ECO 336 USM Midterm

An internal economies of scale is defined as A. a firm with falling costs over a relatively large range of output. B. an industry with costs that fall for all firms. C. a firm with falling costs over a relatively large range of output, but definite declining profits. D. a firm with falling costs over a specific level of output.

A

Certain kinds of tropical fruits are impossible to grow outdoors in the United States.​ Suppose, however, that in order to create jobs in​ Wyoming, the U.S. government offered extensive subsidies to firms to produce bananas. With the​ subsidies, firms could build greenhouses and offer the fruit at world prices. A. The United States is​ competitive, but does not have a comparative advantage. B. The United States has a comparative​ advantage, but is not competitive. C. The United States has a comparative advantage and is competitive. D. The United States now has a comparative advantage in bananas.

A

Economic restructuring that takes place as a result of opening to trade with other countries A. improves the​ nation's allocation of resources. B. worsens the​ nation's allocation of resources. C. contradicts the idea of gains from trade. D. causes some trading activity to be zero sum.

A

If trade in a particular good interindustry, the expansion of an industry in one country is likely to lead to the ________ of that industry in the other country. If trade in that good is intraindustry, expansion of the industry in one country is likely to lead to the ________ in the other country. A. decline, expansion B. expansion, decline C. decline, decline D. expansion, expansion

A

In a small country, the net national cost of tariff protection is equal to the reduction in consumer surplus minus A. the increase in government revenue and the increase in producer surplus. B. the increase in producer surplus. C. the efficiency loss and the consumption side loss. D. the increase in government revenue.

A

Most economists attribute the growing income inequality in the United States to A. technological change. Your answer is correct. B. trade. C. changing values. D. taxes. E. macroeconomic policies.

A

Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital​ intensive, then according to the Heckscherminus Ohlin ​Theorem, Chile should export goods that A. intensively use natural resources. Your answer is correct. B. intensively use capital input. C. intensively use labor input. D. use capital and labor in about equal proportions.

A

Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital​ intensive, then according to the Stolperminus Samuelson ​Theorem, the incomes of the owners of​ __________ are likely to rise in Brazil after trade with Chile begins. A. capital Your answer is correct. B. labor C. natural resources D. It is impossible to determine which will be favored.

A

Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip. Under the current rules of the WTO and GATT, the U.S. effort is A. not allowed. B. allowed as long as the subsidies do not succeed in creating a new product. C. allowed as long as the subsidies are a small percent of the total cost. D. allowed as long as the subsidies do not involve a direct payment to the industry.

A

The Nobel Prize winning Economist who felt that trade is really about geography? A. Paul Krugman B. David Ricardo C. Adam Smith D. Gregory Mankiw

A

The Stolperminus Samuelson Theorem predicts A. the income distribution effects of trade. B. which goods will be exported. C. which factors are abundant. D. the level of productivity in export industries.

A

The production side efficiency loss of a tariff is caused by A. the expansion of relative inefficient domestic production. B. the increase in government revenue. C. the contraction of domestic consumption. D. higher profits gained by foreign producers.

A

Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation except A. diseconomies of scale make it impossible for new firms to enter the market. B. an initial headstart gives a scale advantage to already existing firms in one country. C. a historical accident, such as the shifting of airplane production to the United States to avoid World War II bombings, causes firms in one location to have a competitive advantage. D. a location has a better-developed linkage between suppliers and producers, giving it a cost advantage.

A

Which of the following is FALSE about intraindustry trade? A. Intraindustry trade is due to comparative advantage. B. Intraindustry trade may involve heightened competition and lower prices for consumers. C. Intraindustry trade increases consumer choice. D. Intraindustry trade creates gains from trade.

A

Which of the following would NOT be associated with the LATE PHASE of the product​ cycle? A. There is experimentation and improvement in design and manufacturing. B. Consumption in high income countries begins to exceed production. C. Increasing share of output is moving to developing countries where abundant low skilled and semiminus skilled labor keep production costs low. D. Consumption continues to grow in low income countries.

A

Critics of regional trade agreements argue that the formation of regional trade agreements

A and B only

A production possibilities curve that is a straight line represents the case of A. constant opportunity costs but increasing real costs. B. constant costs. C. constant opportunity costs but decreasing real costs. D. increasing costs.

B

After trade​ opens, the short run impact on the income of the variable factor will be A. a decrease. B. ​indeterminate, income effects are not possible to know. Your answer is correct. C. zero. D. an increase.

B

Efficiency losses are A. deadweight losses caused by consumers being prevented by tariffs from buying products at the world price, products that they value more highly than that price. B. the deadweight loss that is created because domestic firms have to charge higher prices to produce units of output than foreign firms would have to charge. C. the total loss in consumer surplus from a tariff. D. the increase in producer surplus that is created by a tariff.

B

If one nation is able to produce a good at a lower opportunity cost than​ another, it has A. a technological advantage in that good. B. a comparative advantage in that good. C. a productivity advantage in that good. D. an absolute advantage in that good.

B

If social returns to the production of a good are greater than private returns, then we can conclude that relative to the social optimum, the good will be A. underproduced and underpriced. B. underproduced and overpriced. C. overproduced and overpriced. D. overproduced and underpriced.

B

One reason that a large share of the trade between High-income industrial economies is intraindustry trade is because A. it is more advantageous than interindustry trade. B. it allows firms to take advantage of internal economies of scale. C. High-income industrial economies produce in the first stage of the product cycle. D. High-income industrial economies have dissimilar resource endowments in absolute terms. E. High-income industrial economies are wealthier than developing countries.

B

Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital​ intensive, then A. Chile will produce more computers after trade begins with Brazil. B. Chile will produce more timber after trade begins with Brazil. Your answer is correct. C. Brazil will completely specialize in computers once trade begins with Chile. D. Brazil will produce more timber after trade begins with Chile.

B

Tariffs reallocate income from A. government to producers. B. consumers to producers. C. producers to consumers. D. consumers to foreigners.

B

Tijuana, Mexico is across the border from San​ Diego, California. It has become a worldminus leading producer and exporter of television sets and computer​ monitors, which it assembles in modern factories owned by multinational consumer electronics firms such as Sony. ​ Initially, these electronics were produced in the industrialized countries of their parent​ companies, and after several​ years, the production moved to Tiajuana This is an example of A. the magnification effect. B. the product cycle. Your answer is correct. C. intraindustry trade. D. the specific factors model.

B

Which of the following does NOT indicate intraindustry trade? A. Trading Bush beer for Heineken beer B. Trading oil for trucks C. Trading Boeing airplanes for Airbus airplanes D. Trading Japanese-made films for Hollywood-made films E. Trading Jeeps for Toyotas

B

Which of the following is FALSE? A. Government revenue increases after a tariff is imposed. B. Consumer surplus increases after a tariff is placed on imports. C. Producer surplus increases after a tariff is imposed. D. Deadweight losses result from tariffs.

B

Which of the following is TRUE about monopolistic competition? A. Firms do not have economies of scale. B. It is competition among many firms producing similar but differentiated products. C. A small number of firms serve the entire market. D. One firm serves as the entire industry.

B

Which of the following would be a deadweight loss from a tariff? A. The decrease in consumer surplus B. The decrease in consumer surplus due to a drop in consumption C. The shift of consumer surplus to government D. The increase in producer surplus

B

Which type of restriction on quantity of imports is the most transparent? A. Licensing requirements B. Quota C. Government procurement policies D. Voluntary export restraints

B

Which of the following is​ FALSE?

Because of international recognition of national sovereignty, individual nations are unaffected by global trade and capital flows

A production possibilities curve that is bowed out represents the case of A. constant costs. B. external costs. C. increasing costs. Your answer is correct. D. decreasing costs.

C

An internal economy means that ________, while an external economy means that ________. A. firm costs fall as industry output increases, firm costs rise as firm output increases B. firm costs fall as industry output increases, firm costs fall as firm output increases C. firm costs fall as firm output increases, firm costs fall as industry output increases D. firm costs fall as firm output increases, firm costs rise as industry output increases

C

Average tariff rates are highest for A. High-income countries. B. industrialized countries. C. Low-income countries. D. Middle-income countries.

C

Consumer surplus is equal to the area A. under the demand curve. B. under the supply curve. C. under the demand curve and above the price line. D. above the supply curve and below the price line. E. under the demand curve and above the supply curve.

C

Empirical tests of the theory of comparative advantage have provided A. no support for either the Ricardian or the Heckscherminus Ohlin models. B. strong support for both the Ricardian and Heckscherminus Ohlin models. C. strong support for the Ricardian model and mixed support for the Heckscherminus Ohlin model. Your answer is correct. D. mixed support for both Ricardian and Heckscherminus Ohlin models. E. mixed support for the Ricardian model and strong support for the Heckscherminus Ohlin model.

C

If the price of a good​ rises, then the effect on the income of the factors that are used intensively in its production will be A. to raise income by a smaller percentage than the rise in prices. B. to raise income by an absolute amount that is less than the rise in prices. C. to raise income by a greater percentage than the rise in prices. Your answer is correct. D. to raise income by an absolute amount that is more than the rise in prices.

C

If the world price for a good is above a​ nation's preminus trade equilibrium​ price, then the nation A. cannot gain from trade. B. will neither export nor import the good. C. will export the good. Your answer is correct. D. will import the good. E. Both C and D.

C

In an industry where transportation costs are high and there are limited scale economies, A. firms might locate in either area. B. firms will locate where policy makers decide. C. firms will locate close to the market. D. firms will locate close to their input sources.

C

In order for large countries to successfully use tariffs to increase well being, A. the deadweight loss created by the tariff must be greater than the government revenue the tariff generates. B. domestic production must increase more significantly than for the small country case. C. they must have significant market power so that foreign firms will cut prices to preserve their sales. D. domestic consumption and imports must decrease more significantly than in the small country case.

C

In this closed economy it is the case that A. the amounts of each good consumed and produced may differ. B. the value of production exceeds the value of consumption. C. consumption cannot occur anywhere outside the production possibilities frontier. D. consumption can vary along the line tangent to the PPF at point X.

C

Interindustry trade refers to A. domestic trade of products made within the same industry. B. the exchange of similar items that are differentiated. C. international trade of products made across different industries. D. international trade of products made within the same industry

C

Internal economies of scale means that A. consumers will have less choices once trade begins, because firms will be squeezed out of the market. B. firms are experiencing lower average production costs due to a geographical concentration of firms in their industry that make it cheaper and easier to hire highly specialized workers and inputs. C. simply expanding the size of the market the firm serves reduces overall per unit costs, since the firm can spread costs over more output. D. firms will have lower profits after international trade begins, because costs will be higher than when they just focused on the domestic market.

C

Intraindustry trade refers to A. international trade of products made across different industries. B. the exchange of dissimilar items. C. international trade of products made within the same industry. D. trade that occurs as a result of comparative advantage.

C

Since the​ Heckscher-Ohlin model involves multiple​ inputs, such as​ land, labor and​ capital, with various suitabilities for different​ tasks, the production possibility curve​ (PPC) is A. curved because production costs are decreasing. B. curved because production costs are constant. C. curved because production costs are increasing. D. straight because production costs are constant. E. straight because production costs are increasing.

C

Suppose that the United States decided to subsidize a major research and development effort by U.S. firms in the semiconductor industry. Under the current rules of the WTO and GATT, the U.S. effort is A. allowed as long as the subsidies do not involve a direct payment to the industry. B. neither allowed nor disallowed. C. allowed as long as the subsidies are for developing a "precompetitive" technology. D. allowed as long as the subsidies are a small percent of the total cost. E. not allowed.

C

The Heckscherminus Ohlin Theorem predicts A. the income distribution effects of trade. B. who benefits and who loses from trade. C. which goods will be exported. Your answer is correct. D. which factors are abundant.

C

The straightminus line production possibilities curve introduced in the text A. fails to benefit trading nations. B. fails to reflect tradeoffs. C. does not show increasing opportunity costs. Your answer is correct. D. refutes the principles of comparative advantage.

C

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale? A. Lower prices for the domestic consumers of the product now being traded B. Job creation at domestic firms entering international trade C. Higher prices for the exported product D. Increased sales and lower per unit costs for the firm doing the exporting

C

Which of the following is NOT a proposition of the Heckscherminus Ohlin ​model? A. A country has a comparative advantage in the production of that commodity which uses more intensively the​ country's more abundant resource. B. The effect of international trade is to tend to equalize factor prices between the trading nations. Your answer is not correct. C. Countries will completely specialize in the product in which they have a comparative advantage if free trade is allowed to occur. This is the correct answer. D. If the United States is a skilled labor abundant​ country, then the United States has a comparative advantage in the production of goods that use skilled labor more intensively. E. If Mexico is an unskilled labor abundant​ country, then Mexico has a comparative advantage in the production of goods that use unskilled labor more intensively.

C

Which of the following is NOT a reason social returns might be greater than private returns? A. Capital market imperfections B. Knowledge spillovers C. Excess competition between firms D. Spillovers from research and development

C

Which of the following would be associated with the early phase of the product​ cycle? A. More consumption in lowminus ​income, developing countries B. Large amounts of production in lowminus ​income, developing countries C. Sophisticated marketing and customer feedback mechanisms Your answer is correct. D. A standardized product with an assemblyminus line style production process

C

When the United States gives MFN status to​ China, it means that

China is treated the same as other U.S. trading partners

According to the​ Heckscher-Ohlin model, a country exports goods that A. use a lot of its scarce factors. B. are abundant in its intensive factors. C. it has an absolute advantage over. D. are intensive in its abundant factors.

D

High tariffs on intermediate inputs A. have no impact on the effective rate of protection on final goods. B. increase the effective rate of protection on final goods. C. lower the nominal rate of protection on final goods. D. decrease the effective rate of protection on final goods.

D

In economic terms, tariffs are preferred to quotas because A. quotas create a greater production inefficiency. B. domestic manufacturers gain more producer surplus. C. tariffs are easier to administer. D. given the way quotas are usually administered, tariffs cause a smaller net national welfare loss. E. there is less loss of consumer surplus.

D

In which way are tariffs different from quotas? A. They increase the domestic quantity supplied of the product. B. They raise the price of the imported products to consumers. C. They reduce the volume of imported products. D. They raise government revenue.

D

Intraindustry trade relies on A. the product cycle. B. differences in factor endowments. C. monopoly pricing. D. economies of scale.

D

Large countries can improve their welfare by levying a tariff only if it does not A. increase domestic production of the good. B. create a deadweight loss. C. reduce rent seeking elsewhere in the economy. D. lead to retaliation by the nation's trading partners.

D

Nominal rates of protection A. are always greater than effective rates of protection. B. refer to the tariffs placed on intermediate goods used to make the final good or service. C. are always smaller than effective rates of protection. D. cannot be negative.

D

Producer surplus is equal to the area A. under the supply curve. B. under the demand curve and above the price line. C. under the demand curve and above the supply curve. Your answer is not correct. D. above the supply curve and below the price line.

D

Suppose furniture production is more​ capital-intensive relative to clothing production. If the U.S. is capital abundant compared with​ Thailand, the​ Heckscher-Ohlin model implies that the U.S. should import A. furniture. B. both furniture and clothing since the U.S. has larger GDP. C. ​nothing, since trade is only beneficial to countries that run a trade surplus. D. clothing.

D

Using the HO​ model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor​ intensive, A. soybean prices in Mexico will rise once trade begins. B. Mexico will produce more soybeans once trade is introduced. C. the United States will produce more avocados once trade is introduced. D. avocado prices in the United States will fall once trade begins.

D

Using the HO​ model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor​ intensive, it would be reasonable to expect the United States to A. specialize completely in soybean production. B. increase avocado​ production, but still produce some soybeans. C. specialize completely in avocado production. D. increase soybean​ production, but still produce some avocados.

D

Using the specific factors​ model, assume that strawberry production requires the specific factor of​ land, tractor production requires the specific factor of​ capital, and labor is variable. If the United States is capital abundant compared to​ Mexico, and Mexico is land abundant compared to the United​ States, then in the short run with trade we would expect A. the income of U.S. workers to increase. B. the income of Mexican workers to increase. C. the income of U.S. land owners to increase. D. the income of Mexican land owners to increase.

D

Which of the following is NOT an expected benefit of reducing nontariff barriers to trade? A. Lower prices for many goods B. Increase in the volume of exports and imports C. Improved overall economic welfare D. Fewer firms to compete with

D

Which of the following is NOT correct about the effects of a tariff on an imported product? A. Tariffs mean higher prices and less consumption for consumers of the product. B. Tariffs benefit domestic producers by raising price and domestic output. C. Tariffs increase government revenue. D. Tariffs increase the efficiency of how resources are allocated.

D

Market failures occur whenever A. the free market produces less than what is socially optimal. B. social returns may be greater than private returns. C. monopolies exist in a market. D. private returns may be greater than social returns. E. All of the above.

E

Which of the following is NOT a problem in the implementation of industrial policies? A. Choosing the industry to target B. The benefits are partly captured by foreign firms. C. The encouragement of rent seeking by firms in other industries D. Knowing the optimum amount of resources to provide the targeted industry E. All of the above are problems.

E

A country experiencing a debt or currency crisis would contact the World Bank.

False

A nation must have an absolute advantage in order to have a comparative advantage in producing a good or service.

False

Adam Smith created the theory of comparative advantage.

False

A​ nation's votes at the IMF are proportional to its population.

False

Capital and labor only very recently have been free to move across international borders.

False

Capital flows between countries are smaller than in past decades in absolute terms.

False

Deadweight losses are the only potential cost associated with tariffs, which is why they are preferred to quotas. True False

False

Domestic agricultural subsidies intended to support the​ nation's farmers would not be considered a trade barrier so they would not be disputed internationally.

False

Economies of scale are an important determinant of comparative advantage based trade. True False

False

If the effective rate of protection is greater than the nominal rate of protection, there must be tariffs on intermediate products. True False

False

Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity, technology, and factor endowments. True False

False

Intraindustry trade tends to be more controversial than interindustry trade. True False

False

Since the mid-1980s tariff rates in most nations have risen. True False

False

Tariff revenue is an important source of operating revenue for many governments of high income countries. True False

False

The United States does not use subsidies as part of its policies. True False

False

The World Bank formed the World Trade Organization when it became clear that to alleviate poverty in developing​ nations, agricultural trade barriers were going to have to be reduced.

False

The​ IMF, because it can force nations to take loans and bail out​ packages, has more power than other international governmental organizations dealing with the global economy.

False

Transactions costs in international financial markets are higher today than they were in the past.

False

From the late 1940s until the creation of the​ WTO, the organization that was primarily responsible for conducting rounds of trade negotiations was the

GATT

Which of the following is an example of an institution whose primary concern is global​ stability?

IMF (international monetary fund)

Nontariff barriers to trade are less transparent than tariffs. True False

TRUE

Nontariff measures are generally much more difficult to eliminate than tariffs and quotas because they are embedded more deeply in national economic policies. True False

TRUE

Which of the following is​ TRUE?

The General Agreement on Tariffs and Trade created the WTO in the negotiations and treaty known as the Uruguay Round

Which of the following is NOT a criticism of international institutions such as the​ IMF, the World​ Bank, or the​ WTO?

Their decision minus making is biased in favor of underdeveloped nations

A country that creates competitive advantage where there are not comparative advantages misallocates its resources and has lower national well being.

True

A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade. True False

True

Both tariffs and quotas lead to a decrease in imports, a decrease in domestic consumption, and an increase in domestic production. True False

True

Chinese exports of toys and footwear can be explained by factor​ endowments, while Chinese exports of telecommunications equipment and computers and accessories can be explained by productminus cycle analysis. True Your answer is correct. False

True

Comparative advantage cannot account for a significant portion of world trade. True False

True

If countries have similar factors of production and similar productivities, most of their trade is likely to be intraindustry. True False

True

Intraindustry trade can lead to lower prices and job creation in both the exporting and the importing nation. True False

True

Many of the important international governmental institutions that deal with the global economy have their roots in the Bretton Woods conference at the end of World War II

True

Mercantilists perceived trade as a zero sum game. True False

True

Most economists support open trade because it increase our choices as​ consumers, lowers costs for​ producers, increases competition and​ innovation, and leads to greater diffusion of technological change.

True

Most migrants move from developing to developed nations. True Your answer is correct. False

True

Most of what we buy and sell never makes it out of domestic markets.

True

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad. True False

True

The four criteria for economic integration include trade​ flows, capital​ flows, people​ flows, and the similarity of prices in separate markets.

True

While the world was fairly integrated at the turn of the last​ century, most trade was in agricultural and raw​ materials, whereas today manufactured consumer and producer goods play a much greater role in determining exports and imports.

True

A key institution that did NOT directly arise from​ post-WWII negotiations was the

WTO

Which of the following was NOT a creation of the Bretton Woods​ conference?

WTO

An example of a foreign direct investment​ (FDI) would includes

a U.S. mutual fund manager buying shares of stock in a Brazilian oil company

Which of the following is​ FALSE?

a common market is more deeply integrated than an economic union

Until the Uruguay Round of trade​ negotiations, which of the following sectors were NOT included in the rules for international​ trade?

agriculture and apparel

Based on the theory of comparative​ advantage, nations maximize their well being when they

allocate resources more efficiently

Which of the following kinds of agreements between two or more countries would be an example of a deep integration​ measure?

an agreement to impose the same limits on cartels and monopolies

Which of the following kinds of agreements between two or more countries would be an example of a shallow integration​ measure?

an agreement to unify customs forms in order to speed up cross border traffic

The United States is an example of

an economic union

Made in the USA or Made in China has less meaning for products that

are technological and involve assembling many different types of sometimes sophisticated components

When economists talk about the gains from trade they mean that

benefits of trade outweigh the losses

If two countries agree to specialize and trade based on comparative​ advantage, which of the following is most likely to be​ TRUE? A. Only one of the countries will produce on and consume outside its production possibilities curve. B. One of the countries will end up receiving all of the gains from trade. C. Both of the countries will consume outside their respective production possibilities curves. D. One of the countries will both consume and produce on its production possibilities curve.

both of the countries will consume outside their respective production possibilities curves

An example of foreign direct investment is

building a starbucks shop in canada

Which of the following is​ TRUE?

common market is more deeply integrated than a customs union

When world capital is allowed to flow freely between​ countries, it is expected that capital will flow from

countries with abundant savings and capital to countries with low savings and capital

Which of the following statements is​ FALSE?

country that possesses an absolute advantage will always have a comparative advantage

A​ country's foreign exchange reserves refers to

countrys holdings of gold and internationally accepted currencies

Financial capital flows could includes

currency market transactions

A free trade agreement plus a common set of tariffs toward non members is called

customs union

The elimination or reduction of trade barriers caused by​ non-trade-related domestic policies is referred to as

deep integration

Negotiation over domestic policies that impact international trade are referred to as

deep integration.

Economists

describe reducing tariffs and quotas as shallow integration

It is often costly for developing countries to adjust to trade agreements because

developing countries often have limited social safety nets to provide support to workers in transition

The trade-to-GDP ratio is calculated by

exports plus imports divided by GDP

One reason markets may fail to provide the optimal quantity of public goods is the problem of

free riders

Labor mobility was

greater in 1900 than in 2010

One of the most important and most visible roles of the IMF is to

intercede by invitation when countries cannot pay their international debts

Which of the following criticisms is NOT directed to the​ IMF?

it creates a free riding problem

Countries such as the United States that have large populations tend to have

lower trade-to-GDP ratios

Which of the following is a problem that arises when trying to classify regional trade​ agreements?

many agreements combine elements from different categories

The economic philosophy that favors strict limits on imports and strong support for exports is called

mercantilism

If a good or service does not get used up as it is​ consumed, then it is said to be

nonrival

One important difference between the international economy of today and the economy of 100 years ago is

presence of international bodies such as the IMF and World Bank

An important function of international institutions during times of crisis is to

prevent free riding

All of the following are differences in capital flows today from the​ past, EXCEPT

problem of volatility in financial capital flows

The primary mission of the World Bank today is to

provide capital to underdeveloped countries

The original mission of the World Bank was to

provide financial assistance for the reconstruction of war minus damaged nations

Which of the following is NOT an example of an international public​ good?

regional trade agreements

Deep integration

requires cooperation with other national governments or international bodies

Elimination of barriers to trade​ (tariffs and​ quotas) are referred to as

shallow integration.

If a nation has no absolute​ advantage, then it

still gains from trade

Which of the following is NOT a feature of a common​ market

substantial coordination of macroeconomic policies among the members

An important factor that increased international capital flows in the second half of the nineteenth century was

technological innovations

The international organization that serves as a forum for trade discussions and the development of trade rules is called

the WTO

One of the reasons we know that international labor mobility has been higher at other times is because

the percent of our population that was foreign born was higher

All of the following are true except

the principle of comparative advantage does not apply to countries with extremely limited resources

The Tokyo Round of the GATT negotiations was notable because it was the first round

to begin establishing rules on subsidies

A relative measure of the importance of trade is

trade as a percentage of GDP

With a partial trade agreement

two or more countries agree to liberalize trade in a selected group of categories

In our simple trade​ model, having a comparative advantage in a product implies that a country will specialize completely in the product

with the lowest opportunity cost

Since the end of World War​ II

world trade has grown more rapidly than world output