Foundations Of Modern Trade Theory MCQs

Option A: relatively higher U.S labor productivity was associated with relatively higher U.K export ratios

Option B: relatively high U.K labor productivity was associated with relatively higher U.K export ratios

Option C: Labor productivity ratios and export ratios were not associated with each other

Option D: None of the above

Correct Answer: relatively high U.K labor productivity was associated with relatively higher U.K export ratios ✔

Option A: The stimulus of additional investment spending as market open

Option B: Economies of large scale production as markets open

Option C: Additional competition made possible by the opening of markets

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Trades at Canada’s marginal rate of transformation

Option B: Trade at Sweden’s marginal rate of transformation

Option C: Specializes completely in the production of its export good

Option D: Specializes partially in the production of its exports goods

Correct Answer: A. Trades at Canada’s marginal rate of transformation ✔

Option A: below the production possibility frontier

Option B: on the production possibility frontier

Option C: above the production possibility frontier

Option D: can’t tell without more information

Correct Answer: on the production possibility frontier ✔

Option A: below the production possibility frontier

Option B: On the production possibility frontier

Option C: above the production possibility frontier

Option D: can’t tell without more information

Correct Answer: On the production possibility frontier ✔

Option A: Mexico and Denmark

Option B: Sweden and Denmark

Option C: Sweden and Spain

Option D: Mexico and Sweden

Correct Answer: Mexico and Sweden ✔

Option A: constant opportunity costs

Option B: decreasing opportunity costs

Option C: first increasing and then decreasing opportunity costs

Option D: increasing opportunity costs

Correct Answer: constant opportunity costs ✔

Option A: Shift out in a parallel fashion

Option B: shift in a parallel fashion

Option C: become steeper

Option D: Become flatter

Correct Answer: Become flatter ✔

Option A: 2

Option B: 1/2

Option C: 500

Option D: 1000

Correct Answer: 2 ✔

Option A: Wine

Option B: Beer

Option C: Both wine and beer

Option D: Neither wine nor beer

Correct Answer: Beer ✔

Option A: 1W = 3B

Option B: 1W = 4 1/2B

Option C: 1W = 5B

Option D: 1W = 6B

Correct Answer: 1W = 4 1/2B ✔

Option A: Beer

Option B: Wine

Option C: Both products

Option D: neither products

Correct Answer: neither products ✔

Option A: A would export X to B

Option B: A would export Y to B

Option C: Neither country would want to trade

Option D: None of the above

Correct Answer: A would export Y to B ✔

Option A: Product X

Option B: Product Y

Option C: Neither X nor Y

Option D: Both X and Y

Correct Answer: Product X ✔

Option A: actual differences in labor productivity between countries

Option B: relative differences in labor productivity between countries

Option C: Both (a) and (b)

Option D: Neither (a) nor (b)

Correct Answer: relative differences in labor productivity between countries ✔

Option A: Absolute advantage

Option B: Comparative advantage

Option C: Physical advantage

Option D: Which way the wind blows

Correct Answer: Comparative advantage ✔

Option A: The labor theory of value

Option B: How much the autarky price differs from international terms of trade change

Option C: The fact that a country must lose from trade

Option D: All of the above

Correct Answer: How much the autarky price differs from international terms of trade change ✔

Option A: Is the philosophy of free international trade?

Option B: Was a system of export promotion and barriers to imports practiced by governments?

Option C: Was praised by Adam Smith in the Wealth of Nations

Option D: Both (a) and (c)

Correct Answer: Was a system of export promotion and barriers to imports practiced by governments? ✔

Option A: There is no basis for gainful trade for either country

Option B: Both countries gain from trade

Option C: Only one country gains from trade

Option D: One country gain and the other country loses from trade

Correct Answer: Both countries gain from trade ✔

Option A: Adam Smith

Option B: David Ricardo

Option C: Eli Heckscher

Option D: Berti IOhlin

Correct Answer: David Ricardo ✔

Option A: South Korea should export steel

Option B: South Korea should export steel and DVDs

Option C: Japan should export steel

Option D: Japan should export steel and DVDs

Correct Answer: South Korea should export steel ✔

Option A: One-half ton of steel

Option B: One ton of steel

Option C: One and one-half tons of steel

Option D: Two tons of steel

Correct Answer: Two tons of steel ✔

Option A: evidence against the classical model

Option B: evidence against the Heckscher-Ohlin model

Option C: Support for the Ricardian modal

Option D: Support for the Heckscher-Ohlin model

Correct Answer: Support for the Ricardian modal ✔

Option A: Ricardian theory of comparative

Option B: Heckscher Ohl in theory of comparative advantage

Option C: Linder theory of overlapping demand all of the above

Option D: None of these

Correct Answer: Ricardian theory of comparative ✔

Option A: Theory of reciprocal demand

Option B: Theory of absolute advantage

Option C: Theory of comarative advantage

Option D: Theory of mercantilism

Correct Answer: Theory of reciprocal demand ✔

Option A: A would likely export S to B

Option B: A would likely import S from B

Option C: neither country would want to trade

Option D: None of the above

Correct Answer: A would likely export S to B ✔

Option A: Production equals consumption

Option B: Exports equal imports

Option C: there is no trade

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Are more productive than their large trading partners

Option B: Are less productive than their large trading partners

Option C: Have demand preferences and income levels lower than their large trading partners

Option D: Realize terms of trade lying near the MRTs of their large trading partners

Correct Answer: Realize terms of trade lying near the MRTs of their large trading partners ✔

Option A: Paid for all goods exported by the home country

Option B: Received for all goods exported by the home country

Option C: Received for exports and paid for imports

Option D: Of primary products as opposed to manufactured products

Correct Answer: Received for exports and paid for imports ✔

Option A: constant opportunity costs

Option B: decreasing opportunity costs

Option C: first increasing and then decreasing opportunity costs

Option D: increasing opportunity costs

Correct Answer: increasing opportunity costs ✔

Option A: shift out in a parallel fashion

Option B: shift in a parallel fashion

Option C: Become steeper

Option D: Become flatter

Correct Answer: Become steeper ✔

Option A: 2

Option B: 1/2

Option C: 00

Option D: 1000

Correct Answer: 2 ✔

Option A: Wine

Option B: Beer

Option C: Both wine and beer

Option D: Neither wine nor beer

Correct Answer: Wine ✔

Option A: 1W = 1B

Option B: 1W = 2B

Option C: 1W = 3B

Option D: 1W = 1/3B

Correct Answer: 1W = 3B ✔

Option A: 1/2 Y

Option B: 3/4 Y

Option C: 1 Y

Option D: 4/3 Y

Correct Answer: 4/3 Y ✔

Option A: A would export X to B

Option B: B would import Y from A

Option C: Neither country would want to trade

Option D: None of the above

Correct Answer: B would import Y from A ✔

Option A: Product X

Option B: Product Y

Option C: Neither X nor Y

Option D: Both X and Y

Correct Answer: Product Y ✔

Option A: actual differences in labor production between countries

Option B: relative differences in labor productivity between countries

Option C: Both (a) and (b)

Option D: Neither (a) nor (b)

Correct Answer: actual differences in labor production between countries ✔

Option A: Only countries with low wages will export

Option B: Only countries with high wages will import

Option C: Countries with high wages will have higher prices

Option D: All of the above are false

Correct Answer: All of the above are false ✔

Option A: Countries will completely specialize in the production of export goods

Option B: Considerable trade will occur between countries with different levels of technology

Option C: Small countries could obtain of the gains from trade when trading with large countries

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Different currencies are an obstacle to international trade

Option B: Goods are more mobile internationally than are resources

Option C: Resources are more mobile internationally that are goods

Option D: A country’s exports should always exceed its imports

Correct Answer: Goods are more mobile internationally than are resources ✔

Option A: Trade would depend on difference in demand conditions

Option B: Trade would depend on economies of large-scale production

Option C: Trade would depend on the use of different currencies

Option D: There would be no basis for gainful trade

Correct Answer: Trade would depend on difference in demand conditions ✔

Option A: One DVD

Option B: Two DVDs

Option C: Three DVDs

Option D: Four DVDs

Correct Answer: One DVD ✔

Option A: One-half ton of steel

Option B: One ton of steel

Option C: Two tons of steel

Option D: Two and one-half tons of steel

Correct Answer: Two tons of steel ✔

Option A: Export steel

Option B: Export DVDs

Option C: Exports steel and DVDs

Option D: There is no basis for gainful specialization and trade

Correct Answer: There is no basis for gainful specialization and trade ✔

Option A: One ton of steel

Option B: Two tons of steel

Option C: Three tons of steel

Option D: Four tons of steel

Correct Answer: One ton of steel ✔