Question :
4.2 International Trade in the Specific Factors Model
1) A country : 1303492
4.2 International Trade in the Specific Factors Model
1) A country that does NOT engage in trade can benefit from trade only if
A) pre-trade and free-trade relative prices are not identical.
B) it employs a unique technology.
C) it has an absolute advantage in at least one good.
D) its wage rate is below the world average.
E) pre-trade and free-trade relative prices are identical.
2) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When then central city, Mudhole, puts in an airstrip, the country is able to engage in trade. If the relative price of cloth in the outside world is 3 units of food, then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.
A) food; immobile; food
B) food; mobile; food
C) cloth; immobile; cloth
D) cloth; mobile; cloth
E) food; immobile; cloth
3) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When then central city, Mudhole, puts in an airstrip, the country is able to engage in trade. If the relative price of cloth in the outside world is 8 units of food, then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.
A) cloth; immobile; cloth
B) food; immobile; food
C) food; mobile; food
D) cloth; mobile; cloth
E) cloth; immobile; food
4.3 Income Distribution and the Gains from Trade
1) In the specific factors model, the effects of trade on welfare are ________ for mobile factors, ________ for fixed factors used to produce the exported good, and ________ for fixed factors used to produce the imported good.
A) ambiguous; positive; negative
B) ambiguous; negative; positive
C) positive; ambiguous; ambiguous
D) negative; ambiguous; ambiguous
E) positive; positive; positive
2) In the specific factors model, the effects of trade on welfare overall are ________ and for fixed factors used to produce the exported good they are ________.
A) positive; positive
B) negative; positive
C) positive; negative
D) ambiguous; positive
E) positive; ambiguous
3) In the specific factors model, the effects of trade on welfare overall are ________ and for fixed factors used to produce the imported good they are ________.
A) positive; negative
B) positive; positive
C) negative; positive
D) ambiguous; positive
E) positive; ambiguous
4) The overall welfare effects of trade are ________ if ________.
A) positive; those who gain can compensate those who lose and still be better off
B) positive; more people gain from trade than lose from it
C) negative; some people are made worse off by trade
D) negative; those who lose can compel those who gain to compensate them for their losses
E) positive; the domestic economy grows faster than do foreign economies
5) The effect of trade on income distribution
A) can be significant in the sort run.
B) is positive for all segments of an economy.
C) is insignificant in the short run.
D) implies that there are no real gains from trade.
E) refutes the model of comparative advantage.
6) A country’s budget constraint states that
A) the value of exports must be equal to the value of imports.
B) real income in the exporting country must be equal to real income in the importing country.
C) unless a country engages in trade, the value of exports cannot exceed the value of goods produced.
D) a country will engage in trade only if the value of imports exceed the value of exports.
E) a country will engage in trade only if the value of exports exceeds the value of imports.
7) A country’s budget constraint states that
A) whether or not a country engages in trade, the value of goods consumed must be equal to the value of goods produced.
B) real income in the exporting country must be equal to real income in the importing country.
C) unless a country engages in trade, the value of goods consumed cannot exceed the value of goods produced.
D) a country will engage in trade only if the value of goods consumed exceeds the value of goods produced.
E) a country will engage in trade only if the value of goods produced exceeds the value of goods consumed.
8) A country will realize no gains from trade if
A) pre-trade and free-trade relative prices are identical.
B) all countries employ the same technology.
C) it does not have an absolute advantage in at least one good.
D) its wage exceeds the world average.
E) pre-trade and free-trade relative prices are not identical.
