MCQCh_02 - CHAPTER 2FOUNDATIONS OF MODERN TRADE THEORY:...

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CHAPTER 2—FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE MULTIPLE CHOICE 1. The mercantilists would have objected to: a. Export promotion policies initiated by the government b. The use of tariffs or quotas to restrict imports c. Trade policies designed to accumulate gold and other precious metals d. International trade based on open markets 2. Unlike the mercantilists, Adam Smith maintained that: a. Trade benefits one nation only at the expense of another nation b. Government control of trade leads to maximum economic welfare c. All nations can gain from free international trade d. The world's output of goods must remain constant over time 3. Unlike Adam Smith, David Ricardo's trading principle emphasizes the: a. Demand side of the market b. Supply side of the market c. Role of comparative costs d. Role of absolute costs 4. In a two-product, two-country world, international trade can lead to increases in: a. Consumer welfare only if output of both products is increased b. Output of both products and consumer welfare in both countries c. Total production of both products, but not consumer welfare in both countries d. Consumer welfare in both countries, but not total production of both products 5. As a result of international trade, specialization in production tends to be: a. Complete with constant costs--complete with increasing costs
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This note was uploaded on 01/17/2012 for the course BUSINESS BU2005 taught by Professor Smith during the Three '10 term at Bond College.

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MCQCh_02 - CHAPTER 2FOUNDATIONS OF MODERN TRADE THEORY:...

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