Tenta 3 OM2 Flashcards
(25 cards)
GATT is
Choose one or no option:
An authority within the European Union
An American federal agency
An international agreement
An international IMF body
An international UN body
An international agreement
The gravity model implies that over time
Choose one or no option:
trade between all countries will decrease
trade between all countries will increase
trade between neighboring countries will increase
the trade value between two countries will be proportional to the product of the two countries’ respective GDPs
trade between Earth and other planets will be extensive
the trade value between two countries will be proportional to the product of the two countries’ respective GDPs
unit labor requirements
CLOTH BALLS Home 10 20 Foreign 60 30
We have two countries, Domestic and Foreign. Two goods can be produced, cloth (meters) and balls (units). Given the information on unit labor requirements in each sector and country provided in the table above …
Choose one or no option:
None of the countries has a comparative advantage in producing balls
Domestic has a comparative advantage in producing cloth
None of the countries has a comparative advantage in producing cloth
Foreign has a comparative advantage in producing cloth
Domestic has a comparative advantage in producing both cloth and balls
Domestic has a comparative advantage in producing cloth
According to the Ricardian model, a country will have a comparative advantage in the product where its…
Choose one or no option:
labor mobility is relatively low
labor productivity is relatively high
labor mobility is relatively high
labor is outsourced to neighboring countries
labor productivity is relatively low
labor productivity is relatively high
In the specific factors model, a decrease in the food price by 5 percent, combined with a decrease in the cloth price by 5 percent, would cause ______ in the welfare of labor, ______ in the welfare of the specific factor in food production, and ______ in the welfare of the specific factor in cloth production.
Choose one or no option:
a decrease; a decrease; a decrease
a decrease; an increase; an increase
no change; no change; no change
an increase; a decrease; a decrease
an increase; an increase; an increase
no change; no change; no change
Figure
Based on the specific factors model and the figure with production possibility curves above. Assume the economy is in equilibrium at point e. If the price of good B increases, the new equilibrium will likely be at…
Choose one or no option:
point d
point e
point b
point h
point f
Point f
In the Heckscher-Ohlin model with two production factors and two goods, the country that is relatively abundant in _______ will have a production possibility curve that provides a larger output of the _______ good.
Choose one or no option:
land; capital-intensive
land; labor-intensive
labor; capital-intensive
labor; labor-intensive
capital; land-intensive
labor; labor-intensive
When there is equilibrium with international trade in the Heckscher-Ohlin model,
Choose one or no option:
the capital-abundant country will receive a higher payment for the capital-intensive good than the price the capital-scarce country receives for the capital-intensive good.
workers in the capital-abundant country will earn less than workers in the capital-scarce country.
workers in the capital-abundant country will earn more than workers in the capital-scarce country.
the capital-abundant country will earn less for the capital-intensive good than the price the capital-scarce country receives for the capital-intensive good.
the relative price of the capital-intensive good in the capital-abundant country will be the same as in the capital-scarce country.
the relative price of the capital-intensive good in the capital-abundant country will be the same as in the capital-scarce country.
If the ratio between the price of textiles and the price of food increases in the world market, the global _______.
Choose one or no option:
relative supply of and relative demand for textiles will increase
relative supply of textiles will increase
relative supply of and relative demand for textiles will decrease
relative supply of food will increase
relative demand for textiles will increase
relative supply of textiles will increase
If a large country introduces export subsidies for the goods it exports, this will lead to a _______.
worsened terms of trade for the country implementing measures
improved terms of trade for all countries
better terms of trade for the country implementing the measure
unchanged terms of trade for the country implementing the measure
higher world market price for the exported goods
worsened terms of trade for the country implementing measures
If production increases in the long term, the average production costs will _______ with internal economies of scale and _______ with external economies of scale.
Choose one or no option:
increase; remain constant
increase; decrease
decrease; decrease
decrease; remain constant
remain constant; increase
decrease; decrease
A company’s decision to make foreign direct investments is strongly influenced by _______ when it comes to horizontal FDI and by _______ when it comes to vertical FDI. Which of the following alternatives is BEST?
Choose one or no option:
material costs; labor costs
trade costs; production costs
production costs; material costs
labor costs; trade costs
production costs; trade costs
trade costs; production costs
The efficiency loss that arises from an import tariff:
Choose one or no option:
only involves a redistribution from one sector to another within the country
is due to the state’s reduced revenues
affects only companies
is due to inefficient use of a country’s resources
does not affect domestic consumers
is due to inefficient use of a country’s resources
: An export subsidy will _______ the producer surplus, _______ the consumer surplus, _______ the state budget, and _______ the total domestic welfare.
Choose one or no option:
increase; decrease; improve; have an ambiguous effect on
increase; decrease; worsen; decrease
increase; worsen; have an ambiguous effect on
increase; decrease; not affect; have an ambiguous effect on
increase; decrease; not affect; decrease
increase; decrease; worsen; decrease
According to trade theory, Japan would benefit if the USA subsidized its wheat farmers if the gains for Japanese wheat consumers are greater than the losses for Japanese wheat producers. This would be the case assuming that Japan…
Choose one or no option:
is a net importer of wheat
has extensive intra-industry trade with the USA
has a comparative advantage in wheat production
has an absolute advantage in wheat production
is overall a net importer in bilateral trade with the USA
is a net importer of wheat
Which of the following statements is most consistent with how the “infant industry” argument has been used?
Choose one or no option:
Developing economies have potential comparative advantages in the manufacturing industry
Developing economies have comparative advantages in agricultural products
Developing economies have comparative advantages in the manufacturing industry
Comparative advantages are irrelevant to economic growth
Developing economies have no chance to compete with already industrialized economies
Developing economies have potential comparative advantages in the manufacturing industry
The Brander-Spencer model suggests that subsidies lead to profits increasing by more than the subsidies themselves due to…
Choose one or no option:
the strengthening of linkage effects
the military-industrial complex
the deterrent effect on foreign competitors
the multiplier effect
economies of scale for domestic producers
the deterrent effect on foreign competitors
During the second half of the 1990s, a critical movement emerged, arguing that international trade was detrimental to…
Choose one or no option:
landowners in developing economies
the terms of trade for developing economies
landowners in industrialized economies
capital owners in industrialized economies
factory workers in both developing and industrialized economies
factory workers in both developing and industrialized economies
What is the exchange rate between the dollar and the pound if a pair of American jeans costs $60 in New York and £30 in London (and there are no barriers or associated costs with trade between countries)?
Choose one or no option:
2.5 dollars per pound
2 dollars per pound
0.5 dollars per pound
1.5 dollars per pound
3.5 dollars per pound
2 dollars per pound
Which of the following statements is MOST correct?
Choose one or no option:
An increase in the American interest rate will cause the euro to appreciate against the dollar.
For a given interest rate in the euro area and with a constant expected future exchange rate between the dollar and the euro, an increase in the American interest rate will cause the dollar to appreciate against the euro.
An increase in the American interest rate will cause the dollar to appreciate against the euro.
An increase in the American interest rate does not affect the dollar’s exchange rate against the euro.
An increase in the American interest rate will cause the dollar to depreciate against the euro.
For a given interest rate in the euro area and with a constant expected future exchange rate between the dollar and the euro, an increase in the American interest rate will cause the dollar to appreciate against the euro.
During the lectures, we combined the foreign exchange market and the money market into a unified figure for the economy’s asset markets. Assume that the USA is the home country and that there is an increase in the money supply in the USA. Which of the following options best describes the sequence and conclusion we can draw from this increase in the American money supply in this asset market figure?
Choose one or no option:
It causes the American interest rate to rise, leading the dollar to depreciate against the euro.
It causes the American interest rate to rise, leading the euro area interest rate to fall.
It causes the American interest rate to fall, leading the euro area interest rate to fall.
It causes the American interest rate to fall, leading the dollar to appreciate against the euro.
It causes the American interest rate to fall, leading the dollar to depreciate against the euro.
It causes the American interest rate to fall, leading the dollar to depreciate against the euro.
Which of the following statements BEST describes the long-term exchange rate for the dollar against the euro, all else being equal?
Choose one or no option:
An increase in demand for products produced in the euro area leads in the long term to a nominal depreciation of the dollar against the euro.
An increase in demand for products produced in the euro area leads in the long term to a nominal depreciation of the euro against the dollar.
An increase in demand for products produced in the euro area leads in the long term to a nominal appreciation of the dollar against the euro.
An increase in demand for products produced in the USA leads in the long term to a nominal depreciation of the dollar against the euro.
A decrease in demand for products produced in the USA leads in the long term to a nominal appreciation of the dollar against the euro.
An increase in demand for products produced in the euro area leads in the long term to a nominal depreciation of the dollar against the euro
in the short term, a temporary tax cut will:
Choose one or no option:
Shift the DD curve to the right, increase production, and appreciate the currency.
Shift the AA curve down/left, decrease production, and depreciate the currency.
Shift the DD curve to the left, decrease production, and depreciate the currency.
Shift the AA curve down/left, increase production, and depreciate the currency.
Shift the DD curve to the left, decrease production, and appreciate the currency.
Shift the DD curve to the right, increase production, and appreciate the currency.
Based on the AA-DD model as presented in the course literature, under the fixed exchange rate regime, which of the following statements BEST describes the short-term situation?
Choose one or no option:
A devaluation causes an increase in the money supply.
A devaluation causes a decrease in the foreign exchange reserve.
A devaluation causes a decreased money supply.
A devaluation causes a decrease in production.
A devaluation has no effect on the money supply.
A devaluation causes an increase in the money supply.
