If the world terms of trade for a country are somewhere between the domestic cost ratio of H and that of F, then A) country H but not country F will gain from trade. B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade. […]
As populations age, public spending tends to increase. Indicate whether the statement is true or false ANSWER TRUE
A reason why it is difficult for developing countries to maintain a cartel is that A) the elasticity of demand for a cartel’s output decreases over time. B) producers in the cartel have an economic incentive to cheat. C) economic profits discourage other producers from entering the industry. D) producers in the cartel have the […]
Even if some people are hurt by international trade, the HO model predicts that free international trade improves the standard of living for the country as a whole. Indicate whether the statement is true or false ANSWER TRUE
Complete crowding out occurs when A) monetary policy has no effect on income. B) fiscal policy has no effect on income. C) monetary policy has no effect on interest rates. D) fiscal policy has no effect on interest rates. ANSWER B
Spencer and Brander’s model highlights the existence of A) aircraft industries. B) excess returns present in highly competitive markets. C) excess returns, or rents, available in non-competitive markets. D) the futility of government bureaucrats’ attempts to build an airplane. E) natural advantages in foreign technology firms. ANSWER C
According the Stolper-Samuelson theorem, the scarce factor in any given country should oppose international trade by that country. Indicate whether the statement is true or false ANSWER TRUE
International trade based on external scale economies in both countries is likely to be carried out by A) a relatively large number of price competing firms. B) a relatively small number of price competing firms. C) a relatively small number of imperfect competitors. D) monopolists in each country. E) a large number of oligopolists in […]
In the Ricardian model, if a country’s trade is restricted, this will cause all EXCEPT which? A) limited specialization and the division of labor B) reduced volume of trade and reduced gains from trade C) nations to produce inside their production possibilities curves D) a country to produce some of the product of its comparative […]
The world of flexible exchange rates and perfect capital mobility is often called the A) Keynesian model. B) Mundell-Fleming model. C) Monetarist model. D) Melvin model. ANSWER B