Wk 6 - Practice: Ch 7

An important facilitating factor for research and development activities is

adequate financing.

The national location of production using newly developed technology is _____ since technology has a relatively _____ rate of diffusion.

ambiguous; high

If a country's endowments of all factors increase by the same proportion, economic growth will most likely be _______. (Give your answer as a single word.)

balanced

If a country's endowments of all factors increase by the same proportion, economic growth will most likely be _______. (Give your answer as a single word.) Listen to the complete question

balanced

If a country's PPC shifts out proportionately so that its relative shape is unchanged, growth is said to be

balanced.

Technology differences tend to skew production in each country toward producing the product(s) in which the country has the relatively _____ technology.

better

When the expansion of a country's production capabilities favors one product over the other(s). economic growth is said to be

biased.

Research and development focuses on improvements in existing production technologies and on new production technologies and is largely done by

businesses.

Consider a country whose labor force is increasing while its available land is constant. If clothing uses labor intensively while food uses land intensively, the Rybczynski theorem posits that increased production in _____ will occur while _____ production will decline.

clothing; food

An implication of the Rybczynski theorem is that the discovery of new large reserves of a natural resource (e.g., oil or natural gas) in a country may lead to a _______ in its production of manufactures. (Give your answer using a single word.)

decrease, drop, reduction, decline, contraction, or fall

Immiserizing growth refers to the possibility that economic growth in a large country so _____ its terms of trade that its gains from expanded production are more than offset.

decreases

According to the product cycle hypothesis, the production location of a new product, particularly one embodying high technology, is likely to shift over time from _____ to _____.

developed; developing

Comparative advantage may over time come to be based on technology If technological change occurs at _____ rates in different sectors and countries.

different

Because a closed economy shuts itself off to technology developed elsewhere, its growth prospects are very likely

diminished.

A small country is one whose trade _____ affect the international price ratio.

does not

Competitive pressures that domestic firms face as a result of trade _____ their incentives to seek better technology.

enhance

One of several conditions necessary for the possibility that a country might experience immiserizing growth is that prior to growth, the country's engagement in trade must be

extensive.

Select all that apply A country's openness to international trade can increase its growth rate by facilitating its access to technology developed elsewhere. providing a larger market in which its firms can earn returns to innovation. incentivizing its firms to develop new technologies. enabling its government to extract aid from other countries.

facilitating its access to technology developed elsewhere. providing a larger market in which its firms can earn returns to innovation. incentivizing its firms to develop new technologies.

When an economy experiences biased economic growth, the outward shift in its PPC will be skewed toward the _____-growing product.

faster

Consider a diagram showing a country's PPC with food measured on the vertical axis and clothing on the horizontal. If growth shifts the curve such that at the same relative price of clothing (in terms of food), food production is higher while clothing production is unchanged, then the growth is biased toward

food.

If one country's rate of technological progress in a given sector exceeds the rate of another country in that same sector, then over time the _____ country is likely to hold the comparative advantage in that sector.

former

Economic growth by a small country with an open economy results in unambiguous _____ for the country as a whole.

gains

Since research and development is intensive in _____-skilled labor, most of it is conducted in the _____ countries.

highly; industrialized

Growth that expands a large country's willingness to trade to the extent that its declining terms of trade makes it worse off is known as _____ growth.

immiserizing

An implication of the Rybczynski theorem is that the influx of a large number of immigrants into a country may lead to an _______ in its production of manufactures. (Give your answer using a single word.)

increase, increment, upswing, or expansion

If economic growth is balanced and the home country's consumption of its export good increases by less than its production increases, the size of the trade triangle and the country's willingness to trade will

increase.

Given certain assumptions and conditions, the Rybczynski theorem states that growth in a country's endowment of one factor, with the other factor(s) unchanged, will _____ the output of the good using the growing factor intensively and _____ the output of the other good.

increase; decrease

If economic growth increases a large country's willingness to trade at any given price, the relative price of its imported good will _____ and its terms of trade will _____.

increase; worsen

The risk that a country might experience immiserizing growth is _____ related to the diversity of its export products.

inversely

The size of the gains realized by a small open economy experiencing economic growth _____ contingent upon the type (balanced vs. biased) of growth taking place.

is

If a country's trade can affect the international price ratio, then it is considered to be a _____ country.

large

If reasonable changes in a country's own production or demand have a discernible effect on the world prices, then regardless of its physical size, it is considered to be a _____ country.

large

The product cycle hypothesis as an explanation of trade patterns in the case of technologically sophisticated products is considered to be of _____ value.

limited

A developing country that relies on one or a few primary export products is probably _____ likely at risk than countries having diversified selections of export products.

more

If economic growth in a country is balanced but the size of its trade triangle and its willingness to trade decreases, then we know that consumption of its export good increased by _____ than its production increased.

more

If country Nocal has relatively better technology for the production of printed circuits than does country Socal, then overall production will be skewed toward printed circuits in country _______.

nocal

If economic growth increases a large country's willingness to trade at any given price, then its gains from being able to produce more are _____ by the effects from having _____ terms of trade.

offset; a worsened

The notion that the production location of a new product, particularly one embodying high technology, is likely to shift over time from developed to developing countries is known as the _____ cycle hypothesis.

product

If a country experiences balanced growth, its PPC shifts outward in a _____ fashion.

proportionate

If economic growth reduces a large country's willingness to trade at any given price, then its gains from being able to produce more are _____ by the effects from having _____ terms of trade.

reinforced; an improved

The risk that a country might actually experience immiserizing growth is considered to be

remote.

The fact that the United States became a net importer of _______ in the early 1960s can be explained in part by Japan's adoption of newer production technology for that product. (Give your answer as a single word.)

steel

One of several conditions necessary for the possibility that a country might experience immiserizing growth is that the country's growth must be _____ biased toward expanding the country's supply of exports.

strongly

The proposition that openness to trade increases a country's economic growth is broadly _____ by available historical evidence.

supported

Select all that apply According to the product cycle hypothesis, both R&D and initial production of new products are likely to be in advanced countries because export licenses are tough to acquire. the products still need to be perfected. major demand is mostly in high-income countries. early production is often in small amounts by skilled workers.

the products still need to be perfected. major demand is mostly in high-income countries. early production is often in small amounts by skilled workers.

Select all that apply According to the product cycle hypothesis, both R&D and initial production of new products are likely to be in advanced countries because the products still need to be perfected. major demand is mostly in high-income countries. early production is often in small amounts by skilled workers. export licenses are tough to acquire.

the products still need to be perfected. major demand is mostly in high-income countries. early production is often in small amounts by skilled workers.

In the standard graphical analysis of free trade using production-possibility curves (PPCs) and community indifference curves, the change in a country's willingness to trade can be shown by the change in the size of its trade _______. (Give your answer using a single word.)

triangle

Research and development funding in the United States relies heavily on _____ while other countries such as Japan depend more on internal funding from _____.

venture capital; large businesses