If the goods’ money prices do not change, an appreciation 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) doesn’t change the relative price of sweaters and jeans. D) makes American jeans cheaper in terms of […]
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 […]
An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade such that the combined market is supplied by one country’s industry, then A) consumers in both countries would have more varieties and lower prices. B) consumers in both countries would have higher prices and fewer varieties. […]
A(n) ________ of a nation’s currency will cause imports to ________ and exports to ________, all other things held constant. A) depreciation; increase; decrease B) appreciation; decrease; increase C) depreciation; decrease; increase D) appreciation; increase; increase E) depreciation; decrease; decrease ANSWER C
The relatively rapid economic growth experienced by Chile in the late 1980s A) supported the conventional Latin American reliance on import substitution. B) relied on the Harris-Todaro model to explain this growth. C) rejected the conventional Latin American reliance on import substitution. D) demonstrated the importance of market failure as a reason for import substitution. […]
Let us define the real wage as the purchasing power of one hour of labor. In the Ricardian 2X2 model, if two countries under autarky engage in trade then A) the real wage will not be affected since this is a financial variable. B) the real wage will increase only if a country attains full […]
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 […]
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 […]
