Falltest1B Answerkey

Falltest1B Answerkey - ECON 460-01 &02; Fall 2010 Test...

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ECON 460-01 &02; Fall 2010 Test 1B On my honor, I have neither given nor received unauthorized aid on this test: ______________ SECTION I: Multiple Choice Questions (3 points each) 1. If two countries with increasing opportunity costs have identical PPFs but different tastes with country I having a higher relative preference for good Y, then a. the relative price of good X will be higher in country I and it will import good X. b. the relative price of good X will be higher in country II and it will import good X. c. the relative price of good X will be higher in country I and it will export X. d. the relative price of good X will be higher in country II and it will export X 2. Suppose that a country in the Classical model has the following production- possibilities frontier (PPF): If, in autarky, the country is producing 700 computers and is located at point M on the PPF, the country would be producing __________ autos. If the country is now opened to trade at a terms of trade of 1 auto: 2 computers (or 1 computer: 0.5 auto), it would export __________. a. 120; autos b. 120; computers c. 280; autos d. 280; computers 3. If at the above trade price, the country consumes 750 computers and 125 autos, this country will a. export 275 autos and import 750 computers. b. export 250 computers and import 275 autos. c. export 375 autos and import 750 computers. d. export 250 computers and import 125 autos. 4. As a country moves from autarky to trade, the relative price of the country’s export good will __________ for home consumers, and the relative price of the country’s import good __________ for home consumers. a. fall; will rise b. fall; also will fall c. rise; also will rise d. rise; will fall 1
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5. US exports corn to Canada and imports Canadian wheat. If corn is measured on the X axis, an increase in demand for Canadian wheat in the US is shown as a a. leftward shift in the OC for Canada resulting in an increase in the relative price of corn. b. rightward shift in the OC for the US resulting in a decrease in the relative price of corn. c. rightward shift in the OC for Canada resulting in a decrease in the relative price of corn.
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This document was uploaded on 10/28/2011 for the course ECON 460 at UNC.

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Falltest1B Answerkey - ECON 460-01 &02; Fall 2010 Test...

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