Question 1

One of the criticisms against Sisira is that it deliberately keeps its currency value low against the U.S.and other developed nations,and thus amasses a trade surplus and foreign exchange reserves.According to this criticism,Sisira is acting as a

Accepted Answer

A)  mercantilist.
B)  neo-mercantilist.
C)  regional dominator.
D)  trade monopolist.
E)  capitalist.F) None of the above
G) B) and E)

Question 2

Airbus pioneered the development of the new superjumbo jet at a cost of $15 billion.It quickly obtained contracts for much of the 400 units that are expected to be ordered in the next 20 years,thereby effectively shutting out its competitor,Boeing.Airbus benefits from

Accepted Answer

A)  first-mover advantages.
B)  comparative advantages.
C)  absolute advantages.
D)  economies of scale.
E)  factor endowments.F) None of the above
G) A) and D)

Question 3

According to new trade theory,how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?

Accepted Answer

A)  Trade results in a contraction of the size of the markets of individual firms.
B)  Trade allows for production of products at higher prices.
C)  Trade increases the variety of goods available to consumers and lowers the costs of those goods.
D)  Trade allows countries to attain self-sufficiency in the production of all goods.
E)  Trade guarantees first-mover advantages to all the countries that engage in trade.F) D) and E)
G) All of the above

Question 4

The Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard interpretation,in certain circumstances the theory of comparative advantage predicts that a rich country might actually be worse off by switching to a free trade regime with a poor nation.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a result of certain products having small national markets,in the absence of trade?

Accepted Answer

A)  The variety of products available to consumers increases.
B)  Limited demand for such products leads to non-realization of economies of scale.
C)  Each nation will specialize in producing a narrower range of products than it would in the presence of trade.
D)  At low volumes of production,unit costs and prices would be lowered.
E)  The first movers in an industry may get a lock on the world market that discourages subsequent entry.F) None of the above
G) B) and E)

Question 6

In Zombia,it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice.In South Curmudgea,it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice.Zombia has a comparative advantage over South Curmedgea in

Accepted Answer

A)  both cocoa and rice.
B)  cocoa.
C)  rice.
D)  both cocoa and rice if combined.
E)  neither cocoa nor rice.F) A) and E)
G) B) and D)

Question 7

Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States?

Accepted Answer

A)  The United States imports goods that heavily use skilled labor and innovative entrepreneurship.
B)  The United States has a special advantage in producing new products made with innovative technologies.
C)  The United States exports heavy manufacturing products that use large amounts of capital.
D)  The United States has a strong absolute advantage over other nations because of its advantageous factor endowments.
E)  The United States imports goods that make intensive use of factors that are locally abundant.F) D) and E)
G) C) and D)

Question 8

Neo-mercantilists equate political power with economic power and economic power with

Accepted Answer

A)  corruption.
B)  a balance-of-trade surplus.
C)  regional dominance.
D)  a trade monopoly.
E)  capitalism.F) A) and D)
G) A) and E)

Question 9

Which of the following is true of the relationship between trade and economic growth?

Accepted Answer

A)  Countries open to international trade display higher growth rates than those that close their economies to trade.
B)  Within a group of developing countries,closed economies grow faster than open economies.
C)  The Leontief paradox notes that adopting an open economy and embracing free trade does not reward a nation with higher economic growth.
D)  Free trade hampers economic growth and leads to lower living standards in the long run.
E)  Free trade has historically benefited poor counties and hence trade barriers should be introduced to protect rich countries from exploitation.F) A) and D)
G) A) and C)

Question 10

Salcia is a country that depends heavily on domestic products.The Salcian government decides on the products that can be imported and ensures that any product that can be produced at home is not imported.A major part of Salcia's trade is concentrated on exporting agricultural produce and textiles.Which of the following influences Salcia's approach to international trade?

Accepted Answer

A)  mercantilism
B)  leontief's paradox
C)  product life-cycle theory
D)  new trade theory
E)  neo-Ricardian trade theoryF) C) and E)
G) A) and E)

Question 11

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Accepted Answer

A)  comparative advantage
B)  Heckscher-Ohlin
C)  new trade
D)  product life-cycle
E)  absolute advantageF) A) and E)
G) All of the above

Question 12

An inconsistency in the mercantilist doctrine,as pointed out by David Hume,is that

Accepted Answer

A)  the volume of a country's imports increases as an indirect consequence of mercantilism.
B)  the exclusion of government influence in matters pertaining to trade is not ideal.
C)  in the long run,no country could sustain a surplus on the balance of trade.
D)  it was not backed by either sound political principles or social ideologies.
E)  trade is a zero-sum game rather than a positive-sum game as postulated by the theory.F) A) and E)
G) B) and E)

Question 13

The economic and strategic advantages that accrue to early entrants in an industry are called

Accepted Answer

A)  first-mover advantages.
B)  comparative advantages.
C)  absolute advantages.
D)  economies of scale.
E)  factor endowments.F) C) and D)
G) A) and D)

Question 14

Which of the following creates a barrier to subsequent entries in an industry dominated by first movers?

Accepted Answer

A)  laissez-faire stance toward trade adopted by first movers
B)  iImplementation of policies to maximize imports and minimize exports
C)  specializing in the production of goods for which firms have a comparative advantage
D)  ability of first movers to benefit from increasing returns
E)  decrease in the variety of goods available to consumers and increase in the cost of existing goodsF) A) and D)
G) B) and D)

Question 15

U.S.exports are less capital-intensive than U.S.imports,despite the relative abundance of capital in the country.What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called?

Accepted Answer

A)  zero-sum game
B)  Leontief paradox
C)  positive-sum game
D)  Samuelson's critique
E)  first-mover advantageF) All of the above
G) None of the above

Question 16

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Accepted Answer

A) True 
 B)False

Question 17

Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively.Argonia exports industrial equipment to Selenia,which in turn exports chemicals and medicines to Argonia.According to the theory of comparative advantage,this mutually beneficial trade relationship best illustrates

Accepted Answer

A)  the significance of trade barriers.
B)  a positive-sum game.
C)  a first-mover advantage.
D)  the advantages of mercantilism.
E)  a zero-sum game.F) All of the above
G) A) and B)

Question 18

According to Michael Porter,government can influence each of the four components of Porter's diamond-either positively or negatively.

Accepted Answer

A) True 
 B)False

Question 19

The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Accepted Answer

A)  ethnocentrism
B)  capitalism
C)  collectivism
D)  mercantilism
E)  socialismF) All of the above
G) B) and E)

Exam 6: International Trade Theory

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Correct Answer
verified

Airbus pioneered the development of the new superjumbo jet at a cost of $15 billion.It quickly obtained contracts for much of the 400 units that are expected to be ordered in the next 20 years,thereby effectively shutting out its competitor,Boeing.Airbus benefits from

Correct Answer
verified

U.S.exports are less capital-intensive than U.S.imports,despite the relative abundance of capital in the country.What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called?

Correct Answer
verified

Which of the following creates a barrier to subsequent entries in an industry dominated by first movers?

Correct Answer
verified

The Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard interpretation,in certain circumstances the theory of comparative advantage predicts that a rich country might actually be worse off by switching to a free trade regime with a poor nation.

Correct Answer
verified

One of the criticisms against Sisira is that it deliberately keeps its currency value low against the U.S.and other developed nations,and thus amasses a trade surplus and foreign exchange reserves.According to this criticism,Sisira is acting as a

Correct Answer
verified

Which of the following is true of the relationship between trade and economic growth?

Correct Answer
verified

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Correct Answer
verified

Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States?

Correct Answer
verified

In Zombia,it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice.In South Curmudgea,it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice.Zombia has a comparative advantage over South Curmedgea in

Correct Answer
verified

According to Michael Porter,government can influence each of the four components of Porter's diamond-either positively or negatively.

Correct Answer
verified

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Correct Answer
verified

Neo-mercantilists equate political power with economic power and economic power with

Correct Answer
verified

Which of the following is a result of certain products having small national markets,in the absence of trade?

Correct Answer
verified

Correct Answer
verified

An inconsistency in the mercantilist doctrine,as pointed out by David Hume,is that

Correct Answer
verified

According to new trade theory,how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?

Correct Answer
verified

Correct Answer
verified

The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.

Correct Answer
verified

The economic and strategic advantages that accrue to early entrants in an industry are called

Correct Answer
verified

Exam 6: International Trade Theory

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Correct AnswerverifiedShow Answer

Airbus pioneered the development of the new superjumbo jet at a cost of $15 billion.It quickly obtained contracts for much of the 400 units that are expected to be ordered in the next 20 years,thereby effectively shutting out its competitor,Boeing.Airbus benefits from

Correct AnswerverifiedShow Answer

U.S.exports are less capital-intensive than U.S.imports,despite the relative abundance of capital in the country.What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called?

Correct AnswerverifiedShow Answer

Which of the following creates a barrier to subsequent entries in an industry dominated by first movers?

Correct AnswerverifiedShow Answer

The Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard interpretation,in certain circumstances the theory of comparative advantage predicts that a rich country might actually be worse off by switching to a free trade regime with a poor nation.

Correct AnswerverifiedShow Answer

One of the criticisms against Sisira is that it deliberately keeps its currency value low against the U.S.and other developed nations,and thus amasses a trade surplus and foreign exchange reserves.According to this criticism,Sisira is acting as a

Correct AnswerverifiedShow Answer

Which of the following is true of the relationship between trade and economic growth?

Correct AnswerverifiedShow Answer

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Correct AnswerverifiedShow Answer

Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States?

Correct AnswerverifiedShow Answer

In Zombia,it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice.In South Curmudgea,it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice.Zombia has a comparative advantage over South Curmedgea in

Correct AnswerverifiedShow Answer

According to Michael Porter,government can influence each of the four components of Porter's diamond-either positively or negatively.

Correct AnswerverifiedShow Answer

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Correct AnswerverifiedShow Answer

Neo-mercantilists equate political power with economic power and economic power with

Correct AnswerverifiedShow Answer

Which of the following is a result of certain products having small national markets,in the absence of trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An inconsistency in the mercantilist doctrine,as pointed out by David Hume,is that

Correct AnswerverifiedShow Answer

According to new trade theory,how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.

Correct AnswerverifiedShow Answer

The economic and strategic advantages that accrue to early entrants in an industry are called

Correct AnswerverifiedShow Answer

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