Exam 3 - International Trade Texas A&M University...

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Exam III Texas A&M University ECON 452-500 Spring 2006 Prof: Diego Vacaflores Name: ____________________________________________________ Code:________________ 1. In theory, labor mobility is (a) a complete complement to trade flows. (b) a partial complement to trade flows. (c) a complete substitute for trade flows. (d) a partial substitute for trade flows. (e) None of the above. 2. Because the marginal product of labor declines as labor increases, then the income earned by landowners (a) increases as less labor is employed to produce the given good. (b) increases whenever the country opens up to trade. (c) decreases always – workers are better organized and thus can accrue part of those rents by lobbying the government more efficiently. (d) decreases as less labor is employed to produce a given good. (e) is positively related to changes in the real wage. 3. Labor moves from countries where it is relatively abundant to countries where it is relatively scarce. This movement (a) increases cultural ties, and consequently trade levels. (b) raises total world output because of differences in marginal productivity of labor. (c) does not have any significant effect on total world output. (d) raises domestic output in both countries, and consequently total world output too. (e) explains the divergence in real wages observed in countries with different labor abundance. 4. American labor unions have recently maintained that U.S. multinational corporations have been (a) exporting American jobs by investing overseas. (b) exporting American jobs by keeping investment in the United States. (c) importing cheap foreign labor by shifting U.S. investment overseas. (d) importing cheap foreign workers by keeping U.S. investment at home.
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Exam 3 - International Trade Texas A&M University...

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