$8.$ The gravity model explains why:

$($a$)$ Trade between Sweden and Germany exceeds that between Sweden and Spain.

$($b$)$ Countries with oil reserves tend to export oil.

$($c$)$ Capital$-$rich countries export capital$-$intensive products.

$($d$)$ Intra$-$industry trade is relatively more important than other forms of trade between neighboring countries.

$($e$)$ None of the above.

$9.$ Trade between two countries can benefit both countries if:

$($a$)$ Each country exports that good in which it has a comparative advantage.

$($b$)$ Each country enjoys superior terms of trade.

$($c$)$ Each country has a more elastic demand for the imported goods.

$($d$)$ Each country has a more elastic supply for the supplied goods.

$($e$)$ Both $($c$)$ and $($d$).$

$10.$ In a two$-$country, two$-$product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to:

$($a$)$ France having a comparative advantage over Germany in ships.

$($b$)$ France having a comparative disadvantage compared to Germany in autos and ships.

$($c$)$ Germany having a comparative advantage over France in autos and ships.

$($d$)$ France having no comparative advantage over Germany.

$($e$)$ None of the above.

$11.$ In the $2-$factor, $2-$good Heckscher$-$Ohlin model, the two countries differ in:

$($a$)$ Tastes.

$($b$)$ Military capabilities.

$($c$)$ Size.

$($d$)$ Relative availabilities of factors of production.

$($e$)$ Labor productivities.

$12.$ In the $2-$factor, $2-$good Heckscher$-$Ohlin model, a change from autarky $($no trade$)$ to trade:

$($a$)$ Will tend to make the wages in both countries more similar.

$($b$)$ Will equalize the wages in both countries.

$($c$)$ Will tend to make the wages in both countries less similar.

$($d$)$ Will tend to make wages equal to returns to capital.

$($e$)$ Will tend to make rents equal to interest rates.

$13.$ According to the Heckscher$-$Ohlin model:

$($a$)$ Everyone automatically gains from trade.

$($b$)$ The scarce factor necessarily gains from trade.

$($c$)$ The gainers could compensate the losers and still retain gains.

$($d$)$ A country gains if its exports have high value$-$added.

$($e$)$ None of the above.

$14.$ Starting from an autarky $($no$-$trade$)$ situation with the Heckscher$-$Ohlin model, if Country H is relatively labor abundant, then once trade begins:

$($a$)$ Wages and rents should rise in H$.$

$($b$)$ Wages and rents should fall in H$.$

$($c$)$ Wages should rise and rents should fall in H$.$

$($d$)$ Wages should fall and rents should rise in H$.$

$($e$)$ None of the above.

$15.$ The Heckscher$-$Ohlin model differs from the Ricardian model of Comparative Advantage in that the former:

$($a$)$ Has only two countries.

$($b$)$ Has only two products.

$($c$)$ Has two factors of production.

$($d$)$ Has two production possibility frontiers $($one for each country$).$

$16.$ The concept "terms of trade" means:

$($a$)$ The amount of exports sold by a country.

$($b$)$ The price conditions bargained for in international markets.

$($c$)$ The price of a country's exports divided by the price of its imports.

$($d$)$ The quantities of imports received in free trade.

$($e$)$ None of the above.

$17.$ When the production possibility frontier shifts out relatively more in one direction, we call it:

$($a$)$ Biased growth.

$($b$)$ Unbiased growth.

$($c$)$ Immiserizing growth.

$($d$)$ Balanced growth.

$($e$)$ Imbalanced growth.

$18.$ An important difference between tariffs and quotas is that tariffs:

$($a$)$ Determine the price of the good.

$($b$)$ Generate tax revenue for the government.

$($c$)$ Stimulate international trade.

$($d$)$ Help domestic producers.

$($e$)$ None of the above.

$19.$ The fact that industrialized countries levy very low or no tariff on raw materials and semi$-$processed goods:

$($a$)$ Helps developing countries export manufactured products.

$($b$)$ Has no effect on developing country exports.

$($c$)$ Hurts developing country efforts to export manufactured goods.

$($d$)$ Hurts developing country efforts to export raw materials.

$($e$)$ None of the above.

$20.$ The effective rate of protection measures:

$($a$)$ The "true" ad valorem value of a tariff.

$($b$)$ The quota equivalent value of a tariff.

$($c$)$ The efficiency with which the tariff is collected at the customhouse.

$($d$)$ The protection given by the tariff to domestic value$-$added.

$($e$)$ None of the above.