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Unformatted text preview: METU/FEAS 28.10.2009 Econ 353 Hakan ERCAN Tuna GONULDAS Gorkem KARABAYIR PROBLEM SET 1 PART A: MULTIPLE CHOICE QUESTIONS 1) The mercantilists would have objected to: a) Export promotion policies initiated by the government b) The use of tariffs or quotas to restrict imports c) Trade policies designed to accumulate gold and other precious metals d) International trade based on open markets 2) Unlike the mercantilists, Adam Smith maintained that: a) Trade benefits one nation only at the expense of another nation b) Government control of trade leads to maximum economic welfare c) All nations can gain from free international trade d) The worlds output of goods must remain constant over time 3) The trading principle formulated by Adam Smith maintained that: a) International prices are determined from the demand side of the market b) Differences in resource endowments determine comparative advantage c) Differences in income levels govern world trade patterns d) Absolute cost differences determine the immediate basis for trade 4) Unlike Adam Smith, David Ricardos trading principle emphasizes the: a) Demand side of the market b) Supply side of the market c) Role of comparative costs d) Role of absolute costs 5) When a nation requires fewer resources than another nation to produce a product, the nation is said to have a (an): a) Absolute advantage in the production of the product b) Comparative advantage in the production of the product c) Lower marginal rate of transformation for the product d) Higher opportunity cost of producing the product 6) A nation that gains from trade will find its consumption point being located: a) Inside its production possibilities curve b) Along its production possibilities curve c) Outside its production possibilities curve d) None of the above 7) The trading-triangle concept is used to indicate a nations: a) Exports, marginal rate of transformation, terms of trade b) Imports, terms of trade, marginal rate of transformation 1 c) Marginal rate of transformation, imports, exports...
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This note was uploaded on 05/26/2010 for the course ECON 353 taught by Professor Erol during the Spring '10 term at Middle East Technical University.
- Spring '10
- International Economics