QUESTION Which of the following factors is taken into consideration by David Ricardo’s theory of comparative advantage in order to explain the pattern of international trade? A. Absolute advantage of a country with reference to natural resources B. The proportions in which the factors of production are available C. International differences in labor productivity D. […]
QUESTION Which of the following is consistent with the central beliefs of mercantilism? A. A country’s government should intervene to achieve a surplus in the balance of trade. B. A large volume of trade is essential regardless of whether it comes from imports or exports. C. Trade is a positive-sum game in which all countries […]
QUESTION The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from […]
QUESTION Considered to be the first theory of international trade, the principal assertion of mercantilism is that: A. countries differ in their ability to produce goods efficiently. B. gold and silver are the mainstays of a country’s wealth and essential to vigorous commerce. C. countries should specialize in the production of goods for which they […]
QUESTION According to Michael Porter, government can influence each of the four components of Porter’s diamond—either positively or negatively. Indicate whether the statement is true or false. ANSWER TRUE Porter contends that government can influence each of the four components of Porter’s diamond—either positively or negatively. Factor endowments can be affected by subsidies, policies […]
QUESTION Which of the following is in a country’s best interests, according to the main tenet of mercantilism? A. Importing products from developing rather than developed countries B. Importing products even if they are efficiently produced at home C. Importing less specialized goods rather than attempting to make them at home D. Minimizing exports and […]
QUESTION Michael Porter argues that advanced factors are the most significant for competitive advantage. Indicate whether the statement is true or false. ANSWER TRUE Michael Porter argues that advanced factors are the most significant for competitive advantage. The benefits of investments in advanced factors of production by related and supporting industries can spill over […]
QUESTION Neo-mercantilists equate political power with economic power and economic power with: A. corruption. B. a balance-of-trade surplus. C. regional dominance. D. a trade monopoly. E. capitalism. ANSWER B
QUESTION The main tenet of mercantilism was that it was in a country’s best interests to maintain a trade surplus. Indicate whether the statement is true or false. ANSWER TRUE The main tenet of mercantilism was that it was in a country’s best interests to maintain a trade surplus (to export more than it […]
QUESTION Limits on imports are often in the interests of domestic consumers, but not domestic producers. Indicate whether the statement is true or false. ANSWER FALSE Limits on imports are often in the interests of domestic producers, but not domestic consumers.
