Quiz
International Economics Exam
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Questions in this quiz (15)
1Autarky means?
- Ain the absence of government
- Bin the absence of agriculture
- Cin the absence of international trade
- Din the absence of exchange rates
2By following the principle of comparative advantage, nations can
- Aavoid the fundamental economic problem of scarcity
- Breach points outside their production possibilities frontiers
- Cavoid being forced into international trade
- Dnone of the above
3David Ricardo
- Alived in England around the turn of the sixteenth century
- Bis credited with originating the concept of comparative advantage
- Cwas unfamiliar with the work of Adam Smith, since Smith lived after Ricardo
- Dall of the above are correct.
4The following example shows the hours of labor required to produce one unit of each commodity in each country.
Australia: melons 18 - ore 36
New Zealand: melons 24 - ore 60
To Adam Smith, in this example- AAustralia should export melons and import ore
- BAustralia should export ore and import melons
- CAustralia would not find trade advantageous
- DNone of the above
5The following example shows the hours of labor required to produce one unit of each commodity in each country.
Australia: melons 18 - ore 36
New Zealand: melons 24 - ore 60
If trade occurs according to Ricardo's principle of comparative advantage,- AAustralia should export melons and import ore
- BAustralia should export ore and import melons
- CAustralia would not find trade advantageous
- DBoth countries should export melons and import ore
6The following example shows the hours of labor required to produce one unit of each commodity in each country.
Australia: melons 18 - ore 36
New Zealand: melons 24 - ore 60
New Zealand's pre-trade (autarky) melon price is- A1 melon = 0.4 ore
- B1 melon = 1.33 ore
- C1 melon = 2.5 ore
- D1 melon = 24 ore
7Gains from trade can be demonstrated in the neoclassical model by noting that
- Atrade permits a country to produce and consume on its production possibilities frontier.
- Btrade allows a country to consume at points on higher indifference curves than was possible in autarky.
- CTrade almost always leads a country to completely specialize in the production of one good.
- DNone of the above.
8In the neoclassical model, if two countries have identical production possibilities frontiers,
- Atrade will be mutually advantageous only if the international relative price of good X is the same as both countries' autarky relative price of good X.
- Btrade will not be mutually advantageous.
- CTrade will be mutually advantageous only if the two countries also have identical community indifference curves.
- DTrade will be mutually advantageous only if the two countries have different community indifference curves.
9In the neoclassical model, if demand conditions are exactly the same in countries A and B,
- Atrade will not occur.
- BTrade will occur if the countries involved have different production possibilities frontiers
- CTrade will occur only if each country completely specializes in their respective comparative advantage good.
- DTrade will occur, but each country will remain on the pre-trade (autarky) community indifference curve.
10Which of the following is not an assumption of neoclassical trade analysis?
- Afactors of production are fully employed
- Bfactors of production can move within a country easily and without cost
- Cdemand conditions in each country are the same.
- Dindividuals within an economy have reasonably similar tastes.
11Suppose in the 22nd century there are two factors of production - land and capital. If you were to read that Martian landowners were outraged at the proposed trade treaty with Earth what would you conclude about Martian relative factor abundance?
- ALand must be relatively abundant on Mars.
- BCapital must be relatively abundant on Mars.
- CLand must be relatively abundant on Earth.
- Db and c are both correct.
12In the Heckscher-Ohlin model, when trade commences
- Ain relative terms, the wage will rise in the relatively capital abundant country
- Bin relative terms, the wage will fall in the relatively capital abundant country
- Cthe relatively capital abundant country will eventually become relatively labor abundant.
- DNone of the above.
13Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge. They hope to get both sentenced to a year in prison on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to: betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent.
The better strategy:- AIf A and B each betray the other, each of them serves 2 years in prison
- BIf A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)
- CIf A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)
14 Leontief found that the United States—the most capital-abundant country in the world—exported labor-intensive commodities and imported capital-intensive commodities, in contradiction with Heckscher–Ohlin theory ("H–O theory").
- ATrue
- BFalse
15In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy.
- ATrue
- BFalse
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- International Economics Exam
- Author
- Diego Donoso Vargas
- Language
- English
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