Exam _1 ANSWERS

Exam _1 ANSWERS - Name(Last name first name SID GSI UGBA...

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Exam #1 (Fall 2009) 1/14 Name: _________________________ (Last name, first name) SID: _________________________ GSI: _________________________ UGBA 118 Econ C181/EnvEcon C181 International Trade Professor Steven Wood Fall 2009 Exam #1 ANSWERS Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test with any other students until after 5:00 p.m. on October 13, 2009. _______________________________________ Signature Any test turned in without a signature will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: 1. Completely , clearly and accurately label all axis, lines, curves, and equilibrium points. 2. The original diagram and equilibrium points MUST be drawn in black or pencil. 3. The first shift of any line(s) and the new equilibrium points MUST be drawn in red. 4. The second shift of any line(s) and new equilibrium points MUST be drawn in blue. 5. The third shift of any line(s) and new equilibrium points MUST be drawn in green. Do NOT open this test until instructed to do so. Good Luck!

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Exam #1 (Fall 2009) 2/14 A. Multiple Choice Questions . Circle the letter corresponding to the best answer (3 points each; total of 30 points.) 1. In antiquity, China exported silk because no other country knew how to produce silk. This implies that: a. China enjoyed a comparative advantage in silk. b. There was no comparative advantage because no other country knew how to produce silk. c. China enjoyed an absolute advantage but not a comparative advantage in silk. d. China had to export silk even though it had no comparative advantage. 2. A country will be able to consume a bundle of goods that is not attainable solely from domestic production only if: a. The world terms of trade equal the domestic relative costs. b. The world terms of trade differ from its domestic relative costs. c. The country exports the good in which it has a comparative advantage. d. The country completely specializes in the good in which is has a comparative advantage. 3. The introduction of an export subsidy will: a. Help consumers and raise the overall economic welfare of the exporting country. b. Help consumers but lower the overall economic welfare of the exporting country. c. Hurt consumers and lower the overall economic welfare of the exporting country. d. Hurt consumers but still raise the overall economic welfare of the exporting country. 4. If the United States, a large country, has a higher marginal propensity to spend on its imports compared to its marginal propensity to spend on either its exports and non-traded goods, then a transfer of income from the U.S. to poor countries in Latin America will: a. Worsen the U.S.’s terms of trade. b.
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Exam _1 ANSWERS - Name(Last name first name SID GSI UGBA...

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