Final_Practice__Ch5

Final_Practice__Ch5 - Chapter 5 The Standard Trade Model...

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Chapter 5 The Standard Trade Model Multiple Choice Questions 1. The concept “terms of trade” means (a) the amount of exports sold by a country. (b) the price conditions bargained for in international markets. (c) the price of a country’s exports divided by the price of its imports. (d) the quantities of imports received in free trade. (e) None of the above. Answer: C 2. A country cannot produce a mix of products with a higher value than where (a) the isovalue line intersects the production possibility frontier. (b) the isovalue line is tangent to the production possibility frontier. (c) the isovalue line is above the production possibility frontier. (d) the isovalue line is below the production possibility frontier. (e) the isovalue line is tangent with the indifference curve. Answer: B 3. Tastes of individuals are represented by (a) the production possibility frontier. (b) the isovalue line. (c) the indifference curve. (d) the production function. (e) None of the above. Answer: C 4. If P C /P F were to increase in the international marketplace, then (a) all countries would be better off. (b) the terms of trade of cloth exporters improve. (c) the terms of trade of food exporters improve. (d) the terms of trade of all countries improve. (e) None of the above Answer: B
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If P C /P F were to increase, (a) the cloth exporter would increase the quantity of cloth exports. (b) the cloth exporter would increase the quantity of cloth produced. (c) the food exporter would increase the quantity of food exports. (d) Both (a) and (c). (e) None of the above. Answer: B 6. If P C /P F were to increase, (a) world relative quantity of cloth supplied and demanded would increase. (b) world relative quantity of cloth supplied and demanded would decrease. (c) world relative quantity of cloth supplied would increases. (d) world relative quantity of cloth demanded would decrease. (e) None of the above. Answer: C 7. When the production possibility frontier shifts out relatively more in one direction, we have (a) biased growth. (b) unbiased growth. (c) immiserizing growth. (d) balanced growth. (e) imbalanced growth. Answer: A 8 . Export-biased growth in Country H will (a) improve the terms of trade of Country H. (b) trigger anti-bias regulations of the WTO. (c) worsen the terms of trade of Country F (the trade partner). (d) improve the terms of trade of Country F. (e) decrease economic welfare in Country H. Answer: D 9. Immiserizing growth is (a) likely to occur if the exporting country is poor. (b) likely to occur if the exporting country is rich. (c) likely to occur when terms of trade change. (d) likely to occur if relative supplies are elastic. (e) None of the above. Answer: E
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This note was uploaded on 01/13/2011 for the course ECON 231 taught by Professor Rus during the Spring '08 term at Waterloo.

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Final_Practice__Ch5 - Chapter 5 The Standard Trade Model...

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