International Macroeconomics 4th edition by Robert C. Feenstra,
Alan M. Taylor Test Bank 2023/2024
1. Which of the following is NOT a reason why countries trade goods with one another?
A) differences in technology used in different countries
B) differences in countries' total amount of resources
C) the proximity of countries to one another
D) differences in countries' languages and cultures
2. David Ricardo's model explains trade based on:
A) labor supply.
B) technology.
C) population.
D) government control.
3. Which of the following is the MOST likely explanation for a Detroit
construction company's imports of concrete blocks made in Windsor,
Ontario?
A) the Ricardian model
B) offshoring
C) technology
D) proximity
4. What is the MOST likely reason why neighboring nations engage in trade?
A) labor availability
B) similar tastes and preferences
C) proximity
D) shared membership in a free-trade area
5. A country's factors of production includes:
Page 1
, A) its labor, capital, natural resources, and markets.
B) only its labor and capital.
C) only its capital and natural resources.
D) its labor, capital, and natural resources.
6. Which of the following is NOT considered to be a factor of production?
A) labor
B) capital
C) natural resources
D) government
Page 1
, 7. When a firm in one nation purchases unfinished products internationally and
addsfurther processing to sell in the domestic market, this is known as:
A) barter.
B) offshoring.
C) factor movement.
D) marketing arrangements.
8. In some cases, a country can export a good without having any advantage in the
naturalresources needed to produce it. Which of the following is an example of this
type of export?
A) Austrian exports of snowboards
B) U. S. exports of ―icewine‖
C) Japanese exports of Toyotas
D) Canadian exports of lumber
9. In some cases, a country can export a good without having any advantage in the
naturalresources needed to produce it. Which of the following is an example of this
type of export?
A) United Arab Emirates's exports of high-quality snowboards
B) U. S. exports of Caterpillar bulldozers
C) French exports of wine
D) Canadian exports of lumber
10. In trade, if a nation has the technology to produce a good with fewest resources (such
asGermany's production of snowboards), it is known as a(n):
A) absolute advantage.
B) technology advantage.
C) comparative advantage.
D) resource advantage.
Page 2
,11. The Ricardian model focuses on how:
A) countries' resource bases explain international trade.
B) countries' different technologies explain international trade.
C) transportation costs explain international trade.
D) different languages and cultures explain international trade.
Page 3
,12. When a country requires fewer resources to produce a product than other
countries, itis said to have a(n):
A) absolute advantage in the production of the product.
B) comparative advantage in the production of the product.
C) higher opportunity cost of producing the product.
D) lower opportunity cost of producing the product.
13. When a country requires more resources to produce a product than other
countries, itis said to have a(n):
A) absolute disadvantage in the production of the product.
B) comparative disadvantage in the production of the product.
C) lower opportunity cost of producing the product.
D) higher opportunity cost of producing the product.
14. The primary explanation of trade among nations is Ricardo's theory of:
A) offshoring.
B) resource abundance.
C) absolute advantage.
D) comparative advantage.
15. The Ricardian model focuses on how differences in influence
internationaltrade patterns.
A) demand
B) comparative costs
C) absolute costs
D) transportation costs
16. Ricardo's theory of trade discredited the school of economic thought that believed
Page 4
,inflows of gold or silver as a result of exporting helped a nation, while outflows of
gold or silver as a result of importing hurt a nation. This school of economic
thoughtwas known as:
A) export preference.
B) mercantilism.
C) monetary economics.
D) price-specie-flow mechanism.
Page 5
,17. Ricardo's theory made a number of assumptions, including which of the following?
A) Nations had balanced trade with their partners.
B) There were barriers to trade.
C) There was no transfer of gold or silver.
D) Nations' factors of production consisted of labor and capital.
18. According to Ricardo:
A) all countries can gain from trade if they export goods for which they have
anabsolute advantage.
B) one country can gain from trade only at the expense of another country.
C) all countries can gain from trade if they export goods for which they have
acomparative advantage.
D) all countries lose from international trade.
19. According to the Ricardian principle of comparative advantage,
internationaltrade increases a nation's total output because:
A) the nation's resources are used where they are most productive.
B) the output of the nation's trading partner declines.
C) the nation can produce outside of its production possibilities frontier.
D) the nation is able to increase its consumption.
20. David Ricardo believed that:
A) trade is a zero-sum game; that is, a country benefits at the expense of
othercountries.
B) trade will benefit countries when it generates gold and silver for
thenational treasury.
C) all nations can gain from free international trade.
D) trade cannot increase the world's output of goods.
Page 6
,21. Mercantilists believed that:
A) exporting goods will leave fewer goods for the local economy.
B) importing goods is beneficial for the economy.
C) exports and imports are both bad for the economy.
D) exports are good and imports are bad for the economy.
Page 7
,22. Ricardo's theory showed that if nations are allowed to trade freely, the result will
bethat:
A) all trading nations benefit by trade.
B) the manufacturing sector benefits but the consumers lose out.
C) workers benefit but the government loses tax revenue.
D) the gains from trade offset the losses from trade exactly.
23. The Ricardian model can be simplified and made more explanatory by assuming
thatthere is only one resource used in producing goods. What did Ricardo assume
the resource was?
A) capital
B) technology
C) labor
D) loanable funds
24. What is the marginal product of labor?
A) the average output of a unit of labor
B) the extra output obtained by using one more unit of labor
C) the average output obtained by using one more unit of labor
D) the total output obtained by using one more unit of labor
25. In the Ricardian model, the marginal product of labor:
A) first rises, then falls, as more labor is employed to produce a good.
B) first falls, then rises, as more labor is employed to produce a good.
C) continuously falls as more labor is employed to produce a good.
D) does not change as more labor is employed to produce a good.
26. The Ricardian model assumes that the marginal product of labor is:
Page 8
, A) increasing.
B) decreasing.
C) constant.
D) zero.
27. Production possibilities frontiers in the Ricardian model:
A) are linear (i.e., straight lines), with end points showing a country's production
whenit produces only one or the other good.
B) are bowed out from the origin, with end points showing a
country'sproduction when it produces only one or the other
good.
C) are linear and begin from the origin.
D) are curvilinear and increase at a decreasing rate.
Page 9
Alan M. Taylor Test Bank 2023/2024
1. Which of the following is NOT a reason why countries trade goods with one another?
A) differences in technology used in different countries
B) differences in countries' total amount of resources
C) the proximity of countries to one another
D) differences in countries' languages and cultures
2. David Ricardo's model explains trade based on:
A) labor supply.
B) technology.
C) population.
D) government control.
3. Which of the following is the MOST likely explanation for a Detroit
construction company's imports of concrete blocks made in Windsor,
Ontario?
A) the Ricardian model
B) offshoring
C) technology
D) proximity
4. What is the MOST likely reason why neighboring nations engage in trade?
A) labor availability
B) similar tastes and preferences
C) proximity
D) shared membership in a free-trade area
5. A country's factors of production includes:
Page 1
, A) its labor, capital, natural resources, and markets.
B) only its labor and capital.
C) only its capital and natural resources.
D) its labor, capital, and natural resources.
6. Which of the following is NOT considered to be a factor of production?
A) labor
B) capital
C) natural resources
D) government
Page 1
, 7. When a firm in one nation purchases unfinished products internationally and
addsfurther processing to sell in the domestic market, this is known as:
A) barter.
B) offshoring.
C) factor movement.
D) marketing arrangements.
8. In some cases, a country can export a good without having any advantage in the
naturalresources needed to produce it. Which of the following is an example of this
type of export?
A) Austrian exports of snowboards
B) U. S. exports of ―icewine‖
C) Japanese exports of Toyotas
D) Canadian exports of lumber
9. In some cases, a country can export a good without having any advantage in the
naturalresources needed to produce it. Which of the following is an example of this
type of export?
A) United Arab Emirates's exports of high-quality snowboards
B) U. S. exports of Caterpillar bulldozers
C) French exports of wine
D) Canadian exports of lumber
10. In trade, if a nation has the technology to produce a good with fewest resources (such
asGermany's production of snowboards), it is known as a(n):
A) absolute advantage.
B) technology advantage.
C) comparative advantage.
D) resource advantage.
Page 2
,11. The Ricardian model focuses on how:
A) countries' resource bases explain international trade.
B) countries' different technologies explain international trade.
C) transportation costs explain international trade.
D) different languages and cultures explain international trade.
Page 3
,12. When a country requires fewer resources to produce a product than other
countries, itis said to have a(n):
A) absolute advantage in the production of the product.
B) comparative advantage in the production of the product.
C) higher opportunity cost of producing the product.
D) lower opportunity cost of producing the product.
13. When a country requires more resources to produce a product than other
countries, itis said to have a(n):
A) absolute disadvantage in the production of the product.
B) comparative disadvantage in the production of the product.
C) lower opportunity cost of producing the product.
D) higher opportunity cost of producing the product.
14. The primary explanation of trade among nations is Ricardo's theory of:
A) offshoring.
B) resource abundance.
C) absolute advantage.
D) comparative advantage.
15. The Ricardian model focuses on how differences in influence
internationaltrade patterns.
A) demand
B) comparative costs
C) absolute costs
D) transportation costs
16. Ricardo's theory of trade discredited the school of economic thought that believed
Page 4
,inflows of gold or silver as a result of exporting helped a nation, while outflows of
gold or silver as a result of importing hurt a nation. This school of economic
thoughtwas known as:
A) export preference.
B) mercantilism.
C) monetary economics.
D) price-specie-flow mechanism.
Page 5
,17. Ricardo's theory made a number of assumptions, including which of the following?
A) Nations had balanced trade with their partners.
B) There were barriers to trade.
C) There was no transfer of gold or silver.
D) Nations' factors of production consisted of labor and capital.
18. According to Ricardo:
A) all countries can gain from trade if they export goods for which they have
anabsolute advantage.
B) one country can gain from trade only at the expense of another country.
C) all countries can gain from trade if they export goods for which they have
acomparative advantage.
D) all countries lose from international trade.
19. According to the Ricardian principle of comparative advantage,
internationaltrade increases a nation's total output because:
A) the nation's resources are used where they are most productive.
B) the output of the nation's trading partner declines.
C) the nation can produce outside of its production possibilities frontier.
D) the nation is able to increase its consumption.
20. David Ricardo believed that:
A) trade is a zero-sum game; that is, a country benefits at the expense of
othercountries.
B) trade will benefit countries when it generates gold and silver for
thenational treasury.
C) all nations can gain from free international trade.
D) trade cannot increase the world's output of goods.
Page 6
,21. Mercantilists believed that:
A) exporting goods will leave fewer goods for the local economy.
B) importing goods is beneficial for the economy.
C) exports and imports are both bad for the economy.
D) exports are good and imports are bad for the economy.
Page 7
,22. Ricardo's theory showed that if nations are allowed to trade freely, the result will
bethat:
A) all trading nations benefit by trade.
B) the manufacturing sector benefits but the consumers lose out.
C) workers benefit but the government loses tax revenue.
D) the gains from trade offset the losses from trade exactly.
23. The Ricardian model can be simplified and made more explanatory by assuming
thatthere is only one resource used in producing goods. What did Ricardo assume
the resource was?
A) capital
B) technology
C) labor
D) loanable funds
24. What is the marginal product of labor?
A) the average output of a unit of labor
B) the extra output obtained by using one more unit of labor
C) the average output obtained by using one more unit of labor
D) the total output obtained by using one more unit of labor
25. In the Ricardian model, the marginal product of labor:
A) first rises, then falls, as more labor is employed to produce a good.
B) first falls, then rises, as more labor is employed to produce a good.
C) continuously falls as more labor is employed to produce a good.
D) does not change as more labor is employed to produce a good.
26. The Ricardian model assumes that the marginal product of labor is:
Page 8
, A) increasing.
B) decreasing.
C) constant.
D) zero.
27. Production possibilities frontiers in the Ricardian model:
A) are linear (i.e., straight lines), with end points showing a country's production
whenit produces only one or the other good.
B) are bowed out from the origin, with end points showing a
country'sproduction when it produces only one or the other
good.
C) are linear and begin from the origin.
D) are curvilinear and increase at a decreasing rate.
Page 9
