ECO610 Quizzes Week 1 Quiz

Question 1

In the 2-factor, 2 good Heckscher-Ohlin model, trade will ________ the owners of a country’s ________ factor and will ________ the good that uses that factor intensively.

benefit; scarce; export

Correct!

benefit; abundant; export

benefit; scarce; import

harm; scarce; export

harm; abundant; import

Question 2

In the 2-factor, 2 good Heckscher-Ohlin model, the country with a relative abundance of ________ will have a production possibility frontier that is biased toward production of the ________ good.

Correct!

labor; labor intensive

land; capital intensive

capital; land intensive

land; labor intensive

labor; capital intensive

Question 3

Since World War II, the likelihood that the job of a new college graduate will be directly or indirectly affected by world trade

remained constant.

increased slightly before dropping off.

decreased.

fluctuated widely with no clear trend.

Correct!

increased.

Question 4

After World War II, the United States has pursued a broad policy of

strengthening “Fortress America” protectionism.

restricting trade of manufactured goods.

isolating Iran and other members of the “axis of evil.”

protecting the U.S. from the economic impact of oil producers.

Correct!

removing barriers to international trade.

Question 5

International trade can have important effects on the distribution of income because

rich countries take advantage of poor countries.

Correct!

some resources are immobile in the short run.

of government corruption.

different countries use different currencies.

the more powerful country dictates the terms of trade.

Question 6

One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that ________ is (are) identical in all countries.

factor endowments

opportunity costs

scale of production

Correct!

technology

factor intensities

Question 7

In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ________ unit labor requirements

three

Correct Answer

four

You Answered

five

one

two

Question 8

International economics ________ use the same fundamental methods of analysis as other branches of economics, because ________.

does not, the interactions associated with international economic relations is highly mathematical

does not, the level of complexity of international issues is unique

does not, international economic policy requires cooperation with other countries

does not, international economics takes a different perspective on economic issues

Correct!

does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions

Question 9

Since World War II, the likelihood that foreign markets would gain importance to average exporters as a source of profits

decreased.

increased slightly before dropping off.

remained constant.

Fluctuated widely with no clear trend.

Correct!

increased.

Question 10

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Import restrictions are the result of trade wars between hostile countries.

The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial.

Restrictions on imports can have significant beneficial effects on domestic consumers.

Correct!

Trade can have significant harmful effects on some segments of a country’s economy.

Imports are only restricted when foreign-made goods do not meet domestic standards of quality.