1. Japan can utilize its resources to make automobiles or use them to grow more rice. Japan has a comparative advantage in automobiles. According to the Ricardian Model, the best way Japan can provide more rice for its population is: A) By growing rice till the country is self-sufficient in rice, and then producing automobiles with the remainder of resources B) By making as many automobiles as it can sell at home and abroad C) By using half the resources to make cars and the other half to grow rice D) By making as many automobiles as to be self-sufficient in automobiles, and then growing rice with remainder of the resources E) By putting high tariffs on rice. 2. When a country's labor market is in equilibrium in the specific factors model, the wage rate A) will be the same in both sectors. B) will be higher in the export-competing sector. C) will be higher in the import-competing sector. D) will be higher in the sector where product price is higher. E) will be higher in the sector where product price is lower. 3. The gravity model suggests that over time: A) trade between two countries is independent of their distance. B) trade between two countries increases if their incomes decline. C) the value of trade between two countries will be proportional to the product of the two countries' GDP. D) trade is not optimal E) trade has an impact on income distribution. 4. The two neighbors of the United States, Mexico and Canada, do a lot more trade with the United States than European economies of equal size. A) This is irrelevant to any inferences that may be drawn from gravity models. B) This is because these neighboring countries have exceptionally large GDPs. C) This relates to Belgium's trade record with the U.S. D) This contradicts predictions from gravity models. E) This is consistent with predictions from gravity models. 5. The Ricardian model attributes the gains from trade associated with the principle of comparative advantage to A) differences in output. B) differences in preferences. C) differences in labor productivity. D) differences in resources. E) gravity relationships among countries. 6. In the Ricardian model, a country's production possibility frontier is A) a curved line; a limited supply of product of labor B) a straight line; diminishing marginal product of labor C) a curved line; diminishing marginal product of labor D) a straight line; constant marginal product of labor E) a curved line; constant marginal product of labor because of