L5101 Midterm Solutions

L5101 Midterm Solutions - IMPORTANT Place your NAME and ID...

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1 IMPORTANT: Place your NAME and ID NUMBER on your scantron form. Economics 364H1F, Fall 2010 Assistant Professor Peter Morrow Midterm October 25th, 2010 L5101: 6:10pm-8:00pm 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. Failure to stop writing when told to do so will result in a 10 point deduction. 2. Place your NAME and ID NUMBER on your scantron form. 3. This exam has 100 points and is in two parts: Multiple Choice (13 questions @ 3 points each=39 total points) and two Long Questions (61 total points). For all questions, there is no penalty for guessing. 4. For the long question, clearly mark your final answer. 5. Failure to take the exam with the lecture in which you are enrolled will result in a 10 point deduction. 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, iPhones, 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!
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2 1) In both the Heckscher-Ohlin and Ricardian models, the gains from trade come from the fact that a) trade allows countries to expand their PPF’s. b) trade lowers the relative price of all goods that the country consumes. c) countries are no longer constrained to consume bundles on their PPFs. d) technologies flow across boarders leading to “learning-by-doing.” e) low wages abroad allow multinationals to circumvent high wages imposed by unions. 2) Assume that the Heckscher-Ohlin model holds. Canada is relatively skilled labor abundant and China is relatively unskilled labor abundant. Given a movement from autarky to free trade, the __________ theorem predicts that ____________ labor’s real and nominal wage fall in China. For both skilled and unskilled labor to gain from trade in China, there must be transfer payments from ____________ labor to __________ labor. a) Rybczynski; skilled; unskilled; skilled b) Rybczybski; unskilled; skilled; unskilled c) Stolper-Samuelson; unskilled; skilled; unskilled d) Stolper-Samuelson; skilled; unskilled; skilled e) Stolper-Samuelson; skilled; skilled; unskilled 3) Consider Canadian imports from the Albania, Germany, and the United States. The gravity model predicts that a descending ranking of imports into Canada from each is a) {Germany, United States, Albania}. b) {Albania, United States, Germany}.
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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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L5101 Midterm Solutions - IMPORTANT Place your NAME and ID...

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