Technology transfer comes only from nations importing new capital goods in the current account. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Two countries engaged in trade in products with no scale economies, produced under conditions of perfect competition, are likely to be engaged in A) inter-industry trade. B) monopolistic competition. C) intra-industry trade. D) Heckscher-Ohlin trade. E) oligopolistic competition ANSWER A
Date: September 10th, 2020
The payment of a dividend by an American company to a foreign stockholder represents A) a debit in the U.S. capital account. B) a credit in the U.S. current account. C) a credit in the U.S. official reserve account. D) a debit in the U.S. current account. ANSWER D
Date: September 10th, 2020
In the Ricardian model, comparative advantage is likely to be due to A) scale economies. B) home product taste bias. C) greater capital availability per worker. D) labor productivity differences. E) political pressure. ANSWER D
Date: September 10th, 2020
The evidence usually cited to prove that globalization hurts workers in developing countries A) is inconclusive due to poor statistical design of the underlying samples. B) is inconclusive due to the poorly funded Central Statistical Office of Mexico. C) is inconclusive due to the ambiguous theoretical implications of the findings. D) is conclusive. E) does […]
Date: September 10th, 2020
The terms of trade are A) the terms negotiated in a trade agreement. B) exports plus imports divided by GDP. C) the value of the real exchange rate. D) taxes plus transaction costs paid on imports. E) the ratio of export prices to import prices. ANSWER E
Date: September 10th, 2020
Explain Purchasing Power Parity. What will be an ideal response? ANSWER PPP states that the exchange rate between two countries’ currencies equals the ratio of the countries’ price levels. A fall in a currency’s domestic purchasing power (i.e. an increase in the domestic price level) will be associated with a proportional currency depreciation in […]
Date: September 10th, 2020
Describe the controversy surrounding the HO model and the widening of the American income gap. What will be an ideal response? ANSWER Over the past three decades, real wages in America paid to blue collar workers have only risen slightly whereas real wages paid to college graduates have risen significantly. Many pundits claim that […]
Date: September 10th, 2020
A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries, and these two countries engage in trade with each other, then we would expect A) each country will export different varieties of the product to the other. B) the country in which the price of the […]
Date: September 10th, 2020
The excess of total credits over total debits in the current and private capital accounts is called the A) BOP deficit. B) BOP surplus. C) official settlements account surplus. D) official settlements account deficit. ANSWER C
Date: September 10th, 2020
