QUESTION Which of the following statements best indicates Samuelson’s criticism of free trade? A. Dynamic gains lead to a universally beneficial outcome for all countries. B. Offshoring service jobs that were traditionally mobile will increase the market clearing wage rate. C. Free trade has historically been beneficial only to developing countries. D. By importing cheap […]
QUESTION One of the rebuttals to Samuelson’s critique of the free trade model is that: A. the United States’ ability to achieve constant returns to specialization is unparalleled. B. the strict immigration policies of the United States help insulate the economy from inward migration. C. introducing trade barriers may in fact be beneficial to developed […]
QUESTION Which of the following is a reason for diminishing rather than constant returns to specialization? A. All resources are of the same quality. B. Resources can shift from the production of one good to another seamlessly. C. Each country has a fixed stock of resources. D. Different goods use different resources in different proportions. […]
QUESTION Meitneria and Seaboria specialize in the production of heavy machinery and textiles respectively. While Meitneria doesn’t produce textiles, Seaboria is not as technologically advanced as Meitneria. In this situation, according to the Heckscher-Ohlin theory: A. Meitneria will import textiles from Seaboria and export heavy machinery to it. B. Meitneria will invest more than Seaboria […]
QUESTION According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in: A. labor productivity. B. diminishing returns. C. factor endowments. D. management practices. E. trade barriers. ANSWER C
QUESTION Which of the following is true of the relationship between trade and economic growth? A. Countries open to international trade display higher growth rates than those that close their economies to trade. B. Within a group of developing countries, closed economies grow faster than open economies. C. The Leontief paradox notes that adopting an […]
QUESTION U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called? A. A zero-sum game B. The Leontief paradox C. A positive-sum game D. Samuelson’s critique E. A first-mover advantage ANSWER B
QUESTION Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States? A. The United States imports goods that heavily use skilled labor and innovative entrepreneurship. B. The United States has a special advantage in producing new products made with innovative technologies. C. The United […]
QUESTION The new trade theory suggests that a country may predominate in the export of a good simply because it was lucky enough to have one or more pioneering firms to produce that good. Indicate whether the statement is true or false. ANSWER TRUE The new trade theory suggests that a country may predominate […]
QUESTION Porter’s theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns. Indicate whether the statement is true or false. ANSWER FALSE Porter’s theory has not been subjected to detailed empirical testing. Much about the theory rings true, but the same can be said for […]
