国际经济学

Part A: Mulitpile-choice Questions

1. The classical, or Ricardian, theory of international trade explains

a. how goods produced in high wage countries like the United States or Japan can compete in world markets with products produced in lower wage countries.

b. How developed and developing countries can trade with each other and both benefit.

c. How a country that is the more efficient producer of a good can benefit from not producing it but rather trading for the product with a less efficient producer.

d. All of the above

2. When country A produces both goods more efficiently than country B,

a. country A should produce both goods and not trade

b. country A should specialize in its good of least absolute disadvantage

c. both countries would benefit from autarky

d. both countries can benefit from specialization and trade

3. The slope of a country’s PPF reflects

a. the opportunity cost of S in terms of T

b. the opportunity cost of Tin terms of S

c. both a and b

d. none of the above

4. The H-0 theory states

a. a country should export the good with the highest output per unit of labor.

b. A country will export the good that requires more intensive use of its abundant factor.

c. A country should import the good that uses capital most intensively.

d. A country should export the factor that receives a higher wage in the other country.

5. If two countries had exactly the same factor endowments in addition to identical tastes, what trade patterns would occur according to the H-O theory?

a. trade would be determined solely by technology, with each country exporting the good for which it has a technological advantage.

b. Each country would export the good with the lower relative price.

c. Both countries would export the same good.

d. The two countries would have the same PPF; there would be no gains from trade; and hence trade would not occur.

6. Which of the following statements about the H-O model is false?

a. in trade equilibrium, there will be a single international relative price

b. Only demand conditions affect the equilibrium price, supply conditions are irrelevant

c. The equilibrium price will be determined according to reciprocal demand

d. Graphically, the international relative price (line) makes up part of the trade triangles of the two countries.

7. The Rybcaynski theorem

a. says that a country with a high investment rate will tend to produce more capital intensive goods for its own use and will trade its labor intensive goods

b. describes the effect of trade on the payments to factors

c. says that a country with a high investment rate will tend over time to produce and trade more capital intensive goods

d. states that free international trade will lead to the international equalization of individual factor prices

8. The factor price equalization theorem

a. states that given all of the assumptions of the H-O model (including equal labor productivity across countries), free trade will lead to equal factor prices

b. proves that international trade theory has nothing to do with reality

c. means that all factors will lose from free international trade

d. both b. and c.

9. The Stolper Samuelson theorem

a. describes the effect of trade on the payments to factors.

b. Says that scarce factors will gain from trade while the abundant factors will lose with trade.

c. Implies that even though the abundant factor’s payment decreases with trade, it is possible for the scarce factor (who gains) to compensate the losers and have all factors better off with trade.

d. All of the above.

10. Leontief found

a. equal labor productivity in the US and British

b. the US to be abundant in natural resources

c. US imports to be more capital intensive than US exports

d. US imports to be more labor intensive than US exports

11..The Bretton Woods Conference

a. established rules for freely floating exchange rates

b. enabled the US to close the gold window

c. established the gold exchange standard, among other things

d. prompted a run on US gold holdings

12. The International Monetary Fund

a) was responsible for all international gold reserves after WWⅡ

b) financed the Marshall Plan

c) controlled all foreign exchange transactions world-wide

d) was created to ensure the smooth operation of the gold exchange standard

13. The existence of intra-industry trade

a. is inconsistent with the HO theory

b. can sometimes be explained by transportation costs

c. is impossible with imperfect competition

d. none of the above

14. Nontariff barriers (NTBs) include all of the following except

a. quotas b.tariffs c.subsidies d.health and safety standards

15. Which of the following is false?

a. according to WTO rules, export quotas are generally prohibited.

b. quotas can be specified by quantity or value.

c. an embargo is a quota set at zero imports

d. a voluntary export restraint is very different than a quota and has a dissimilar impact on welfare.

16. Unallocated global quotas are relatively uncommon because

a. they are prohibited by the GATT

b. they are impossible to monitor and control

c. they result in inefficient use of cargo facilities

d. they are greatly preferred by exporting countries

17. All of the following are forms of export subsidies except

a. government-funded research and development

b. tax rebates of tax credits

c. insurance guarantees or guarantees against losses

d. protection of intellectual property rights

18. Quota are most costly to domestic welfare when

a. quota licenses are auctioned by the government to the highest bidder

b. quota licenses are given to domestic producers or importers

c. quota licenses are given to foreign exporters

19. In an economy with fully employed factors, neutral economic growth requires

a. proportional expansion of the production possibility frontier

b. growth in the supply of only the scarce factor

c. the sum of the income elasticities must equal one

d. the increase in production must be greater than the increase in consumption

20. Government spending and taxes are examples of a government’s

a. fiscal policy

b. foreign policy

c. monetary policy

d. trade policy

21. The \"Ditch Disease’ refers to

a. a commodity boom that brings about an overall economic downturn

b. export promotion policies that fail in an economy with unemployed factors

c. a decline in commodity prices that brings about overall economic growth

22. The study of international trade in financial assets is called:

a. international finance b. international monetary economics

c. international trade d. both a and b

23. A trade surplus occurs when:

a. A country sells more merchandise to the rest of the world than it buys.

b. Exports of bonds exceed bond imports.

c. The balance of payments has a surplus.

d. More money comes in to the country than goes out.

24. The price in the foreign exchange market is called:

a. the trade surplus b.the money price c. the exchange rate d. the currency rate

25. A current account deficit

a. implies the country is a net borrower with the rest of the world

b. is always bad

c. implies a matching capital account deficit

d. is very rare for most countries

26. In balance of payments accounting, a credit

a. is entered for exported goods b.sends foreign exchange out of the country

c. results in a demand for foreign exchange d. none of the above

27. All of the following are international reserves except

a. SDRs b.Gold c.Foreign credits not yet received d.Foreign exchange

28. PPP means

a. exchange rates are the same in different foreign exchange markets at any given time

b. interest rates will be the same across countries at any given time

c. exchange rates will adjust to offset differing inflation rates between countries

d. the law of one price will never hold

29. Suppose the French inflation rate this next year will be 4%, and British inflation will be 6%. The current exchange rate is FF/￡ = 4.000. If relative PPP holds, wi should expect next year’s FF/￡ exchange rate to be

a. 3.9216 b. 4.0800 c. 4.1600 d. 4.2400

30.An efficient market is one where

a. the spread is zero b.all available information is reflected in prices

c. prices don’t change

d. a well-informed investor can make consistent profits without undertaking substantial exchange risks

31. Which item below is not included in Gross National Product of France?

a. The value of a new factory built outside Paris for a French construction company

A Japanese company’s profits that come from manufacturing and selling bicycles in France

c. A French company’s profits that come from operating an appliance factory in Thailand

d. The value of French champagne that is sold in Italy

32. Which region of world has seen its share of world exports rise over

the past quarter century?

a. North America b.Latin America c.Asia d.Africa

33. An answer to a question such as, \"What would be the effect on US

consumption of imported European beers if we imposed an additional 20% tariff on their import?\" is called

a. positive analysis b.Normative analysis c. Descriptive analysis d.Prescriptive analysis

34.The use of real GDP rather than nominal GDP allows us to

a. Measure the value of output in a given year at constant prices

b. Compare changes in real output rather than changes in prices

c. Derive growth in per capita real GDP by subtracting the population growth rate from the growth in real GDP

d. All of the above

35.The increase in the level of world production that would occur when countries

specialized in the production of just a few goods is based on the principle of

a. The international division of labor b.Our belief

c. Mercantilism d.Balanced trade

36. If tow countries had exactly the same factor endowments in addition to identical tastes, what trade patterns would occur according to the HO theory?

a. Trade would be determined solely by technology, with each country

exporting the good for which it has technological advantage

b. Each country would export the good with the lower relative price

c. Both countries would export the same good

d. The two countries would have the same PPF; there would be no gains from trade; and hence trade would not occur

37. The Stolper-Samuelson theorem

a. describes the effect of trade on the payments to factors

b. says that scarce factors will gain from trade while the abundant factors will lose with trade

c. implies that even though the abundant factors payment decreases with trade, it is possible for the scarce factors(who gains)to compensate the losers and have all factors better off with trade

d. all of the above

Questions 8-10 are based on the following table.

Suppose two countries have labor inputs as shown in the table below.

Country A Country B

S 9hrs. 4hrs.

T 12hrs. 3hrs.

38.Based on the information in this table, country B has

a. Absolute advantage in the production of both goods

b. Comparative advantage in the production of both goods

c. Absolute disadvantage in the production of S

d. Comparative advantage in the production of S

39.According to the table, country A has comparative advantage in the production of

a. Good S b.Good T c.Both goods d.Neither good

40.In this example, the equilibrium terms of trade could occur anywhere

a. Between 3/4 and 5/4 b.Between 3/4 and 4/3

c. Between 1/3 and 4/3 d. Between 1/2 and 3/4

41.If Brazil imposes a 50% tariff on automobiles and a 25% tariff on motors, the

effective rate of protection on autos is

a. higher than the nominal rate of protection on autos

b. lower than the nominal rate of protection on autos

c. equal to the nominal rate of protection on autos

d. need more information to answer

42.Which of the following is not a characteristic of constant returns to scale in

production in the classical mode of trade?

a. A fixed ratio between the quantity of labor employed in production and the amount of output produced

b. Each successive unit produced requires a larger input of labor than the last unit

c. Constant opportunity cost in production

d. A straight line production function

43.The Hechscher-Ohlin(HO)theorem states

a. A country should export the good with the highest output per unit of labor

b. A country will export the good that requires more intensive use of

its abundant factor.

c. A country should import the good that used capital most

intensively

d. A country should export the factor that receives a higher wage in

the other country.

44. Which of the following correctly describes a relatively capital intensive good?

a. The total amount of capital used in production is greater than the

amount of labor required

b. The capital used per unit of labor is greater than for the other good

c. It used a larger total amount of capital than the production of the

other good

d. The value of the capital input is greater than the value of the labor input

45. Nontariff barriers(NTBS) include all of the following except

a. Quotas b.Tariffs c.Subsidies d.Health and safety standards

46.Some economists believe differences in capital and labor are not as important as

endowments of skilled and unskilled labor. Comparative advantage based on human skill means

a. relatively low-wage countries will always have an advantage over high-wage countries

b. countries with relatively large endowments of highly skilled labor will have comparative advantage in products that are relatively intensive in skilled labor

c. both a and b

d. none of the above

Question 477-49 are based on the following information:

A domestic producer of gas-powered lawn-mowers asks the government for and receives protection in the form of a tariff of $50 each on imports of gas-powered lawnmowers. The free trade price of each lawnmower is $200.Each domestic lawnmower produced requires $100 worth imported components, on which there has always been a tariff of 10%.

47.The tariff on lawnmowers is

a. an ad valorem tariff b.a revenue tariff

c.a compound tariff d.a specific tariff

48.The nominal rate of protection on lawnmowers is approximately

a. 50% b.20% c.55% d.25%

49.The effective rate of protection on lawnmowers is approximately

a. 50% b.20% c.40% d.25%

50.When demand increased for a good subject to a quota,

a. Imports would stay the same but the price would rise

b. The price would stay the same but imports would increase

c. The supply curve shifts outward at the world price

d. The price wouldn’t change since imports ensure competition

51. If the relative price of S in terms of T is 2 and S has a nominal price of $1,then

the nominal price of T is

a. $2 b.50 cents c.0.5S d.need more information to answer

52. The gains from international trade are closely related to

a. the labor theory of value

b. how much the autarky price differs from the international price

c. the fact that one country can lose from trade

d. all of the above

53. Which of the following statements about the HO model is false?

a. In(trading)equilibrium, there will be a single international relative price

b. Only demand conditions affect the equilibrium price, supply conditions are irrelevant.

c. The equilibrium price will be determined according to the reciprocal demand.

d. Graphically, the international relative price(line)makes up part of the trade triangles of the two countries

54. A prohibitive tariff has

a. only revenue effects. B. Only protective effects

c. Both protect and revenue effects d. Neither protective nor revenue

55. If Amy spends her income on movies and biscuits and the price of movies is three times the price of biscuits, then when Amy maximizes total utility, she will buy

a. equal quantities of movies and biscuits

b. three times as many movies as biscuits

c. three times as many biscuits as movies

d. biscuits and movies until the marginal utility of movies is three times the marginal utility of biscuits.

56. All of the following are tools of macroeconomic policy

a. government spending

b. taxes

c. a government’s tariff policy

d. the central bank’s control of the money supply

57. Government spending and taxes are examples of a government’s

a. fiscal policy b. foreign policy c. monetary policy d. trade policy

58. Macroeconomic equilibrium in an open economy requires

a. goods market equilibrium

b. money market equilibrium

c. current account balance equal to zero

d. balance of payments equilibrium

e. all of the above

f. a, b and d

559. Balance of payments equilibrium means

a. the balance of trade equals zero

b. the current account balance equal zero

c. the capital account balance equals zero

d. the current account balance is exactly offset by the capital account balance so the official settlements balance equals zero

60. The Mundell-Fleming model considers equilibrium in

a. an open economy with floating exchange rates and perfect capital mobility

b. an open economy with floating exchange rates and sluggish capital flows

c. an open economy with fixed exchange rates and perfect capital mobility

a closed economy

61．Two trading countries will both benefit as long as the terms of trade are:( )

A．equal to one of the country’s real domestic ratios

B．equal to the sum of the countries’ real domestic exchange ratios

C．lying somewhere between the countries’ real domestic exchange ratios

D．equal to one

62．Over time, the economic interdependence of nations has: ( )

A．grown B．diminished C．remained unchanged D．cannot say

Questions 3-5 are based on the following table

Suppose two countries have labor inputs as shown in the table below.

Country A Country B

S 9hrs. 4hrs.

T 12hrs. 3hrs.

63、Based on the information in this table, country B has ( )

A．absolute advantage in the production of both goods

B．comparative advantage in the production of both goods

C．absolute disadvantage in the production of S

D．comparative advantage in the production of S

．According to the table, country A has comparative advantage in the production of ( )

A．good S B．good T C．both goods D．neither good

65．In this example, the equilibrium terms of trade could occur anywhere ( )

A．between 3/4 and 5/4 B．between 3/4 and 4/3

C．between 1/3 and 4/3 D．between 1/2 and 3/4

66．Which is not a function of the foreign exchange market? ( )

A．to transfer funds from one nation to another

B．to provide short-term credits to finance trade

C．to provide facilities for hedging

D．to diversify risks

67、Purchasing power parity believed that: ( )

A．new exchange rates should attempt to equalize the relative purchasing power of currencies reflected by relative price levels

B．countries’ relative holdings of gold should be equalized

C．new exchange rates should be established dependent upon each country[s money supply holdings

D．exchange rates should reflect absolute differences in wages

68．An international cartel refers to: ( )

A．dumping B．an organization of exporters

C．an international commodities agreement D．voluntary export restraints

69．The factor price equalization theorem ( )

A．states that given all of the assumptions of the H-O model (including equal labor productivity across countries), free trade will lead to equal factor prices

B．proves that international trade theory has nothing to do with reality

C．means that all factors will lose from free international trade

D．both B and C

70．The mercantilists did not advocate: ( )

A．free trade B．accumulation of gold by the nation

C．restricting the nation’s imports D．stimulating the nation’s exports

71．In his test, Leontief used an input-output table to ( )

A．calculate the capital and labor required to produce $1 million of U.S. exports and imports

B．calculate the labor productivity of American workers relative to foreign workers

C．calculate the capital productivity of American capital relative to foreign capital

D．all of the above

72．Leontief found ( )

A．equal labor productivity in the US and British

B．the US to be abundant in natural resources

C．US imports to be more capital intensive than US exports

D．US imports to be more labor intensive than US exports

73．The H-O theory states ( )

A．a country should export the good with the highest output per unit of labor.

B．a country will export the good that requires more intensive use of its abundant factor.

C．a country should import the good that uses capital most intensively.

D．a country should export the factor that receives a higher wage in the other country.

74．Which of the following is not a characteristic of constant returns to scale in production in the classical model of trade? ( )

A．a fixed ratio between the quantity of labor employed in production and the amount of output produced

B．each successive unit produced requires a larger input of labor than the last unit

C．constant opportunity cost in production

D．a straight line production function

75．A country is relatively capital abundant when ( )

A．its endowment of capital relative to labor is greater than in the other country.

B．it produces capital intensive goods

C．its endowment of capital exceeds the other country’s capital endowment

D．none of the above

76．Some economists believe differences in capital and labor are not as important as endowments of skilled and unskilled labor. Comparative advantage based on human skills means

A．relatively low-wage countries will always have an advantage over

high-wage countries.

B．countries with relatively large endowments of highly skilled labor will have comparative advantage in products that are relatively intensive in skilled labor

C．both A and B

D．none of the above

77．Adjustment for any shift in the domestic demand or supply of an imported commodity occurs

A．in domestic price with an import quota

B．in the quantity of imports with a tariff

C．through the market mechanism with a tariff but not with a quota

D．all of the above

78．Which of the following was not negotiated under the Tokyo Round? ( )

A．agreement on a government procurement code

B．removal of non-tariff barriers on agricultural trade

C．a generalized system of preferences for some type of exports of developing nations

D．uniformity in application of duties in countervailing and anti-dumping cases

79．An economic transaction is entered in the balance of payments as credit if it leads to ( )

A．the receipt of payment from foreigners

B．a payment to foreigners

C．either the receipt of a payment or the making of a payment

D．neither the receipt nor the making of a payment

80．Under a freely flexible exchange rate system, a deficit in a nation’s balance of payments is automatically corrected by ( )

A．a depreciation of its currency B．an appreciation of its currency

C．domestic inflation D．a rise in national income

81．Tariff can be used to redistribute income from ( )

A．abundant factors to scare factors B．consumers to domestic producers

C．from one country to another D．all of the above

82．Developing nations often experience fluctuations in the export price of their primary products because of the ( )

A．inelastic and stable demand and supply B．elastic and unstable demand and supply

C．inelastic and unstable demand and supply D．elastic and stable demand and supply

83．Balance of payments equilibrium means ( )

A．the balance of trade equals zero

B．the current account balance equal zero

C．the capital account balance equals zero

D．the current account balance is exactly offset by the capital account balance

so the official settlements balance equals zero

Questions 84-86 are based on the following information:

A domestic producer of gas-powered lawn-mowers asks the government for and receives protection in the form of a tariff of $50 each on imports of gas-powered lawnmowers. The free trade price of each lawnmower is $200. Each domestic lawnmower produced requires $100 worth imported components, on which there has always been a tariff of 10%.

84．The tariff on lawnmowers is ( )

A．an ad valorem tariff B．a revenue tariff C．a compound tariff D．a specific tariff

85．The nominal rate of protection on lawnmowers is approximately ( )

A．50% B．20% C．55% D．25%

86．The effective rate of protection on lawnmowers is approximately ( )

A．50% B．20% C．40% D．25%

87．Direct foreign investment can be explained by all of the following except ( )

A．it is less risky to transfer capital abroad by investing in productive resources than it is to buy foreign securities

B．A firm might possess skills or knowledge that allows it to earn a higher

return

C．Firms wish to diversify their assets in order to maximize return subject to risk considerations

D．Firms wish to prevent foreign competitors from entering the market

88．If the exchange rate for the Australian dollar is US$/A$ = .7833 and the exchange rate for the HK dollar is US$/HK$ = .1280, then the HK-Australian dollar exchange rate (or how many HK$s does it take to buy one A$), HK$/A$ equals ( )

A．1.2767 B．7.8133 C．6.1195 D．9.9738

．Suppose you are the First National Bank of Erehwon, and you have FF1,000,000 in your vault you will need to use in 60 days. Furthermore, you need ￥104,000 for the next 60 days. You arrange to loan your FF to the HK & Shanghai Bank for 60 days in exchange for￥104,000 now, and reverse the transaction at the end of 60 days. You have just arranged ( )

A．to purchase a currency option B．a currency swap

C．a futures contract D．something completely illegal

90．Which is not a function of the foreign exchange market ( )

A．to transfer funds from one nation to another’s

B．to provide short-term credits to finance trade

C．to provide facilities for hedging

D．to diversify risk

91、The receipt of an interest payment on a loan made by a U.S. commercial bank to a foreign resident is entered in the U.S. balance of payments as a ( )

A、credit in the capital account B、credit in the current account

C、credit in official reserves D、debit in unilateral transfers

92、Which is not an official reserve asset of the U.S.? ( )

A、U.S. holdings of Special Drawing Rights

B、The U.S. reserve position in the International Monetary Fund

C、Foreign official holdings of U.S. dollars

D、Official holdings of foreign currencies by U.S. monetary authorities

93、A U.S. importer scheduled to make a payment of ￡100,100 in three

months (forward exchange rate ￡1=$2), can hedge his foreign exchange risk by: ( )

A、purchasing $100,100 in the forward market for delivery in three months

B、selling $100,100 in the spot market for delivery in three months

C、purchasing ￡100,100 in the forward market for delivery in three months

D、selling ￡100,100 in the spot market for delivery in three months

94、The relative purchasing power-parity (PPP) theory gives better results: ( )

A、in the long run than in the short run

B、when structural changes take place

C、the greater is the level of commodity aggregation

D、in tests including developed and developing countries

95、To correct a balance of payments surplus and inflation a nation requires a: ( )

A、devaluation and expansionary fiscal and monetary policies

B、devaluation and contractionary fiscal and monetary policies

C、devaluation and either expansionary or contractionary fiscal and monetary policies

D、revaluation and either expansionary or contractionary fiscal and monetary policies

96、A difference in relative commodity prices between two nations can be based upon a difference in: ( )

A、factor endowments B、technology

C、tastes D、all of the above

Questions 97-99 are based on the following information:

Suppose that all goods are made with two factors, labor and capital. The table below shows the total endowments of each factor in the US and Canada.

Endowments of labor and capital

US Canada

Workers 100 10

Machines 20 4

97、Relative to the US, Canada is ( )

A、labor abundant B、labor scarce

C、capital scarce D、not enough information to tell

98、According to the Stolper-Samuelson theorem, the income distribution effects of free trade in the United States are likely to favor ( )

A、capital B、labor

C、either capital or labor, depending on US productivity D、neither capital nor labor

99、According to the Stolper-Samuelson theorem, U.S. exports should be goods that ( )

A、intensively use labor input

B、intensively use capital input

C、use either labor or capital input, depending on the good

D、use capital and labor in about equal proportions

100、Which of the following is characteristic of the H-O model but is not characteristic of the classical model?

A、Straight line production function B、Labor is the only factor of production

C、Trade triangles must be congruent D、Incomplete specialization with trade

101、If the relative price of S in terms of T is 2 and S has a nominal price of $1,then the relative price of T is

A、$2 B、50 cents C、0.5 S D、need more information to answer

102、In the study of international economics we use the tools of: ( )

A、microeconomic theory only B、macroeconomic theory only

C、neither micro or macro D、both macro and micro theory

103、We say that commodity Y is K-intensive with respect to X when: ( )

A、more K is used in the production of Y than in X

B、less L is used in the production of Y than in X

C、a lower L/K ratio is used in the production of Y than in X

D、a high K/L ratio is used in the production of X than in Y

104、Which of the following is not a characteristic of constant returns to scale in production in the classical model of trade? ( )

A、a fixed ratio between the quantity of labor employed in production and the amount of output produced

B、each successive unit produced requires a larger input of labor than the last unit

C、constant opportunity cost in production

D、a straight line production function

105、Tijuana, Mexico is across the border from San Diego, California. It has become a world leading producer and exporter of television sets and computer monitors which it assembles in modem factories owned by multinational consumer electronics firms such as Sony. This is an example of ( )

A、the product cycle B、intra-industry trade

C、a specific factors model D、a contradiction of the Heckscher Ohlin model

Questions 106-108 use the following information.

Suppose that United States furniture makers imports $100 of wood and parts in order to make a dining room table selling for $500.The imports have no tariff and quota restrictions.

106、Value added in the U.S. is ( )

A、$500 B、$600 C、$400 D、$300

107、If a tariff of 20 percent is placed on imports of dining room tables, the effective rate of protection is

A、20 percent B、25 percent C、30 percent D、40 percent

108、If a tariff of 20 percent is placed on imports of dining room tables and another tariff of 60 percent is placed on imports of wood and parts, then the effective rate of protection on tables made in the U.S. is

A、40 percent B、20 percent C、10 percent D、0 percent

109、Tariff can be used to redistribute income from ( )

A、abundant factors to scare factors B、consumers to domestic producers

C、from one country to another D、all of the above

110、Developing nations often experience fluctuations in the export price of

their primary products because of the ( )

A、inelastic and stable demand and supply

B、elastic and unstable demand and supply

C、inelastic and unstable demand and supply

D、elastic and stable demand and supply

111、An increase in the demand for the imported commodity subject to a given import quota

A、reduces the producer’s surplus

B、decreases the domestic production

C、increases the domestic output of the commodity

D、reduces the quantity demanded of the commodity

112、Adjustment for any shift in the domestic demand or supply of an imported commodity occurs

A、in domestic price with an import quota

B、in the quantity of imports with a tariff

C、through the market mechanism with a tariff but not with a quota

D、all of the above

113、A prohibitive tariff has ( )

A、only revenue effects B、only protection effects

C、both protection and revenue effects D、neither protection nor revenue effects

114、The welfare effects of a quota depend, to considerable extent, upon ( )

A、who has the quota license B、the size of the quota

C、elasticities of the domestic demand and supply D、all of the above

115、Linder’s hypothesis that consumers prefer to choose from a variety of goods with slightly different characteristics ( )

A、can explain intra-industry trade

B、means that countries with similar standards of living will likely be trading

partners

C、focuses primarily on the demand side of trade rather than on the supply side

D、all of the above

116、The existence of intra-industry trade ( )

A、is inconsistent with the H-O theory

B、can sometimes be explained by transportation costs

C、is impossible with imperfect competition

D、none of the above

117、Swedish economists Eli Heckscher and Bertil Ohlin ( )

A、were classical economists of the late 18th century

B、developed a new extension of the Ricardian model

C、laid out the foundation of a theory of international trade that differed from the classical theory in both its assumptions and results

D、set the assumptions of the classical model, but derived new and different results by using more advanced mathematical techniques

118、Leontief found ( )

A、equal labor productivity in the US and British

B、the US to be abundant in natural resources

C、US imports to be more capital intensive than US exports

D、US imports to be more labor intensive than US exports

119、When demand is elastic ( )

A、supply must be elastic

B、sales decrease when the price decreases

C、sales increase by proportionately more than the price decreases

D、supply must be inelastic

120、The product-cycle is closely related to ( )

A、Linder’s hypothesis B、the H-O theory

C、technological gap model D、all of the above

Part B: True or False ?

1. When two countries open their economies to trade, the resulting terms of trade will always be the same as the larger country’s pre-trade price ratio.

2. When the wages in a country are higher than in another, all of the gains from trade go to the other country.

3. A curved PPF is the result of different factor endowments for the two countries.

4. Increasing opportunity costs in production is the result of different factor proportions required for production of the two goods.

5. A quota is a form of commercial policy.

6. Producers always gain from any type of tariff.

7. Under certain circumstances, tariffs can raise a country’s welfare.

8. Developing countries generally tend to have lower average tariff rates than developed countries.

9. Voluntary export restraints give quota rights to foreign producers.

10. When quota rights are efficiently auctioned, a quota has the same domestic welfare effect as an equivalent tariff in the short run and in the long run.

11. A government that encourages its citizens to purchase modern, imported products rather than traditional locally-made products is using import substitution policy.

12. Examples of countries that had success with primary export-led growth include Canada and the US

13. If national saving falls relative to national investment, the current account deficit will increase.

14. BOP accounting is a complete statement of all official transactions, but not private transactions.

15. Swaps combine spot and forward transactions in a single deal

16. The foreign exchange market operates only in New York and London.

17. Developing countries’ currencies often tend to be undervalued because of lower labor productivity/

18. PPP holds better in the long run than in the short run.

19. In all countries, economic stability is best assured by allowing exchange

rates to float freely.

20. Under a system of fixed exchange rates, expansionary fiscal policy will force the central bank to buy foreign exchange with domestic currency.

21. When two countries open their economies to trade, the resulting terms of trade will always be the same as the larger country’s pre-trade price ratio.

22. The farther the international price from a country’s autarky relative price, the greater the gains from trade for that country.

23. When the wages in a country are higher than in another, all of the gains from trade go to the other country.

24. The Leontief Paradox proves that the H-O theory is wrong.

25. Leontief showed that American labor is three time as productive as British labor.

26. PPP rarely holds in cases of hyperinflation.

27. If the percentage change in the exchange rate is equal to the inflation differential between two countries, then relative PPP holds.

28. In general, inflation has little effect on exchange rates.

29. Developing countries’ currencies often tend to be undervalued because of lower labor productivity/

30. PPP holds better in the long run than in the short run.

31. Exchange rate arbitrage equates exchange rates just as covered interest arbitrage equalizes interest rates worldwide.

32. Covered interest arbitrage results in an interest parity relationship.

33. Covering investments with a forward exchange contract reduces their exchange risk.

34. 34.Interest arbitrage generally equates the forward premium with the interest differential.

35. The effective return on an asset is the interest rate minus expected inflation.

36. The IMF is an agency of the US Government.

37. The SDR is a better hedge against US inflation than the ECU.

38. With fixed exchange rates, a country is unable to undertake independent monetary policy.

39. The BP curve will be horizontal when all financial assets are perfect substitutes and capital is instantly mobile.

40. In the H-O model, both countries start with the same factor endowments.

41．Free trade would cause world resources to be utilized most efficiently and would maximize world welfare. ( )

42．Even if one nation has an absolute disadvantage with respect to the other nation in the production of both commodities, there is still a basis for mutually beneficial trade. ( )

43．The physical definition and the price definition of factor abundance always give the same conclusions.

44．During the past two decades, polluting or dirty industries and their exports have expanded faster than clean industries and their exports in poor developing countries than in rich developed countries. This means that dirty industries have migrated from rich to poor countries.

45．The economic impact of international factor movements includes a factor payment effect, output effect, and income redistribution effect. ( )

46．Developing countries’ currencies often tend to be undervalued because of lower labor productivity.

47．A quota is a form of commercial policy. ( )

48．The price-specie flow mechanism of Hume explained that why a nation could not increase its stock of precious metals by continually increasing the favorable trade balance. ( )

49．The law of absolute advantage pointed out that both nations can gain through exporting the commodity of more productive. ( )

50．Producers always gain from any type of tariff. ( )

51．Benefits of trade imply that each nation can only exchange for more imports by consuming less exports than before. ( )

52．The law of comparative advantage merely is applied in the simple model of two nations, it cannot be applied in the model of many nations in the realistic world. ( )

53．The \"brain drain\" refers to the intensive labor input required for some types of production.

54．The prohibitive tariff on the imported commodity is the maximum ad valorem rate that would make the tariff prohibitive. ( )

55．When a large country grows, pro-trade biased growth could worsen the country’s terms of trade.

56、Benefits of trade imply that each nation can only exchange for more imports by consuming less exports than before. ( )

57、The law of comparative advantage merely is applied in the simple model of two nations, it cannot be applied in the model of many nations in the realistic world. ( )

58、Free trade would cause world resources to be utilized most efficiently and would maximize world welfare. ( )

59、Even if one nation has an absolute disadvantage with respect to the other nation in the production of both commodities, there is still a basis for mutually beneficial trade. ( )

60、It is the definition in physical terms that should be used. ( )

61、H-O model is often referred to as the H-O-S theorem. ( )

62、The mercantilists advocated that each nation would realize the balanced trade in which the exports would equal to the imports. ( )

63、The price-specie flow mechanism of Hume explained that why a nation could not increase its stock of precious metals by continually increasing the favorable trade balance. ( )

、The law of absolute advantage pointed out that both nations can gain

through exporting the commodity of more productive. ( )

65、Producers always gain from any type of tariff. ( )

66、A government that encourages its citizens to purchase modern, imported products rather than traditional locally-made products is using import substitution policy. ( )

67、When a trading country increases its factors of production and increases output, it is impossible for it to be worse off than it was before it grew. ( )

68、The economic impact of international factor movements includes a factor payment effect, output effect, and income redistribution effect. ( )

69、Goods prices tend to adjust more quickly than exchange rates. ( )