Exam 3 - IMPORTANT: Place your NAME, FORM NUMBER and ID...

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IMPORTANT: Place your NAME, FORM NUMBER and ID NUMBER on your scantron form. Economics 328Y1Y, Fall 2007 Professor Peter Morrow Exam 1 October 24th, 2007 10:10am-12:10pm FORM 1 Fill in the information below: Name______________________________ Student ID _________________________ INSTRUCTIONS 1. Do not open this exam until you are told to do so. STOP work immediately when told to do so. 2. Place your NAME, FORM NUMBER, and your ID NUMBER on your scantron form. 3. This exam has 100 points and is in two parts: Multiple Choice (19 questions @ 3 points each=57 total points) and Long Question (43 total points). For all questions, there is no penalty for guessing. 4. For the multiple choice section, choose the best answer. 5. For the long question, box your final answer. 6. Your scantron will not be returned to you. Be sure to mark your answers on the exam booklet so that you will later have a record of your answers. 7. You are allowed to use simple (non-programmable) calculators. Programmable calculators are forbidden. Cell phones, blackberrys, PDA’s, IPODs, and all devices that can contain programmable information are forbidden. 8. Do not cheat. If you are caught cheating, I will penalize you to the greatest extent allowed by the University. Possession of any forbidden item will be construed as cheating. GOOD LUCK! 1
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Multiple Choice Questions (57 Points) 1) Suppose that we observe that Belgium only produces diamonds each of which cost $100. Columbians only produce cups of coffee that cost $1.00. A given Belgian worker can produce 100 diamonds per year. A given Colombian can produce 1000 cups of coffee per year. The Ricardian model predicts that the relative nominal wage of a Belgian worker to a Colombian worker will be: a. 0.01 b. 0.10 c. 10 d. 100 e. 1000 2) In the Ricardian model, the ______ is flat and horizontal. a. relative factor demand curve. b. SS curve. c. PPF. d. world relative supply curve. e. autarky relative supply curve. 3) For the statement “everyone gains from trade” to be true, which of the following statements must be true? a. Everyone gains from trade so this statement is always true. b. Winners win by the same amount as losers lose. c. There must be transfer payments from the winners to losers. d. There must be transfer payments from the losers to the winners. e. Even with transfer payments, free trade can never make everyone better off. 4) Assume that we are dealing with the basic Ricardian model. There are two countries X Y A 0.5 0.2 B 0.1 0.4 In free trade, the relative price of one unit of X in terms of Y must be between ____ and ____. a. 0.2,2.5 b. 0.2,4 c. 0.25,25 d. 2.5,25 e. 0.25,2.5 2
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5) What determines whether a country will have an overall trade deficit? a. unit labor requirements in accordance with the Ricardian model.
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This note was uploaded on 03/27/2011 for the course ECO 364 taught by Professor Petermorrow during the Fall '10 term at University of Toronto.

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Exam 3 - IMPORTANT: Place your NAME, FORM NUMBER and ID...

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