


b) supply side of the market


c) role of comparative costs


d) role of absolute costs

c) Role of comparative costs

Under Heckscher-Ohlin Model, international trade can lead to increases in:

a) Consumer welfare only if output of both products is increased


b) Output of both products and consumer welfare in both countries


c) Total production of both products, but not consumer welfare in both countries


d) Consumer welfare in both countries, but not toal production of both products.

b) Output of both products and consumer welfare in both countries

A main advantage in specialisation results from:
a) Economies of large-scale production


b) The specializing country behaving as monopoly


c) Smaller production runs resulting in lower unit costs.


d) High wages paied to foreign workers.

a) Economies of large-scale production

A country’s workers union attempted to win the approval of legislation that wouldmoderate the practice of foreign sourcing on the part of auto manufacturers. Which ofthe following best represents this legislation?


a) Voluntary export quotas


b) Export subsidies


c) Tariff quotas


d) Local content requirement

d) Local content requirement