The proposal that trade agreements should include a system which monitors worker conditions and make the results available to consumers in the rich importing country A) is consistent with the Invisible Hand paradigm. B) is consistent with the market failure approach. C) is consistent with the Ricardian theory of comparative advantage. D) is consistent with […]
If the goods’ money prices do not change, a depreciation of the dollar against the pound A) makes British sweaters cheaper in terms of American jeans. B) makes British sweaters more expensive in terms of American jeans. C) makes American jeans more expensive in terms of British sweaters. D) doesn’t change the relative price of […]
Discuss the relationship between PPP and the Law of One Price. What will be an ideal response? ANSWER The law of one price applies to individual commodities while PPP applies to the general price level. Proponents of PPP argue that its validity in the long run doesn’t require the law of one price to […]
One reason that a large share of the trade between high-income industrial economies is intraindustry trade is because A) it is more advantageous than interindustry trade. B) high-income industrial economies produce in the first stage of the product cycle. C) high-income industrial economies are wealthier than developing countries. D) high-income industrial economies have dissimilar resource […]
The United States international investment position is negative. Indicate whether the statement is true or false ANSWER TRUE
Import substitution industrialization in Latin America A) relied on increased exports. B) provided subsidies for exports. C) shifted the bulk of exports away from primary commodities. D) created disincentives to export. E) Answers A and C are correct. ANSWER D
MacDougall compared export ratios and labor productivity ratios for the United States and the United Kingdom in order to test the A) classical theory. B) the Heckscher-Ohlin theory. C) the Linder hypothesis. D) All of the above. ANSWER A
Latin America has more trade agreements than any other region, and it has some of the oldest as well. Indicate whether the statement is true or false ANSWER TRUE
To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called A) export-led growth. B) generalized system of preferences. C) Most Favored Nation. D) reciprocal trade agreement. E) outsourcing. ANSWER B
Explain how free international trade tends to lead to factor price equalization under the assumptions of the HO model. What does this process predict about which groups should be in favor of or opposed to free international trade? What will be an ideal response? ANSWER Free international trade leads in each country to the […]
