Macroeconomics Exam 2 – Prof. Bergstrom Tulane University 2026 – Study Guide
and Practice Questions
comparative advantage - correct answer ✔✔ The ability of a country to produce a good at a
lower cost than another country can.
opportunity cost - correct answer ✔✔ whatever must be given up to obtain some item
Autarky - correct answer ✔✔ a situation in which a country does not trade with other countries
gains from trade - correct answer ✔✔ Can consume outside the PPF
Sources of Comparative Advantage - correct answer ✔✔ Differences in climate
Differences in factor endowments
Differences in technology
factor abundance - correct answer ✔✔ how large a country's supply of a factor is relative to its
supply of other factors
factor intensity - correct answer ✔✔ a measure of which factor is used in relatively greater
quantities than other factors in production
Heckscher-Ohlin model - correct answer ✔✔ a country that has an abundant supply of a factor
of production will have a comparative advantage in goods whose production is intensive in that
factor
domestic demand curve - correct answer ✔✔ shows how the quantity of a good demanded by
domestic consumers depends on the price of that good
, domestic supply curve - correct answer ✔✔ shows how the quantity of a good supplied by
domestic producers depends on the price of that good
autarky price - correct answer ✔✔ the equilibrium price in this domestic market
World price - correct answer ✔✔ the international market price of a good or service,
determined by world demand and supply
Effect of Imports on Surplus - correct answer ✔✔ Gains to consumers outweigh the losses to
producers, there is an increase in the total surplus in the economy
Effect of Exports on Surplus - correct answer ✔✔ Producers gain surplus and consumers lose
surplus. Because gains to producers outweigh losses to consumers, there is an increase in the
total surplus in the economy
free trade - correct answer ✔✔ international trade free of government interference
Tarrif - correct answer ✔✔ A tax on imported goods- a form of trade protection
arguments for trade protection - correct answer ✔✔ national security, job creation, infant
industry
national security - correct answer ✔✔ A country should protect domestic suppliers of crucial
goods to be self-sufficient
job creation argument - correct answer ✔✔ Protection creates additional jobs. Economists
argue that these jobs are often offset by jobs lost elsewhere
and Practice Questions
comparative advantage - correct answer ✔✔ The ability of a country to produce a good at a
lower cost than another country can.
opportunity cost - correct answer ✔✔ whatever must be given up to obtain some item
Autarky - correct answer ✔✔ a situation in which a country does not trade with other countries
gains from trade - correct answer ✔✔ Can consume outside the PPF
Sources of Comparative Advantage - correct answer ✔✔ Differences in climate
Differences in factor endowments
Differences in technology
factor abundance - correct answer ✔✔ how large a country's supply of a factor is relative to its
supply of other factors
factor intensity - correct answer ✔✔ a measure of which factor is used in relatively greater
quantities than other factors in production
Heckscher-Ohlin model - correct answer ✔✔ a country that has an abundant supply of a factor
of production will have a comparative advantage in goods whose production is intensive in that
factor
domestic demand curve - correct answer ✔✔ shows how the quantity of a good demanded by
domestic consumers depends on the price of that good
, domestic supply curve - correct answer ✔✔ shows how the quantity of a good supplied by
domestic producers depends on the price of that good
autarky price - correct answer ✔✔ the equilibrium price in this domestic market
World price - correct answer ✔✔ the international market price of a good or service,
determined by world demand and supply
Effect of Imports on Surplus - correct answer ✔✔ Gains to consumers outweigh the losses to
producers, there is an increase in the total surplus in the economy
Effect of Exports on Surplus - correct answer ✔✔ Producers gain surplus and consumers lose
surplus. Because gains to producers outweigh losses to consumers, there is an increase in the
total surplus in the economy
free trade - correct answer ✔✔ international trade free of government interference
Tarrif - correct answer ✔✔ A tax on imported goods- a form of trade protection
arguments for trade protection - correct answer ✔✔ national security, job creation, infant
industry
national security - correct answer ✔✔ A country should protect domestic suppliers of crucial
goods to be self-sufficient
job creation argument - correct answer ✔✔ Protection creates additional jobs. Economists
argue that these jobs are often offset by jobs lost elsewhere
