The earliest statement of the principle of comparative advantage is associated with

B) David Ricardo.

 A) David Hume_

C) Adam Smith

D) Eli Heckscher

 E) Bertil Ohlin

2 * The comparative advantage is measure by

cost

none of above

both

opportunity cost

3-Suppose that in the U.S. 10 million roses can be produced with the same resources as 100,000 computers. Suppose also that in Columbia 10 million roses can be produced with the same resources as 30,000 computers. Which of the following statements are right ones?

a)Columbia has comparative advantage in growing roses.

B)U.S has compartive advantage in producing computers.

 c)U.S. has lower opportunity cost of producing computers.

d)Columbia has lower opportunity cost of producing roses.

 

 

Revival

3) 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.

A) factor endowments

D) technology

C factor intensities

E) opportunity costs

B) scale of production

17) If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries,

E) relative product prices would diverge between Australia and Belgium.

 D) the relative price of the capital-intensive product would decrease in Belgium.

C) the relative price of the land-intensive product would increase in Belgium.

B) the relative price of the capital-intensive product would increase in Australia.

A) the relative price of the land-intensive product would increase in Australia.

18) If Australia has more land per worker, and Belgium has more capital per worker,then if trade began between these two countries,

E) the real income of labor in both countries would decline.

D) the real income of labor in Belgium would decline.

A) the real income of landowners in Belgium would decline.

C) the real income of labor in Australia would decline.

B) the real income of capital owners in Australia would increase.

8)Assume that only two countries, A and B, exist.

Factor endowments	Country a	Country B
Labor force	45	20
Capital stock	15	10

Refer to the table above. If good S is capital intensive, then following the Heckscher-Ohlin Theory,

E) both countries will import good

 B) country A will export good

C) both countries will export good

A) country B will export good

D) trade will not occur between these two countries.

9) 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.

D) land; capital intensive

A) labor; labor intensive

C) land; labor intensive

E) capital; land intensive

B) labor; capital intensive

4) According to the Heckscher-Ohlin model,

E) only the country with the more advanced technology gains from trade.

A) the gainers from trade could compensate the losers and still retain gains.

B) everyone gains from trade.

D) a country gains from trade if its exports have a high value added.

C) the scarce factor gains from trade and the abundant factor loses.

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.

A) benefit; abundant; export

 D) benefit scarce; import

E) harm: scarce: export  

B) harm: abundant; import

C) benefit: scarce export

34) Suppose that there are two factors, capital and land, and that the United States is relatively land endowed while the European Union is relatively capital-endowed. According to the Heckscher-Ohlin model,

A) European capitalists should support U.S.-European free trade.

C) all capitalists in both countries should support free trade.

E) the U.S. should compensate European countries once trade commences.

B) European landowners should support U.S.-European free trade.

D) all landowners should support free trade.

Revival 04

What is the expected dollar rate of return on euro deposits with today's exchange rate at S1.10 per euro, next year's expected exchange rate at S1.166 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%?

B)11%

C)-1%

E) 15%

A) 10%

0) 0%

 If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then an investor should

B) invest only in euros.

A) invest only in dollars.

 E) invest only in euros if the exchange rate is expected to remain constant.

 D) invest only in dollars if the exchange rate is expected to remain constant.

C) be indifferent between dollars and euros.

3) Suppose that the one-year forward price of euros in terms of dollars is equal to S1.113 per euro. Further, assume that the spot exchanee rate is S1.05 per euro, and the interest rate on dollar deposits is 10 percent and on euro it is 4 percent. Under these assumptions,

B) interest parity does hold.

 A) interest parity does not hold.

 E) interest parity fluctuates.

D) Not enough information is given to answer the question.

 C) it is hard to tell whether interest parity does or does not hold.

4)Which one of the following statements is the most accurate?

C) A rise in the interest rate offered by dollar deposits does not affect the U.S. dollar.

 D) For a given euro interest rate and constant expected exchange rate. a rise in the interest rate offered by dollar deposits causes the dollar to appreciate.

 A)A rise in the interest rate offered by dollar deposits causes the dollar to appreciate.

E)A rise in the interest rate offered by the dollar causes the euro to appreciate.

B)A rise in the interest rate offered by dollar deposits causes the dollar to depreciate.

Ricardian

1 The Ricardian model demonstrates that

E) trade between two countries always benefits the country with a larger labor force.

D) trade between two countries may benefit one but harm the other.

A) trade between two countries will benefit both countries.

B) trade between two countries may benefit both regardless of which good each exports.

C) trade between two countries may benefit both if each exports the product in which it has a comparative advantage.

2 The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

B) differences in preferences.

D) differences in resources.

A) differences in technology.

 C) differences in labor productivity.  

E) gravity relationships among countries.

3 The earliest statement of the principle of comparative advantage is associated with

D) Eli Heckscher.

B) David Ricardo.

C) Adam Smith.

A) David Hume.

E) Bertil Ohlin.

5 A country engaging in trade according to the principles of comparative advantage gains from trade because it

 A) is producing exports indirectly more efficiently than it could alternatively.

E) is producing exports while outsourcing services.

B) is producing imports indirectly more efficiently than it could domestically.

D) is producing imports indirectly using fewer labor units.

6)

Unite labour requirements	cloth	widget
home	10	20
foreign	60	30

 Given the information in the table above, if it is ascertained that Foreign uses labor to produce its exports, then home

C) export both and import nothing.

E) export widgets and import cloth.

B) export widgets.

A) export cloth.

D) export and import nothing.

7)

Unite labour requirements	cloth	widget
home	10	20
foreign	60	30

Given the information in the table above. if the Home economy suffered a meltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

C) export both and import nothing.

D) export and import nothing.

A) export cloth

B) export widgets.

E) export widgets and import cloth.

8) 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

B) two

D) four

C) three

A) one

E) five

Answer rating: 100% (QA)

1 David Ricardo 2 opportunity cost 3 Columbia has lower opportunity cost of producing ro... View the full answer