The leading trading partner (most favorite) in international trade for the United States is-----. One of the most closed economies of the world is-----

Group of answer choices

Canada, North Korea

China, USA

North Korea, South Korea

United Kingdom (UK), Cuba

Question 2Question

Nationalist view of the international trade was originally started by mercantilists. According to mercantilists, the useful public policy for the kings (and kingdoms) was----

Group of answer choices

Export more and import less

import more and export less

increase the tariff on exports, put quota on imports

increase taxes on imports and put quota on exports

Question 3Question

Mercantilists philosophy was open to question and doubt. It was first criticized by ----- in ------

Group of answer choices

David Hume, 1752

Adam Smith, 1860

David Ricardo, 1940

Milton Friedman, 1970

Question 4Question

The process of "Price Specie Flow Mechanism" (which was a criticism for mercantilists' arguments) shows that as exports are raised,------

Group of answer choices

coins flow in, and prices of goods will go up

human specie can flow from one country to another

imports and exports have same effect on the specie

then increase in imports is mandatory

Question 5Question

In Adam Smith's absolute advantage theory, the gains from trade are mainly seen as-----

Group of answer choices

having countries specialize and produce the lower cost good

having countries produce most favorite good in tastes of the consumers

having one country specialize in both goods

having total production of the world go down

Question 6Question

When Adam Smith was writing (circa 1776) the most important factor of production was considered to be--------- and international trade was assumed to be------ between two countries.

Group of answer choices

labor, free

capital, free

land, controlled by the policy makers

labor, dictated by demand conditions

Question 7Question

In Adam Smith's absolute advantage theory, some simplifying assumptions were needed. However, which one of the following IS NOT an assumption made by the theory?

Group of answer choices

a complete movement of factors of production is allowed

free trade of goods

world made up of 2 countries, 2 goods and one factor of production

no tariff, or quotas and no transportation cost.

Question 8Question

The world trade volume has grown the fastest in-------years and the largest exporting country in the world in 2019 was------

Group of answer choices

last 75-80 years, China

right after civil war days, USA

1900-1940, China

1880-1930, India

Question 9Question

The difference between absolute advantage in production and comparative advantage in production is as follows:

In 2 x 2 x 1 world, for labor in one country the absolute advantage can occur in both goods. Comparative advantage, the way it is defined, can -------

Group of answer choices

occur in only one good

take place in both goods too

not be useful to define the trade advantage

be defined only some times

Question 10Question

In the case of two country, two goods, and one factor of production world, (and given all other assumptions needed) if one country's labor has absolute advantage in the production of both goods then according to Ricardo--------

Group of answer choices

mutually beneficial trade is still possible when comparative advantage is defined

no trade is possible that can be seen as mutually beneficial

one country would exploit the other country

trade direction and volume is unpredictable, anything can happen depending upon the demand conditions

Question 11Question

In Ricardian world when the trade direction is determined, we can also show further that if prices are decided by their respective comparative cost of production, then comparative cost ratio is exactly same as------

Group of answer choices

ratio of prices in that country (or the price ratio)

factor intensity ratio

factor price ratio

ratio of capital stock in the country to the labor stock

Question 12Question

In Ricardian model which one of the following assumptions forces us to conclude that after trade, there is a complete specialization in the production in each country? It is the assumption of-------

Group of answer choices

constant cost conditions (CCC)

perfect competition in all production

same demand conditions in both countries

two countries, two goods, one factor of production

Question 13Question

We can easily conclude that in Ricardian model the main reason for the beneficial international trade for both countries, was----

Group of answer choices

difference in technology of production of same good across countries

difference in factor abundance of both countries

difference in factor intensity of production of each good

difference in tastes and preferences of the consumers across countries.

Question 14Question

In economics specific definitions have meaning only when they are applied correctly. For example, factor abundance is always defined for (and refers to)------ and factor intensity is always defined for (and refers to)-------

Group of answer choices

a country, a good or the production of a good

a good or the production of a good, a country

factor of production, a country

the world alone, foreign country alone

Question 15Question

Suppose two countries make the world, Z and S. When wage rental ratio (w/r) in country S is smaller than wage rental ratio (w/r) in country Z, then country S is called------- and country Z is called-----

Group of answer choices

labor abundant, capital abundant

capital abundant, labor abundant

capital intensive, labor intensive

capital abundant, labor intensive

Question 16Question

When the capital labor ratio (K/L) required to produce one unit of good X is higher than capital labor ratio (K/L) required to produce one unit of good Y, then good X production is called----- and good Y production is called--------

Group of answer choices

capital intensive, labor intensive

labor intensive, capital intensive

labor abundant, capital abundant

capital abundant, labor abundant

Question 17Question

Further extension of Ricardian argument shows that the price ratio of international trade between two countries will lie-----domestic price ratios in individual countries

Group of answer choices

somewhere in between

equal to

higher of the two

lower of the two

Question 18Question

Please recall the definition of the small country and the large country in international trade context. The main conclusion is that the free international trade will benefit more to the -----country than the-----country.

Group of answer choices

small, large

large, small

undefined, small

small, unknown

Question 19Question

According to Heckscher-Ohlin theorem, even if technology of production of same good across countries is exactly same, the gains of trade are------- due to differences in-------

Group of answer choices

possible, factor endowments of a country

not possible, factor intensity

possible, factor prices

impossible, factor endowment

Question 20Question

Heckscher and Ohlin two Swedish economists, team of a professor and a student concluded that, a country should specialize in the production of and export that commodity whose production uses country's------

Group of answer choices

abundant factor of production

scarce factor of production

technology of production that is better than any other country's technology

land fertility better than other country's

Question 21Question

We have to make several simplifying assumptions to state the Heckscher-Ohlin (H-O) Theorem. However, which one of the following IS NOT the assumption required to make the Heckscher-Ohlin theorem?

Group of answer choices

world consists of two countries, four factors of production, three goods in the world

only goods cross borders, factors of production do not

tastes and preferences of consumers are same in all countries

technology of production for same good across countries is same.

Question 22 Question

Paul Samuelson's extension of the Heckscher-Ohlin theorem is popularly called------and it shows that after trade, the trade volume will be in equilibrium when -------are equal

Group of answer choices

Factor Price Equalization, ratios of factor prices

commodity price equalization, commodity prices

factor price equalization, all prices of goods

goods prices equalization, ratios of factor prices

Question 23Question

If Samuleson's theorem is correct, then several consequences evolve. Which one of the following IS NOT the consequence of his argument? Your answer is-----

Group of answer choices

after trade countries will have same demand conditions

countries would trade when their factor price ratios are equal

commodity trade is sufficient to compensate for factor movement from one country to another

country's abundant factor of production will benefit from international trade and the scarce factor of production will lose.

Question 24Question

In James MacDougall's study ---------theory was tested and it was found to be------

Group of answer choices

Ricardian comparative advantage, valid

H-O theorem, invalid

H-O theorem, valid

Ricardian Comparative advantage, invalid

Question 25Question

By using his world famous------Leontief studied the trade pattern of USA for 1947 data. He found out that US is exporting more--------goods.

Group of answer choices

Input-Output Table, labor intensive

mathematical analysis, capital intensive

input-output table, capital intensive

mathematical formula, capital abundant

Question 26Question

In his attempt to explain the Leontief paradox, Wassily Leontief himself argued that USA can be taken as the--------country

Group of answer choices

labor abundant

capital abundant

labor abundant

capital intensive

Question 27Question

Factor Intensity Reversal (FIR) argues that same good is produced with different-------across countries. It seems to be a logical explanation to resolve the Leontief Paradox. FIR is ------phenomenon in actual world trade.

Group of answer choices

factor intensity, a rare

factor abundance, an usual

factor intensity, an usual

factor abundance, a rare

Question 28Question

One of the problems with the Leontief Paradox was that he considered only-------factors of production and Robert Stern-Keith Maskus showed that with another factor of production namely,------the paradox can be resolved.

Group of answer choices

2, natural resources

3, labor

2, land

4, enterprise

Question 29Question

In 1947 time period, US consumers had a distinct preference for-----goods, and ------argued that tastes of the consumers can be major reason for trade composition of modern times.

Group of answer choices

capital intensive, Stefan Liner

labor intensive, Stefan Linder

capital intensive, Milton Friedman

labor intensive, Stern-Maskus

Question 30Question

Intra Industry Trade (IIT) was a concept introduced by----- . That hypothesis essentially argues that modern international trade is basically done between------in two or more countries.

Group of answer choices

Paul Krugman, same industries

Robert Stern, same industries

Paul Samuelson, different industries

Wassily Leontief, same industries

Question 31Question

Intra Industry Trade when tested for the whole world, was found to be existing highest in ------continent and lowest in --------continent.

Group of answer choices

European, African

African, Latin American

European, African

Asian, Latin American

Question 32Question

Product cycle hypothesis was introduced by-----, and it essentially claims that a product typically goes through -----stages in its life.

Group of answer choices

Raymond Vernon, 5

Wassily Leontief, 5

Paul Krugman, 4

Milton Friedman, 6

Question 33Question 331 pts

This question refers to the Product Cycle hypothesis as the reason for international trade. For maximum exports, a country needs to keep more products in stage----- of the product cycle. But in reality, some products may not complete the whole cycle and go to stage-----

Group of answer choices

3, 5

2, 4

1, 5

1, 4

Question 34Question 341 pts

This question refers to the economies of scale as the explanation for a reason to do the international trade. Goods are said to have economies of scale in their production, if they need to have a large volume produced to reach to the lowest ----- and therefore they have to be produced on a -------scale.

Group of answer choices

average cost (AC), large

Marginal cost (MC), small

Total cost (TC), large

average cost (AC) small

Question 35Question 351 pts

Considering the case of NAFTA and the Heckscher-Ohlin-Samuleson argument's application, one can easily propose that after NAFTA, ------in Mexico as well as----- were expected to increase.

Group of answer choices

wage rate, labor employment

rental rate, capital's use

wage rate, employment of machinery or the sue of capital

rental rate, land use

Question 36Question 361 pts

In the United States (assuming Mexico is a dominant partner in international trade) after NAFTA, applying Heckscher-Ohlin-Samuelson theorem, one expected to see an increase in------ and a decrease in-----

Group of answer choices

rental rate, wage rate

wage rate, labor employment

rental rate, employment of capital

rental rate, employment of land

Question 37Question 371 pts

Gravity model of international trade claims that two things are important to decide the trade volume. One is------ and other is-----

Group of answer choices

level of GDPs, distance between two countries

weather structure in two countries, language difference

ease of crossing border, interest rate

production costs, tastes of consumer

Question 38Question 381 pts

It looks like Gravity model is a good explanation for high volume of trade between USA and -----. It also explains a low volume of trade between USA and--------

Group of answer choices

Canada, Mongolia

Germany, Canada

China, Mexico

North Korea, Mexico

Question 39Question 391 pts

The reason for USA importing a large volume of perfumes is explained better by-------- and USA exporting airplanes to the rest of the world is better explained by-----

Group of answer choices

Linder's hypothesis, economies of scale explanation

Product cycle hypothesis, Linder's hypothesis

Gravity model, Product cycle hypothesis

Linder's hypothesis, Gravity model

Question 40Question

Consider the case of US's international trade. Good examples of goods that seem to have completed the whole product cycle (all stages) are------ and ---

Group of answer choices

television sets, computer chips

airplanes, perfumes

cars, airplanes

agricultural products, pharmaceuticals