An important insight of international trade theory is that when countries exchange goods and services one with the other it

A) is typically harmful to the technologically lagging country.

B) is typically beneficial only to the low wage trade partner country. C) is usually beneficial to both countries. D) is always beneficial to both countries.

E) tends to create unemployment in both countries.

International economics can be divided into two broad sub-fields A) international trade and international money. B) developed and less developed. C) static and dynamic. D) macro and micro.

E) monetary and barter.

Since the period following World War II (the early 1950s), the proportion of most countries' production being used in some other country A) increased. B) decreased.

C) remained constant.

D) increased slightly before dropping off. E) fluctuated widely with no clear trend.

In the present, most of the exports from China are A) services.

B) overpriced by world market standards. C) primary products including agricultural. D) manufactured goods. E) technology intensive products.

Trade between two countries can benefit both countries if A) each country exports that good in which it has a comparative advantage. B) each country enjoys superior terms of trade.

C) each country produces a wide range of goods for export.

D) each country has a more elastic supply for the exported goods. E) each country has a more elastic demand for the imported goods.

) Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

A) neither country could benefit from trade with each other. B) both countries could benefit from trade with each other. C) each country will want to export the good in which it enjoys comparative advantage. D) both countries will want to specialize in cloth.

E) neither country will want to export the good in which it enjoys comparative advantage.

If the world terms of trade equal those of country F, then A) neither country H nor F will gain from trade. B) country H but not country F will gain from trade. C) country F but not country H will gain from trade. D) country H and country F will both gain from trade.

_______ _______ _______ ______ ______ E) only the country whose government subsidizes its exports will gain.

The two-country, multi -product model differs from the two-country, two-product model in that,

in the former,

A) which country will export which product is determined entirely by labor productivity data. B) full specialization is likely to hold in equilibrium. C) none of the goods are potentially nontraded.

D) the relative wage ratio will determine the pattern of trade ( which good is exported by

which country.

E) domestic relative prices are not relevant.

Which of the following has been confirmed by empirical tests of the Ricardian model? A) International trade has no impact on income distribution.

B) Companies tend to export goods in which they have a relatively high level of productivity. C) The unimportance of economies of scale as a cause of trade.

D) The existence of nontraded goods results in a high degree of specialization among

countries.

E) All predictions of the model for a multi -product, multi-country world are highly unrealistic.

The Ricardian model of international trade demonstrates that trade can be mutually beneficial.

Why, then, do governments restrict imports of some goods?

A) The Ricardian model is often incorrect in its prediction that trade can be mutually

beneficial.

B) Import restrictions are the result of trade wars between hostile countries. C) Restrictions on imports are intended to benefit domestic consumers. D) Imports are only restricted when foreign -made goods do not meet domestic standards of quality.

E) Trade can have substantial effects on a country's distribution of income.

In the specific factors model, the effects of trade on welfare overall are ________ and for fixed

factors used to produce the exported good they are ________. A) positive; ambiguous B) positive; negative C) ambiguous; positive D) negative; positive E) positive; positive

The effect of trade on specialized employees of import -competing industries will be ________ jobs and ________ pay because they are relatively ________. A) fewer; lower; immobile B) more; higher; mobile C) fewer; lower; mobile D) more; higher; immobile E) more; lower; immobile

In modern economies,

A) labor is far more mobile internationally than it is intra -nationally. B) restrictions on international labor mobility are rare. C) labor is far more mobile internationally than capital. D) outsourcing increases international labor mobility. E) restrictions on international labor mobility are common. ______

______

______

______

______

______

In the two -country model of international labor mobility, ______ A) labor has only limited international mobility.

B) the effect of migration is to cause real wages in the two countries to diverge. C) the long -run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries. D) the long -run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries.

E) the effect of migration is to cause real wages in the two countries to converge.

In the 2 -factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border ______ would

A) shift the production possibility curve outward, and increase the production of both goods. B) shift the production possibility curve outward and decrease the production of the

labor-intensive product.

C) shift the production possibility curve outward and decrease the production of the capital-intensive product.

D) move the point of production along the production possibility curve. E) shift the possibility curve outward and displace preexisting labor.

The Heckscher -Ohlin model differs from the Ricardian model of Comparative Advantage in that ______ the former

A) has varying wage rates. B) has only two countries.

C) has two factors of production.

D) has two production possibility frontiers (one for each country). E) has only two products.

According to the Heckscher -Ohlin model, the source of comparative advantage is a country's ______ A) factor endowments. B) technology. C) advertising. D) political system. E) human capital.

Factors tend to be specific to certain uses and products ______ A) in countries lacking comparative advantage. B) in capital -intensive industries. C) in labor -intensive industries.

D) in countries lacking fair labor laws. E) in the short run.

ESSAY.

1) One of the major political developments of the past several decades is the growing size and

economic/monetary integration of the European Union. What effect do you think this will have on international trade between countries?

2) How does the two -good, two-country version of the Ricardian model differ from the two-country,

many-good model in terms of the determination which goods are produced and exported by each country?

3) International trade leads to complete equalization of factor prices. Discuss.