Test Bank For International Macroeconomics 4th Edition By Robert C. Feenstra, Alan M. Taylor Complete All Chapters (Revised )

Test Bank For International Macroeconomics 4th Edition By Robert C. Feenstra, Alan M. Taylor Complete All Chapters (Revised ). 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: 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 adds further 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 natural resources 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 natural resources 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 as Germany's production of snowboards), it is known as a(n): A) absolute advantage. B) technology advantage. C) comparative advantage. D) resource advantage. 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 2 12. When a country requires fewer resources to produce a product than other countries, it is 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, it is 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 international trade 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 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 thought was known as: A) export preference. B) mercantilism. C) monetary economics. D) price-specie-flow mechanism. Page 3 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 an absolute 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 a comparative advantage. D) all countries lose from international trade. 19. According to the Ricardian principle of comparative advantage, international trade 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 other countries. B) trade will benefit countries when it generates gold and silver for the national treasury. C) all nations can gain from free international trade. D) trade cannot increase the world's output of goods. 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 4 22. Ricardo's theory showed that if nations are allowed to trade freely, the result will be that: 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 that there 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: 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 when it produces only one or the other good. B) are bowed out from the origin, with end points showing a country's production 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 5 28. When the production possibilities frontier is a straight line, then production occurs under conditions of: A) increasing costs. B) decreasing costs. C) constant costs. D) increasing, then decreasing, then constant costs. 29. The Ricardian model employs the concept of alternate uses of economic resources in production. We refer to this technique as: A) the production possibilities frontier. B) the labor theory of value technique. C) the least-cost option. D) the labor productivity model. 30. With the assumption that the marginal product of labor is constant and that labor is the only variable resource, the slope of the PPF is: A) positive and increasing. B) negative and decreasing. C) negative and constant. D) unrelated to the issue at hand. 31. Assume the MPLt = 5 tennis rackets and MPLb = 4 baseball bats. If the economy has 100 workers, then the economy can produce: A) a maximum of 500 tennis rackets. B) a maximum of 350 baseball bats. C) 500 tennis rackets and 400 baseball bats. D) either 100 tennis rackets only or 100 baseball bats only. 32. Assume the MPLc = 2 cars and the MPLb = 5 boats. There are 150 workers in this hypothetical economy. What is the maximum number of boats that can be produced? A) 30 B) 300 C) 750 D) 150 Page 6 33. The slope of the PPF can be expressed as: A) the ratio of abundance of capital to labor. B) the preferences of consumers in terms of marginal utility. C) the ratio of the quantities of good 1 and good 2. D) the negative of the ratio of the marginal products of labor in producing each good. 34. If the maximum number of units of cloth produced is 300 and the maximum number of units of corn produced is 600, then with an MPLcloth = 2, what is the number of workers in the economy? A) 100 B) 200 C) 150 D) 600 35. If the maximum number of units of cloth produced is 300 and the maximum number of units of corn produced is 600, then with an MPLcloth = 2, what is the MPLcorn? A) 4 B) 5 C) 6 D) 7 36. To complete the model of international trade using the PPF, we must also use the idea of indifference curves. One of these curves represent: A) a set of alternate quantities of both goods (sloped negatively), whereby consumers are equally satisfied in their level of utility gained. B) consumers who are indifferent to everything. C) producers who do not care which production method is chosen. D) a fixed quantity of one good (such as wheat) and a varying amount of the other good. 37. As a consumer moves down one of her indifference curves, her satisfaction: A) falls. B) rises. C) remains unchanged. D) first falls, then levels out