e333_ex1_fl08_B_angel_key - Fall 2008 Version B (GREEN...

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Fall 2008 Version B (GREEN exam) Key :  The correct answers are highlighted Comments: Numbers 14, 16 and 17 were omitted due to an error in the associated graph.  Everyone will  receive full credit for those questions. Exam Name___________________________________   MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.  50 questions at  2 points each. 1) 
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In autarky  equilibriu m,  
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1) 
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_______  A) 
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production  equals consumption.   B) 
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there is no  trade.   C) 
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exports equal  imports.   D) 
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All of the  above.     2) 
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In  autarky,  when a  communit maximize s its  standard  of living,  its  consumpti on point  is  
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2)  ____ ___  o n   t h e   p r o d uc tio po ssi bil ity  fr on tie r.   be lo w the production  possibility frontier.  
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above the  production possibility frontier.   D) 
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can't tell  without more information.     3) 
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The HO  model  predicts  that once  trade  begins  factor  prices  will  equalize  between  countries.  This  result  occurs  because  of the  assumptio n of  
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3)  ____ ___  i d e n t i c a l   t e c h n o lo gy  se ts  av ail ab le  to  ea ch  co un tr y.  co nst ant opportunity costs.  
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one factor of  production.   D) 
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free  international mobility of factors.     4) 
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If  individual s have  money  illusion  then they  
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4)  ____ ___  t h i n k   t h a t  m on ey  is  w or thl es s.  ig no re  th e effects on their  income or wealth of  some price changes in  the economy.  
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they base their  production and consumption decisions on relative rather than absolute prices.   D) 
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Both B and C.     5) 
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The HO  theorem  states that  a country  will have  comparati ve  advantage  in the  good  whose  productio n is  relatively  intensive  in the  ________  with  which the  country is  relatively  abundant. 
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5)  ____ ___ 
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opportunity  costs  
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B)  tec hnol
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factor  
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D)  tast es     6) 
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The  difference  between  what  consumer s have to  pay for a  particular  good and  what they  are  willing to  pay is  known as 
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6)  ____ ___ 
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producer  surplus.  
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B)  dea dwe
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This note was uploaded on 08/25/2009 for the course ECON 333 taught by Professor Yavas,cemilepan,lu during the Fall '06 term at Pennsylvania State University, University Park.

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e333_ex1_fl08_B_angel_key - Fall 2008 Version B (GREEN...

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