International Trade 1st Edition By John Mclaren - Test Bank

International Trade 1st Edition By John Mclaren – Test Bank

 

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Sample Questions Are Posted Below

 

McLaren/International Economics

Test Bank

Chapter 5

 

 

 

1. In the early nineteenth century the United States was
2. A self-sufficient economy
3. An exporter of cotton textiles
4. An exporter of agricultural goods
5. An exporter of slaves to Latin America

 

Answer: C

 

 

 

2. By 1815 the US cotton textile industry had started blossoming because
3. The Tariff of 1789 provided protectionism
4. Of the disruptions of imports from Britain during the War of 1812
5. Of the cheap cotton from the South
6. Large inflow of immigrant labor

 

Answer: B

 

 

 

3. By 1815 the cotton textile industry in the US had gained some significance because
4. the price of raw cotton had been falling
5. American farmers were producing more cotton by switching land which used to grow tobacco
6. of British FDI in the US
7. of the disruptions of imports from Britain during the War of 1812

 

Answer: D

 

 

 

4. Between 1816 and 1828 New England businessmen lobbied the US Government to
5. Levy tariffs on textile imports from Britain
6. Restrict FDI from Britain
7. Levy an export tax on raw cotton exports to Britain
8. Levy an export tax on tobacco exports to Britain

 

Answer: A

 

 

 

5. Between 1790 and 1836 tariff rates in the US peaked between
6. 1790 and 1803
7. 1803 and 1816
8. 1816 and 1827
9. 1828 and 1832

 

Answer: D

 

 

 

6. In 1932 South Carolina threatened to secede from the US because of
7. The tariff imposed in 1828 on manufactured imports
8. The proposed export tax on agricultural exports
9. North’s anti-slavery
10. North’s support for free immigration into the US

 

Answer: A

 

 

 

7. Which out of the following is not a specific factor
8. A Ph.D. in molecular biology
9. A retail outlet in a shopping mall
10. An off-shore oil rig
11. An oil tanker

 

Answer: B

 

 

 

8. Which out of the following is not a specific factor
9. A Certified Public Accountant
10. Solar panels to gather heat
11. Agricultural land growing corn
12. A soccer stadium

 

Answer: C

 

 

 

9. In a Pure Specific Factors model
10. Factors are immobile within sectors
11. Factors are immobile between sectors
12. Factors are immobile both within and between sectors
13. Factors are immobile within countries

 

Answer B

 

 

 

10. In a Pure Specific Factors model
11. Factors are immobile within countries
12. Factors are immobile both within and between sectors
13. Factors are immobile within sectors
14. Factors are immobile between sectors

 

Answer: D

 

 

 

11. There are two sectors Cars (C) and Wheat (W). Capital (K) is specific to C. The rental price of capital will increase when
12. MPK decreases
13. P^C increases
14. K increases
15. W^C decreases

 

Answer: B

 

 

 

12. There are two sectors Cheese (C) and Wine (W). Land (A) is specific to W. The rental price of land will decrease when
13. P^W decreases
14. MPA decreases
15. W^W increases
16. Supply of A decreases

 

Answer: A

 

 

 

13. There are two industries: Computers (C) and Vegetable farming (V). Labor is specific to each of these industries. If the government imposes a tariff on imported Vegetables, then
14. Both L^C and L^V will benefit
15. Only L^V will benefit
16. Only L^C will benefit
17. Neither L^C nor L^V will benefit

 

Answer: C

 

 

 

14. There are two sectors: Cars (C) and Wheat (W). Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then
15. Both owners of K^C and owners of A^W will benefit
16. Only owners of A^W will benefit
17. Only owners of K^C will benefit
18. Neither owners of K^C nor owners of A^W will benefit

 

Answer: C

 

 

 

15. There are two sectors: Cars (C) and Wheat (W). Labor in C, L^C, and Capital, K^C, are specific to C; Labor in W, L^W, and Land, A^W, is specific to W. If the government imposes a tariff on C then
16. Both L^C and owners of K^C will benefit
17. L^C will benefit but owners of K^C will be worse-off
18. L^C will be worse-off but owners of K^C will benefit
19. Both L^C and owners of K^C will be worse-off

 

Answer: A

 

 

 

16. There are two sectors: Cars (C) and Wheat (W). Labor in C, L^C, and Capital, K^C, are specific to C; Labor in W, L^W, and Land, A^W, is specific to W. If the government imposes a tariff on C then
17. Both L^W and owners of A^W will be worse off
18. Both L^W and owners of A^W will be better off
19. L^W will benefit but owners of A^W will be worse-off
20. L^W will be worse-off but owners of A^W will benefit

 

Answer: B

 

 

 

17. A country grows rice (R) and bananas (B). If the government imposes an export tax on bananas then
18. There will be no change in either P^R or P^B
19. P^R will increase but there will be no change in P^B
20. P^R and P^B will rise in the same proportion
21. There will be no change in P^R but P^B will fall

 

Answer: D

 

 

 

18. A country has two sectors: rubies (R) and diamonds (D). If the government imposes an export tax on diamonds then
19. P^R and P^D will rise in the same proportion
20. There will be no change in either P^R or P^D
21. There will be no change in P^R but P^D will fall
22. P^R will increase but there will be no change in P^D

 

Answer: C

 

 

 

19. In the Mixed Specific-Factors Model, typically
20. L is mobile between sectors but K and A are immobile
21. L and K are mobile between sectors but A is immobile
22. K is mobile between sectors but L and A are immobile
23. L and A are mobile between sectors but K is immobile

 

Answer: A

 

 

 

20. In the Mixed Specific-Factors Model the two sectors are Clothing (C) and Wine (W). If the government imposes a tariff on C
21. Both w and P^C will increase but the increase in w will be greater
22. Both w and P^C will increase but the increase in P^C  will be greater
23. Both P^C and P^W will increase but the increase in P^C will be greater
24. Only P^C will increase

 

Answer: B

 

 

 

21. In the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W), the government imposes a tariff on C. The reason why P^C will rise more than w is that
22. Even though both P^C and P^W increase, P^C rises more
23. Even though both P^C and P^W increase, P^W rises more
24. P^C increases but P^W does not
25. P^W increases but P^C does not

 

Answer: C

 

 

 

22. In the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W), the government imposes a tariff on C. As a result, the change in the welfare of the workers is ambiguous because
23. w increases; P^C increases; P^W decreases
24. w remains the same; P^C increases; P^W decreases
25. P^W and w remain the same; P^C increases
26. P^W remains the same; w increases; P^C increases, but more than the increase in w

 

Answer: D

 

 

 

23. In the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W), the government imposes a tariff on C. As a result, the change in the welfare of the workers is ambiguous because their budget line
24. Moves inward on both the axes
25. Swings outward on the W-axis but swings inward on the C-axis
26. Swings inward on the W-axis but swings outward on the C-axis
27. Moves outward on both the axis

 

Answer: B

 

 

 

24. In the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W), capital, K, is specific to the clothing sector and land, A, is specific to the wine sector. If the government imposes a tariff on C
25. K-owners will gain and A-owners will be hurt
26. A-owners will gain and K-owners will be hurt
27. K-owners and A-owners will gain
28. K-owners and A-owners will be hurt

 

Answer: A

 

 

 

25. In the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W), capital, K, is specific to the clothing sector and land, A, is specific to the wine sector. If the government imposes a tariff on W
26. K-owners will gain and A-owners will be hurt
27. A-owners will gain and K-owners will be hurt
28. K-owners and A-owners will gain
29. K-owners and A-owners will be hurt

 

Answer: B

 

 

 

26. Consider the Mixed Specific-Factors Model with two sectors Clothing (C) and Wine (W) in the context of international trade between two countries: Home (H) and Foreign (F). Home will have a comparative advantage in C if
27. (P^C/P^W)^H > (P^C/P^W)^F
28. (P^C)^H < (P^C)^F
29. (P^C/P^W)^H < (P^C/P^W)^F
30. (P^C)^H < (P^W)^F

 

Answer: C

 

 

 

27. (P^C/P^W)^H and (P^C/P^W)^F are the autarky relative prices in Home and Foreign respectively of Clothing (C) with respect to Wheat (W). Let (P^C/P^W)^FT be the free-trade relative price of C. RS and Rd stand for the relative supply and relative demand for C respectively. Let Foreign have the comparative advantage in C. Then, at (P^C/P^W)^FT
28. RS^H > RD and RS^F< RD
29. RS^H > RD and RS^F> RD
30. RS^H < RD and RS^F< RD
31. RS^H < RD and RS^F> RD

 

Answer: D

 

 

 

28. There are two countries Home and foreign and two goods Cheese (C) and Wine (W). Suppose that Foreign has the comparative advantage in C. Let Cheese be measured along the horizontal axis and Wine along the vertical axis. Then Home’s gains from trade result from its budget line
29. Swinging out pivoting on the original autarky intercept on the W-axis
30. Swinging in pivoting on the original autarky intercept on the W-axis
31. Becoming flatter under free trade
32. Becoming steeper under free trade

 

Answer: C

 

 

 

29. There are two countries Home and foreign and two goods cheese (C) and wine (W). Suppose that Foreign has the comparative advantage in C. Let cheese be measured along the horizontal axis and wine along the vertical axis. Then Foreign’s gains from trade result from its budget line
30. Swinging out pivoting on the original autarky intercept on the C-axis
31. Swinging in pivoting on the original autarky intercept on the C-axis
32. Becoming flatter under free trade
33. Becoming steeper under free trade

 

Answer: D

 

 

 

30. In 1807 the US imported clothing (C) from and exported wooden furniture (W) to Britain. That year the US president Thomas Jefferson in a pique because a US merchant ship was boarded and the captain hung by the British navy instituted a trade embargo against Britain. The result of this embargo is that for the US
31. (P^C/P^W)^US fell sharply
32. (P^C/P^W)^US rose sharply
33. P^W increased
34. P^C decreased

 

Answer: B