Deck 7: Economic Growth and International Trade

Question 1

Doubling L is likely to:

A)increases the relative price of the L-intensive commodity
B)reduces the relative price of the K-intensive commodity
C)reduces the relative price of the L-intensive commodity
D)any of the above

Answer 1

C

Question 2

Technical progress that increases the productivity of L proportionately more than the productivity of K is called:

A)capital saving
B)labor saving
C)neutral
D)any of the above

Answer 2

A

Question 3

Dynamic factors in trade theory refer to changes in all of the above except:

A)factor endowments
B)technology
C)tastes
D)tariff structure

Answer 3

D

Question 4

A proportionately greater increase in the nation's supply of labor than of capital is likely to result in a deterioration in the nation's terms of trade if the nation exports:

A)the K-intensive commodity
B)the L-intensive commodity
C)either commodity
D)both commodities

Question 5

If the output of a nations exportable commodity increases proportionally more than the output of its importable commodity the output changes in considered

A)neutral
B)negative
C)anti-trade
D)pro-trade

Question 6

When a nation's growth deteriorates its terms of trade to the point that its welfare drops it is experiencing

A)debilitating growth
B)immiserizing growth
C)population growth
D)GDP per capital growth

Question 7

Empirical studies have generally shown that most of the real per capita income increase in industrialized countries is due to

A)capital accumulation
B)population growth
C)technical progress
D)infrastructure improvements

Question 8

An increase in tastes for the import commodity in both nations:

A)reduces the volume of trade
B)increases the volume of trade
C)leaves the volume of trade unchanged
D)any of the above

Question 9

Doubling L with trade in a small L-abundant nation:

A)reduces the welfare of representative citizens.
B)reduces the nation's terms of trade
C)reduces the volume of trade
D)reduces national consumption.

Question 10

Doubling K with trade in a large L-abundant nation:

A)increases the nation's welfare
B)improves the nation's terms of trade
C)reduces the volume of trade
D)all of the above

Question 11

If,at unchanged terms of trade,a nation wants to trade more after growth,then for a large country,the nation's terms of trade can be expected to:

A)deteriorate
B)improve
C)remain unchanged
D)any of the above

Question 12

Doubling the amount of L and K under constant returns to scale does all of the following except:

A)doubles the output of the L-intensive commodity
B)doubles the output of the K-intensive commodity
C)leaves output unchanged.
D)leaves the shape of the production frontier unchanged

Question 13

An increase in tastes of the import commodity of Nation A and export in B:

A)will reduce the terms of trade of Nation A
B)will increase the terms of trade of Nation A
C)will reduce the terms of trade of Nation B
D)any of the above

Question 14

Doubling L with trade in a large L-abundant nation is most likely to:

A)increase the nation's social welfare
B)reduces the nation's terms of trade
C)reduces the volume of trade
D)increase the welfare of individual citizens.

Question 15

Doubling only the amount of L available under constant returns to scale:

A)less than doubles the output of the L-intensive commodity
B)more than doubles the output of the L-intensive commodity
C)doubles the output of the K-intensive commodity
D)leaves the output of the K-intensive commodity unchanged

Question 16

In the absence of trade,technical progress

A)tends to increase the nation's welfare.
B)increases the nation's welfare only if it is labor-saving.
C)increases the nation's welfare only if it is capital-saving.
D)tends to decrease the nation's welfare.

Question 17

The capital to labor ratios of countries over the last three decades has generally

A)risen
B)fallen
C)remained relatively unchanged
D)risen in developed nations and fallen in developing nations

Question 18

The Rybczynski theorem postulates that doubling L at constant relative commodity prices:

A)doubles the output of the L-intensive commodity
B)reduces the output of the K-intensive commodity
C)increases the output of both commodities
D)reduces the output of both commodities

Question 19

Technical progress in the nation's export commodity:

A)may reduce the nation's welfare
B)will reduce the nation's welfare
C)will increase the nation's welfare
D)leaves the nation's welfare unchanged

Question 20

Technical progress is usually classified into all of the following except

A)neutral
B)negative
C)labor saving
D)capital saving

Question 21

The Rybczynski theorem postulates that doubling K at constant relative commodity prices:

A)doubles the output of the L-intensive commodity
B)more than doubles the output of the K-intensive commodity
C)reduces the output of the K-intensive commodity
D)increases the output of both commodities

Question 22

Carefully identify and discuss the conditions which can lead to immiserizing growth.

Question 23

Immiserizing growth is most likely in which of the following cases?

A)When the country is small.
B)When the demand for the nation's export good is inelastic.
C)In developed countries.
D)When growth causes the terms of trade to improve.

Question 24

Using the data presented in the chapter,explain how growth,trade,and welfare have changed in the leading industrial countries over the 1990-2010 period.

Question 25

A shift in a nation's offer curve toward the axis measuring the exportable commodity tends to ____________ trade at constant prices,and __________ the nation's terms of trade.

A)expand,improve
B)expand,decrease
C)decrease,improve
D)decrease,decrease

Question 26

What does it mean for a nation's production to be pro-trade?

Question 27

What does the Rybczynski theorem postulate?

Question 28

What is meant by comparative static analysis?

Question 29

How does a change in tastes that shifts in a nation's offer curve toward the axis measuring its exportable commodity impact the nation?

Question 30

Use graphs to demonstrate the effect of an increase in a small country's capital stock at constant commodity prices.