ECON 2001-1 Week 3 MidTerm ( LATEST UPDATE )

ECON 2001-1 Week 3 MidTerm Grade Details1.Question: In the Dornbusch-Fischer-Samuelson graph above, a uniform improvement in labor productivity in all the home country's industries would shift the A schedule and would lead to the export of a number of goods by the home country. Your Answer: upward; greater CORRECT upward; smaller downward; greater downward; smaller Points Received:2 of 2 Comments: 2. Question: The following Classical-type table shows the number of days of labor input required to obtain one unit of output of each of the three commodities in each of the two countries: good T good X good Y United Kingdom 4 days 5 days 3 days United States 4 days 4 days 2 days Using the table above, if the U.S. wage rate is $40 per day and the exchange rate of £1 = $1, what is the upper limit to the wage rate in the United Kingdom that is consistent with two- way trade between the countries? Your Answer: £40 per day CORRECT £32 per day £30 per day £26 per day Points Received:2 of 2 Comments: 3. Question: The following Classical-type table shows the number of days of labor input required to obtain one unit of output of each of the three commodities in each of the two countries: good T good X good Y United Kingdom 4 days 5 days 3 days United States 4 days 4 days 2 days Based on the information in the table above, suppose that the wage rate in the United Kingdom is £30 per day, the wage rate in the United States is $40 per day, and the exchange rate is £1 = $1. In this situation, the United Kingdom will . Your Answer: export good T and import goods X and Y export good Y and import goods T and X export goods T and X and import good Y CORRECT export goods X and Y and import good T Points Received:2 of 2 Comments: 4. Question: If the U.K. worker's wage is £30 per day (and the fixed exchange rate is $2 = £1), what is the upper limit to the U.S. worker's wage per day? Your Answer: $30 $40 $90 $120 CORRECT Points Received:2 of 2 Comments: 5. Question: Suppose that, in a Classical model with two goods, Germany can produce 50 units of steel or 30 units of textiles with 1 day of labor, whereas Switzerland can produce 45 units of steel or 45 units of textiles with 1 day of labor. If the exchange rate is fixed at 1 Swiss franc = 1 euro and if the Swiss wage rate is 10 francs per day, then, in trading equilibrium, German wages Your Answer: must be greater than 10 euros per day. must be less than 10 euros per day. must be equal to 10 euros per day. The answer cannot be determined without more information. CORRECT Points Received:2 of 2 Comments: 6. Question: In a Ricardian-type model, if Portugal can produce twice as much wine per day as England but only 1.5 times as much cloth per day as England, then, if Portuguese wages are 30 euros per day, the upper limit to English wages per day is . (Assume 1 euro = £1.) Your Answer: £15 £20 CORRECT £45 £60 Points Received:2 of 2 Comments: 7. Question: If, in a two-commodity, two-country Classical world, Sweden can make a unit of furniture with 10 days of labor and a unit of steel with 15 days labor, whereas Germany can make a unit of furniture with 12 days of labor and a unit of steel with 12 days labor, then Your Answer: Sweden has an absolute advantage in steel and Germany has an absolute advantage in furniture. Sweden has a comparative advantage in steel and Germany has a comparative advantage in furniture. the pretrade price ratios indicate that Germany will export steel. CORRECT the pretrade price ratio in Sweden is 1 furniture:1.5 steel. Points Received:2 of 2 Comments: 8. Question: Suppose that, with constant opportunity costs, Spain can produce 1,000 units of clothing if it devotes all of its resources to clothing production and 5,000 units of wheat if it devotes all of its resources to wheat production. If Spain is opened to trade at a world price ratio of 1 wheat:0.3 clothing, Spain will export ; if the world price ratio is 1 wheat:5 clothing, Spain will . Your Answer: wheat; also export wheat CORRECT clothing; also export clothing wheat; export clothing clothing; be indifferent to trade Points Received:2 of 2 Comments: 9. Question: Suppose that, in a Classical constant opportunity costs framework, country A can produce 15 units of wheat if it devotes all of its resources to wheat production and 45 units of clothing if it devotes all of its resources to clothing production. In a trading situation for this country, if the world price ratio is Pwheat/Pclothing = 1/3 (or Pclothing/Pwheat = 3), country A would Your Answer: export wheat and import clothing. INCORRECT export clothing and import wheat. CORRECT ANSWER be indifferent to trade. The answer cannot be determined without more information. Points Received:0 of 2 Comments: 10. Question: If a country's PX/PY in autarky is greater than the PX/PY on the world market, the relative price of the country's import good as the country moves from autarky to trade will for home consumers, and the relative price of the country's export good for home consumers. Your Answer: fall; will rise CORRECT ANSWER fall; also will fall rise; also will rise rise; will fall INCORRECT Points Received:0 of 2 Comments: 11. Question: If a country's PX/PY in autarky is greater than the PX/PY on the world market, then the country has a comparative advantage in good , and it will . Your Answer: X; export Y and import X X; export X and import Y Y; export Y and import X CORRECT ANSWER Y; export X and import Y INCORRECT Points Received:0 of 2 Comments: 12. Question: In the Classical (Ricardian) analysis, Your Answer: if a country has an absolute advantage in a good, it also has a comparative advantage in the good. if a country has a comparative advantage in a good, it cannot have an absolute advantage in the good. a country can have a comparative advantage in a good at the same time that it has an absolute advantage in that good. a country with an absolute advantage in all goods cannot gain from trade. Points Received:2 of 2 Comments: 13. Question: CORRECT During the price-specie-flow adjustment process to a trade imbalance, if demands for goods are inelastic, then, when the price level in the country with the trade deficit, the value of that country's exports will as the price-specie-flow process takes place. Your Answer: falls; increase falls; decrease CORRECT rises; increase rises; decrease Points Received:2 of 2 Comments: 14. Question: The paradox of Mercantilism reflected that fact that Your Answer: trade surpluses were fostered by protective tariffs. rich countries were comprised of large numbers of poor people. CORRECT gold inflows led to higher prices and reduced exports. gold could not be hoarded and provide money for the economy at the same time. Points Received:2 of 2 Comments: 15. Question: The price-specie-flow mechanism suggested that Your Answer: a country could easily maintain a balance-of-payments surplus for a long period of time. a deficit country would experience an increase in its money supply and its price level. a surplus country would experience an increase in its money supply and its price level. CORRECT a country's internal price level has no relation to the country's foreign trade activities. Points Received:2 of 2 Comments: 16. Question: The policy of minimum government interference in or regulation of economic activity, advocated by Adam Smith and the Classical economists, was known as Your Answer: the law of comparative advantage. laissez-faire. CORRECT the labor theory of value. Mercantilism. Points Received:2 of 2 Comments: 17. Question: In Adam Smith's view, international trade Your Answer: benefited both trading countries. was based on absolute cost differences. reflected the resource base of the countries in question. all of the above CORRECT Points Received:2 of 2 Comments: 18. Question: According to the labor theory of value, Your Answer: the value of labor is determined by its value in production. the value of a good is determined by the amount of labor with which each unit of capital in an industry works. the price of Good A compared to the price of Good B bears the same relationship as the relative amounts of labor used in producing each good. the values of two minerals such as coal and gold with similar production costs may be very different. Points Received:2 of 2 Comments: 19. Question: CORRECT If the demand for traded goods is price-inelastic, the price-specie-flow mechanism will result in Your Answer: gold movements between countries that remove trade deficits and surpluses. gold movements between countries that worsen trade deficits and surpluses. CORRECT negligible movements of gold between countries and, as a result, little or no adjustment of trade deficits and surpluses. a removal of the basis for trade between countries. Points Received:2 of 2 Comments: 20. Question: In the Mercantilist view of international trade (in a two-country world), Your Answer: both countries could gain from trade at the same time, but the distribution of the gains would depend on the terms of trade. both countries could gain from trade at the same time, and the terms of trade would be of no consequence for the distribution of the gains. neither country could ever gain from trade. one country's gain from trade would be associated with a loss for the other country. CORRECT Points Received:2 of 2 Comments: 21. Question: In the price-specie-flow doctrine, a deficit country will gold, and this gold flow will ultimately lead to in the deficit country's exports. Your Answer: lose; a decrease lose; an increase CORRECT gain; a decrease gain; an increase Points Received:2 of 2 Comments: 22. Question: Suppose that we are in a two-factor, two-country world where the factors of production are labor (L) and land (T), the returns to the factors are the wage rate (w) and the rental rate on land (t), and the countries are country A and country B. In this situation, country A is land- abundant relative to country B by the physical definition of relative factor abundance if , and country A is land-abundant relative to country B by the price (or economic) definition if . Your Answer: (L/T)A < (L/T)B; (w/t)A > (w/t)B CORRECT (L/T)A < (L/T)B; (w/t)A < (w/t)B (L/T)A > (L/T)B; (w/t)A > (w/t)B (L/T)A > (L/T)B; (w/t)A < (w/t)B Points Received:2 of 2 Comments: 23. Question: The magnification effect refers to the fact that, when a country is opened to trade, Your Answer: the price of the export good rises. real income is magnified even though the PPF does not change. the price of the abundant factor rises faster than does the price of the export good. CORRECT the price of the scarce factor rises. Points Received:2 of 2 Comments: 24. Question: The Stolper-Samuelson theorem suggests that, when a country is opened to international trade, the relative price of the country's abundant factor of production will , and the relative price of the country's scarce factor of production will . Your Answer: rise; also rise rise; fall CORRECT fall; rise fall; also fall Points Received:2 of 2 Comments: 25. Question: If Country A is defined as relatively capital-abundant in relation to Country B by the price (or economic) definition of factor abundance, then the price of labor relative to the price of capital is in Country A than in Country B, and the Heckscher-Ohlin theorem would suggest that Country A would export relatively - intensive goods to Country B. Your Answer: higher; capital CORRECT higher; labor lower; capital lower; labor Points Received:2 of 2 Comments: 26. Question: If Good A costs $10 per unit in Country A and $12 per unit in Country B, and if transport costs between A and B for the good are $3 per unit, an economist would say that Your Answer: the good will be exported from A to B. the good will be exported from B to A. intra-industry trade of the good will occur. the good will be a nontraded good. CORRECT Points Received:2 of 2 Comments: 27. Question: In the specific-factors model, in which each sector's capital is fixed but labor can move freely between the two sectors, the opening of the country to trade will increase the real return to capital in the sector and will increase the real wage of a worker who . Your Answer: import-competing; consumes mostly the export good import-competing; consumes mostly the import good export; consumes mostly the export good export; consumes mostly the import good CORRECT Points Received:2 of 2 Comments: 28. Question: If skilled labor is physically more abundant relative to unskilled labor in country A than in country B, yet skilled labor is relatively higher priced compared to unskilled labor in country A than in country B, this phenomenon could be accounted for by Your Answer: factor-intensity reversal. the specific-factors model. demand reversal. CORRECT factor-price equalization between the two countries. Points Received:2 of 2 Comments: 29. Question: An implication of the Heckscher-Ohlin theorem is that Your Answer: if two countries have identical tastes, then no trade will occur between them. the relative price of a country's scarce factor of production will rise when the country is opened to trade. income distribution in a country does not change when a country is opened to trade. two countries with identical tastes can still have a basis for trade if factor endowments of the countries differ and if factor intensities of the commodities differ. Points Received:2 of 2 Comments: 30. Question: CORRECT If relatively capital-abundant country A opens trade with relatively labor-abundant country B, and if the trade takes place in accordance with the Heckscher-Ohlin theorem, what would be the consequence for factor prices (w/r) in the two countries? Your Answer: (w/r) rises in A and falls in B (w/r) rises in A and also rises in B (w/r) falls in A and rises in B CORRECT (w/r) falls in A and also falls in B Points Received:2 of 2 Comments: 31. Question: If a commodity is classified as labor-intensive at one set of relative factor prices but capital- intensive at another set of relative factor prices, this situation is known as Your Answer: demand reversal. factor-intensity reversal. CORRECT balance-of-payments reversal. factor-price reversal. Points Received:2 of 2 Comments: 32. Question: Suppose that a country's factors of production are completely specific to the industries in which they are located (i.e., factors in the X industry would contribute nothing to Y output if they were in the Y industry, and factors in the Y industry would contribute nothing to X output if they were in the X industry). In addition, suppose that the country has an autarky PX/PY that is greater than the world PX/PY. In this situation, if the country is opened to international trade, it will Your Answer: export good X and will obtain gains from specialization (a production gain) but not gains from exchange (a consumption gain). export good X and will obtain gains from exchange (a consumption gain) but not gains from specialization (a production gain). export good Y and will obtain gains from specialization (a production gain) but not gains from exchange (a consumption gain). export good Y and will obtain gains from exchange (a consumption gain) but not gains from specialization (a production gain). Points Received:2 of 2 Comments: 33. Question: CORRECT If two countries with increasing opportunity costs have identical PPFs but different tastes, Your Answer: the countries will have identical relative commodity prices under autarky and, therefore, no incentive to trade. the countries will have different relative commodity prices under autarky, but there will still be no incentive for them to trade. the countries will have different relative commodity prices under autarky, and each country can gain by exporting the good for which its consumers have the higher relative preference. the countries will have different relative commodity prices under autarky, and each country can gain by exporting the good for which its consumers have the lower relative preference. Points Received:2 of 2 Comments: 34. Question: If two countries have identical production-possibilities frontiers but different tastes, it is possible for each country to gain from trade with the other country Your Answer: in the Classical model but not in the neoclassical model. in the neoclassical model but not in the Classical model. CORRECT in both the Classical model and the neoclassical model. in neither the Classical model nor the neoclassical model. Points Received:2 of 2 Comments: 35. Question: CORRECT If a country's PX/PY in autarky is less than the PX/PY on the world market, as the country moves to trade, the relative price of good Y will consumers with a strong relative preference for good movement to trade. Your Answer: increase; Y increase; X decrease; Y decrease; X CORRECT Points Received:2 of 2 Comments: 36. Question: for home consumers. Thus, would tend to oppose the In the neoclassical model of trade, the movement of a country from autarky to free trade generally results in specialization in production, the situation in the Classical model. Your Answer: complete; unlike complete; as was also partial; unlike CORRECT partial; as was also Points Received:2 of 2 Comments: 37. Question: Suppose that, in the context of the Edgeworth box diagram in production, there are constant returns to scale in each of the two industries. One good is relatively labor-intensive in its production process, and the other good is relatively capital-intensive in its production process. In considering this Edgeworth box diagram and the PPF that can be derived from it, Your Answer: all points on the diagonal of the Edgeworth box diagram will have corresponding points on the PPF. no point on the diagonal of the Edgeworth box diagram will correspond to a point on the PPF. the PPF will show constant opportunity costs. the PPF will show increasing opportunity costs. CORRECT Points Received:2 of 2 Comments: 38. Question: In the Edgeworth box diagram in production with two goods and two factors of production, Your Answer: a movement from any point off the production efficiency locus (contract curve) to any point on the locus must involve greater production of one good and less production of the other good. a movement from any point on the production efficiency locus (contract curve) to any point off the locus must involve less production of both goods. a point that is off the production efficiency locus (contract curve) must be associated with unemployment of at least one of the factors of production. a movement from any point on the production efficiency locus (contract curve) to another point on the locus must involve greater production of one good and less production of the other good. Points Received:2 of 2 Comments: 39. Question: A production isoquant shows the various combinations Your Answer: of two factors of production that can produce the same amount of output of a good. CORRECT of two factors of production that can be hired by a firm for the same cost. of two goods that can be produced by the firm with the same quantity of the factors of production. of exports that a country's firms are willing to produce at various terms of trade. Points Received:2 of 2 Comments: CORRECT 40. Question: The equilibrium condition for consumer behavior pertaining to goods A and B is Your Answer: (MUB/PA) = (MUA/PB). MUB = MUA. (MCB/MCA) = (PB/PA). (MUB/MUA) = (PB/PA). CORRECT Points Received:2 of 2 Comments: 41. Question: In the Edgeworth box diagram, Your Answer: a movement from point S to point T involves a rise in the capital/labor ratio used in the production of good B. if the PPF is plotted from the contract curve (or production efficiency locus), the production combination of goods A and B associated with point R is on the PPF. if the PPF is plotted from the contract curve (or production efficiency locus), with good A on the vertical axis and good B on the horizontal axis, the production combination of goods A and B associated with the 0B origin is at the origin of the PPF graph. if the PPF is plotted from the contract curve (or production efficiency locus), with good A on the vertical axis and good B on the horizontal axis, the production combination of goods A and B associated with point T is further up the vertical axis than the production combination associated with point S. Points Received:2 of 2 Comments: 42. Question: In the Edgeworth box diagram, Your Answer: output of the good B is the same at point S as at point R. CORRECT a plotting of the output combinations along the diagonal results in the production-possibilities frontier for this country. INCORRECT good B is the labor-intensive good, and good A is the capital-intensive good. CORRECT ANSWER point S has less output of good A than does point R. Points Received:0 of 2 Comments: 43. Question: Two indifference curves for an individual consumer intersect; two community indifference curves for a country . Your Answer: cannot; also cannot intersect cannot; can intersect under some circumstances CORRECT can; can also intersect under some circumstances can; cannot intersect Points Received:2 of 2 Comments: 44. Question: Ignoring the negative sign, the slope of a consumer indifference curve at any given point on the curve reflects Your Answer: the marginal rate of transformation (MRT) in production of one commodity into the other commodity. the marginal rate of technical substitution (MRTS) between the factors of production. the relative prices of the commodities in the consumption bundle of goods. the marginal rate of substitution (MRS) of the consumer between the two goods. CORRECT Points Received:2 of 2 Comments: 45. Question: The equilibrium condition for producers (i.e., the condition that exists when the isocost line is tangent to an isoquant) is Your Answer: (MUB/MUA) = (PB/PA). (MUB/PA) = (MUA/PB). (MPPL/r) = (MPPK/w). (MPPL/MPPK) = (w/r). CORRECT Points Received:2 of 2 Comments: 46. Question: In the Edgeworth box diagram for production, Your Answer: a point off the contract curve (or production efficiency locus) cannot have more production of one of the goods than can some point on the curve. a point off the contract curve (or production efficiency locus) can involve more production of both goods than can any point on the curve. a movement from autarky to trade can be associated with a movement along the contract curve (or production efficiency locus). the contract curve (or production efficiency locus) will always be the diagonal of the box. Points Received:2 of 2 Comments: 47. Question: If, for a consumer, MUA/PA is greater than MUB/PB, then the consumer Your Answer: has an incentive to consume relatively more A, which will increase his/her MUA. has an incentive to consume relatively more A, which will decrease his/her MUA. CORRECT has an incentive to consume relatively more B, which will increase his/her MUB. has an incentive to consume relatively more B, which will decrease his/her MUB. Points Received:2 of 2 Comments: 48. Question: In the case of nonhomogeneous goods, the imposition of an import tariff Your Answer: produces a transfer from consumers to producers in the domestic market. taxes the domestic product as well as the import product. CORRECT has no impact on the price of the domestic substitute. results in deadweight losses in both the domestic market and the import market. Points Received:2 of 2 Comments: 49. Question: In the large-country case, the imposition of an import quota Your Answer: will always produce a net loss for the imposing country. can result in a net gain for the importing country if the government employs an auction quota system to allocate the restricted imports. will produce a net gain for the exporting country. will have no predictable effect on the exporting country. Points Received:2 of 2 Comments: 50. Question: The imposition of an export tax by a home country will lead to in home country consumer surplus and will in home country producer surplus. Your Answer: a decrease; also lead to a decrease a decrease; lead to an increase an increase; lead to a decrease CORRECT an increase; also lead to an increase Points Received:2 of 2 Comments: 51. Question: CORRECT CORRECT If a small country produces 100 units of product X and consumes 140 units at a price of $2 under free trade, but the imposition of a tariff leads to a situation where domestic price is $2.20, domestic production is 120 units, and domestic consumption is 125 units, then the gain in producer surplus in this country because of the tariff is Your Answer: $1.00. $22.00. CORRECT $24.00. $26.50. Points Received:2 of 2 Comments: 52. Question: In the general equilibrium graph with a production-possibilities frontier (PPF) and consumer indifference curves, Your Answer: a tariff has the same welfare impact as a subsidy to the import-competing industry (provided domestic production is the same with each alternative instrument). a tariff reduces both real income and the gains from exchange. CORRECT a tariff reduces consumer welfare only if the tariff is prohibitive (i.e., eliminates all imports). protection shifts the PPF outward but reduces consumer welfare. Points Received:2 of 2 Comments: 53. Question: In the large-country case, an export tax Your Answer: leads to an increase in price in the importing country. CORRECT leads to no change in price in the importing country. is absorbed totally by the exporting country. increases consumer welfare in both the exporting and the importing country. Points Received:2 of 2 Comments: 54. Question: The situation in the United States (and other developed countries) whereby an import good faces a lower tariff if the good comes from a developing country than if the good comes from a developed country is known as Your Answer: GSP treatment. CORRECT MFN (or NTR) treatment. OAP treatment. ERP treatment. Points Received:2 of 2 Comments: 55. Question: Suppose that a country's unweighted-average (nominal) tariff rate (call it tU) and weighted- average (nominal) tariff rate (call it tW) are calculated both with and without the inclusion of prohibitive tariffs, and that the country does in fact have some prohibitive tariffs. In this situation, the tU that includes the prohibitive tariffs the same as the tU that excludes the prohibitive tariffs, and the tW that includes the prohibitive tariffs the same as the tW that excludes the prohibitive tariffs. Your Answer: would not be; would be would not be; would not be would be; would be would be; would not be CORRECT Points Received:2 of 2 Comments: 56. Question: Suppose that the offshore assembly provisions (OAP) of country A are extended to final good X that is imported as well as produced domestically. This action will most likely Your Answer: stimulate production in country A of components to final good X. CORRECT stimulate production in country A of final good X. raise the price of imports of final good X to consumers in country A. cause foreign assemblers of final good X to use relatively more components of X that are supplied by countries other than country A. Points Received:2 of 2 Comments: 57. Question: The use of the most-favored-nation (MFN) principle (or normal trade relations [NTR]) is an attempt to attain toward competing suppliers of imports to a country. Hence, the arrangement whereby developed countries permit duty-free entry on some goods coming from developing countries but levy tariffs on the same goods if coming from other developed countries is the MFN (or NTR) principle. Your Answer: discrimination; a departure from CORRECT discrimination; an example of nondiscrimination; a departure from nondiscrimination; an example of Points Received:2 of 2 Comments: 58. Question: In general, a country's unweighted-average nominal tariff rate tends to be than the country's weighted-average nominal tariff rate. The difference between the two would be if the goods with the highest tariffs became imported relatively more heavily. Your Answer: lower; smaller lower; larger higher; smaller CORRECT higher; larger Points Received:2 of 2 Comments: 59. Question: The United States now gives China permanent most-favored-nation (MFN) treatment [or normal trade relations (NTR)]. This means that the tariff schedules applicable to U.S. imports from China Your Answer: have lower tariff rates than the rates applicable to other countries to which the United States grants MFN treatment. have the same tariff rates as the rates applicable to other countries to which the United States grants MFN treatment. have lower tariff rates than the rates applicable to any other country sending goods to the United States. have tariff rates of zero percent. Points Received:2 of 2 Comments: 60. Question: CORRECT Other things being equal, which one of the following will cause an increase in the effective rate of protection (ERP) in the automobile industry? Your Answer: a decrease in the nominal tariff rate on automobiles an increase in the nominal tariff rates on imported inputs used in making automobiles an increase in the world price of imported inputs used in making automobiles a decrease in the nominal tariff rates on imported inputs used in making automobiles CORRECT Points Received:2 of 2 Comments: 61. Question: Which one of the following is NOT an example of making a trade instrument more restrictive against imports, other things being equal? Your Answer: a decrease in the size of an import quota a shifting of an import good from an administrative classification category with a high tariff to an administrative classification category with a low tariff a withdrawal of GSP treatment for goods from a particular country a denial of most-favored-nation (MFN) treatment to a country that previously received such treatment Points Received:2 of 2 Comments: 62. Question: CORRECT The 2007 U.S. MFN/normal trade relations tariff on refills for ball point pens was 0.4¢ per refill, 2.7 percent of the value of the refill. This is an example of Your Answer: a specific tariff. an ad valorem tariff. a combination of a specific tariff and an ad valorem tariff. CORRECT a nontariff barrier. Points Received:2 of 2 Comments: 63. Question: Which of the following is NOT an example of a nontariff barrier to the free flow of goods and services in accordance with comparative advantage? Your Answer: import quotas government procurement provisions that favor home products specific duty of $1.00 per unit on each imported item CORRECT voluntary export quotas (VERs) Points Received:2 of 2 Comments: 64. Question: A criticism of the argument that trade has been an important cause of increased U.S. wage inequality in recent decades is that, if trade were an important cause, the nontraded goods industries would have responded to the in the price of skilled labor relative to unskilled labor by using skilled labor relative to unskilled labor. Your Answer: rise; more rise; less CORRECT fall; more fall; less Points Received:2 of 2 Comments: 65. Question: In the United States, in approximately the last 2-3 decades, the supply of highly skilled (HS) labor relative to less highly skilled (LS) labor has been rising. At the same time, the ratio of HS labor wages relative to LS labor wages has been ; therefore, the demand for HS labor relative to LS labor must have been increasing than the supply of HS labor relative to LS labor. Your Answer: falling; less rapidly falling; more rapidly rising; less rapidly rising; more rapidly CORRECT Points Received:2 of 2 Comments: 66. Question: If the Heckscher-Ohlin theorem is valid in practice (and assuming that capital and labor are treated as the only two factors in the real world), then the Leontief statistic for a labor- abundant country would be Your Answer: greater than 1.0. CORRECT equal to 1.0. less than 1.0 but greater than zero. less than zero. Points Received:2 of 2 Comments: 67. Question: Which one of the following could NOT theoretically be offered to help explain the Leontief paradox? Your Answer: a relatively strong U.S. demand for relatively labor-intensive goods CORRECT relatively high U.S. tariffs on relatively labor-intensive imports U.S. importation of goods that are relatively natural-resource-intensive in their production processes a relatively strong U.S. demand for relatively capital-intensive goods and/or a relatively strong foreign demand for relatively labor-intensive goods Points Received:2 of 2 Comments: 68. Question: If relatively labor-abundant country A has a Leontief statistic greater than 1.0 and relatively capital-abundant country B has a Leontief statistic less than 1.0, this suggests that Your Answer: neither country is conforming to the prediction of the Heckscher-Ohlin theorem. both countries are conforming to the prediction of the Heckscher-Ohlin theorem. CORRECT country A is conforming to the prediction of the Heckscher-Ohlin theorem, but country B is not. country B is conforming to the prediction of the Heckscher-Ohlin theorem, but country A is not. Points Received:2 of 2 Comments: 69. Question: Since about 1970, in both developed and developing countries, the ratio of trade to GDP has ; over the same time period, in the United States and the European Union, the ratio of imports from developing countries to total imports . Your Answer: increased; has decreased increased; also has increased CORRECT decreased; also has decreased decreased; has increased Points Received:2 of 2 Comments: 70. Question: The to testing Heckscher-Ohlin seeks to determine whether a country is a net exporter or net importer of the services of the various factors of production; the expectation is that, if a country has an excess a factor's services, the country will be a net exporter of that factor's services. Your Answer: commodity approach; supply of commodity approach; demand for factor-content approach; supply of CORRECT factor-content approach; demand for Points Received:2 of 2 Comments: 71. Question: Suppose that, in a real-world situation, a labor-abundant country's tariffs and nontariff barriers are levied relatively more heavily on labor-intensive goods than on capital-intensive goods. In this situation, a Leontief two-factor test would, other things being equal, be the country's adherence to the Heckscher-Ohlin trade pattern, compared with a situation in which trade barriers were absent. Your Answer: biased toward confirming CORRECT biased against confirming unbiased in its finding concerning The answer cannot be determined without more information. Points Received:2 of 2 Comments: 72. Question: If the capital/labor ratio in import-competing industries in country A is $8,000 per worker and the capital/labor ratio in A's export industries is $4,000 per worker, then country A's Leontief statistic is Your Answer: 0.50. 0.67. 1.00. 2.00. CORRECT Points Received:2 of 2 Comments: 73. Question: If demand reversal is the explanation for the Leontief paradox, this would imply that the demand by the United States for labor-intensive goods is relatively ; therefore, U.S. wages would be relatively compared to wages in U.S. trading partners. Your Answer: low; low CORRECT low; high high; low high; high Points Received:2 of 2 Comments: 74. Question: If increased Heckscher-Ohlin-type trade were the major factor leading to increased income inequality in the United States, then one would expect that the relative prices of skilled labor- intensive goods to unskilled labor-intensive goods would have and that nontraded goods industries would have their use of unskilled labor relative to skilled labor. Your Answer: risen; decreased risen; increased CORRECT fallen; decreased fallen; increased Points Received:2 of 2 Comments: 75. Question: In the production process of a final good industry, the direct factor requirements per unit of output will be the total factor requirements per unit of output; if the industry is relatively capital-intensive when classified by direct requirements, it be relatively capital-intensive when classified by total requirements. Your Answer: greater than; must also greater than; may not necessarily less than; must also less than; may not necessarily CORRECT Points Received:2 of 2 Comments: