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
If the United States follows an expansionary monetary policy relative to Japan and Germany, which of the following is not likely to occur? A) U.S. interest rates will rise relative to Japan and Germany B) a larger U.S. capital account deficit C) a depreciation of the dollar D) lower level of U.S. income ANSWER […]
Date: September 10th, 2020
When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North South trade, such as U.S.-Mexico trade A) must help low skill workers on both sides of the border. B) is likely to hurt high-skilled workers in the U.S. C) is likely to hurt low-skilled workers […]
Date: September 10th, 2020
Intraindustry trade is characterized by what two features of the industry and market? A) Diseconomies of scale and homogeneous products B) Non-tariff barriers and large-scale foreign investment C) Quota auctions and low effective rates of protection D) Economies of scale and differentiated products E) Government subsidies and industrial policy ANSWER D
Date: September 10th, 2020
