Deck 7: International Trade, Human Happiness, and Inequality

Question 1

Orthodox models of international trade, like the Heckscher-Ohlin model, suggest that international trade:

A) makes world incomes less equal.
B) reduces disparities and makes incomes across countries more equal.
C) has no effect on income distribution.
D) equalizes incomes at low levels of economic development but increases income disparities across wealthy countries.

Answer 1

reduces disparities and makes incomes across countries more equal.

Question 2

Chapter 7 presents the Gini coefficients for income and wealth for those countries for which we have reliable data, and this data:

A) clearly supports Marx's hypothesis of a rising concentration income and wealth over time.
B) shows income Ginis are substantially higher than the wealth Ginis for the same countries.
C) shows that the growing inequality of wealth predicted by Marx is not an inevitable outcome.
D) All of the above.
E) None of the above.

Answer 2

shows income Ginis are substantially higher than the wealth Ginis for the same countries.

Question 3

The Gini coefficient measures the:

A) relative level of per capita income in a country compared to the rest of the world.
B) measures the relative rate of growth of per capita income compared to the rest of the world.
C) the inequality of the distribution of income or wealth.
D) the income of the poorest person as a percentage of the income of the richest person.

Answer 3

the inequality of the distribution of income or wealth.

Question 4

The Gini coefficient requires that we first estimate the:

A) rate of economic growth.
B) Lorenz curve.
C) economy's aggregate demand and supply curves.
D) poverty rate.

Question 5

In comparing current economic inequalities with those of medieval England, the inequality of economic well-being and social status was:

A) greater then than it is now.
B) slightly smaller than it is now.
C) much less than it is now.
D) almost exactly the same as it is now.

Question 6

The global Gini coefficient estimates presented in Chapter 7 suggest that the very substantial growth of international trade over the past 200 years:

A) has not reduced or increased global income inequality.
B) indeed reduced global income inequality.
C) increased global income inequality.
D) first increased inequality but then, more recently, decreased inequality.

Question 7

Which of the following statement(s) is(are) true?

A) Differences in per capita incomes across countries are much greater than within any single country.
B) Worldwide (global) income inequality has been reduced during the post-World War II period.
C) The higher the Gini coefficient the more equal is the income distribution.
D) All of the above.
E) None of the above.

Question 8

Which of the following statement(s) is(are) true?

A) The more "curved" is the Lorenz curve, the more equal is the distribution of income.
B) The Gini coefficient is derived from the Lorenz curve.
C) Gini coefficients for individual countries are generally lower than estimated global Gini coefficients.
D) All of the above.
E) None of the above.

Question 9

The shifts in global income inequality over the past two centuries:

A) confirm the Heckscher-Ohlin model and its factor price equalization theorem.
B) confirm the role of trade in the Solow and Schumpeterian growth models.
C) do not provide any useful evidence for judging the Heckshcer-Ohlin model.
D) definitively refute the Heckscher-Ohlin model and its factor price equalization theorem.

Question 10

The social-contractionist philosophy of John A. Rawls (1971) provides:

A) insight into the distributional effects of international trade.
B) a definition of a just society.
C) a model of the optimum distribution of income for maximizing growth.
D) a framework within which to analyze the role of culture in shaping international trade.

Question 11

Rawls reasoned that a truly unbiased definition of social justice can only be arrived at:

A) from behind a "veil of ignorance" that hides one's own personal characteristics, background, culture, and circumstances.
B) from analysis carried out by people who, hypothetically, do not know their actual social class, race, gender, sexual orientation, level of wealth, education, talent, and other personal and social characteristics.
C) if people are concerned about the conditions of the least well-off people in a society.
D) All of the above.
E) None of the above.

Question 12

John Rawls' analysis of social justice suggests that:

A) the basic human rights that underlie social justice are inseparable from basic economic rights.
B) economic rights are separate from human rights; economic rights must be "earned."
C) human rights are costly, but human rights are free, which means societies can provide human rights even if they cannot provide economic rights.
D) All of the above.
E) None of the above.

Question 13

The United Nations' Universal Declaration of Human Rights supplements basic human rights such as political rights, freedom of speech, freedom of assembly, freedom from torture and degrading punishment, a ban on servitude and slavery, and equal rights before the law with a set of specific economic rights, such as:

A) the right to work
B) free choice of employment
C) protection against unemployment
D) All of the above.
E) None of the above.

Question 14

The United Nations' Universal Declaration of Human Rights supplements basic human rights with a set of economic rights, which does not include:

A) free education.
B) the right to organize and join labor unions.
C) equal pay for equal work.
D) None of the above; all are included in the Universal Declaration.
E) all three, a, b, and c, are not included in the Universal Declaration.

Question 15

President Roosevelt of the United States in 1944 detailed a set of economic rights he felt were necessary to create the conditions in which people could enjoy human rights such as free speech, freedom of thought, political freedom, or freedom of religion, such as:

A) the right to a useful and remunerative job.
B) the right to earn enough to provide adequate food and clothing and recreation.
C) the right of every businessman to trade in an atmosphere of freedom from unfair competition and domination by monopolies.
D) All of the above.
E) None of the above.

Question 16

For which of the following policy areas does the United Nations Universal Declaration of Human Rights differ from Roosevelt's list of economic rights?

A) Education
B) Health
C) Employment
D) Restriction of monopolies

Question 17

Raymond Vernon's (1966) leader-follower model of trade is often referred to as:

A) the comparative advantage model.
B) the agglomeration model.
C) the product cycle model.
D) the technological diffusion model.

Question 18

Regional economists have amassed evidence over the decades showing that:

A) tacit knowledge spreads very quickly geographically.
B) knowledge creation and technology development tends to agglomerate.
C) agglomeration in manufacturing was more of a myth than a real process; processes were rapidly copied in other parts of the world.
D) technology is quickly transferred today because of the development of communications and the Internet.

Question 19

Among the conclusions of the many studies of technology diffusion is/are:

A) foreign countries are the principal source of new technologies for all but the very largest economies.
B) small developed economies and all developing economies depend on foreign sources for nearly all of their technological change.
C) in general it takes longer for technology to move across borders than within countries.
D) All of the above.
E) None of the above.

Question 20

Among the conclusions of the many studies of technology diffusion is/are:

A) developed economies absorb less foreign technology than developing economies because the former develop more of their own technology.
B) the volume of bilateral trade explains a significant share of the variation in bilateral technology flows.
C) developing countries gain less technology from trade with developed economies than they do from trade links with other developing economies because developed country technology is inappropriate for developing economies.
D) All of the above.
E) None of the above.

Question 21

Which of the following statements is false?

A) The speed of knowledge and technology transfer has increased.
B) Patents and copyrights make knowledge and technology increasingly excludable.
C) The transfer of knowledge and technology depends on the absorption capability of the receiving country.
D) There are few costs to the transfer of nonrival technology.

Question 22

Agglomeration is limited by:

A) congestion.
B) destruction of local ecosystems.
C) transportation costs.
D) All of the above.
E) None of the above.

Question 23

Over 80 percent of the world's innovations come from which of the following group of countries?

A) The United States, the U.K., Germany, France, and the Soviet Union.
B) China, India, Japan, Korea, and the United States.
C) The United States, the U.K., Japan, Germany, Switzerland, and the Netherlands.
D) The United States, Canada, Sweden, Italy, and Germany.

Question 24

Among the reasons why industries agglomerate are:

A) increasing returns to scale.
B) diminishing returns.
C) lower transportation costs.
D) All of the above.
E) None of the above.

Question 25

Among the reasons why industries agglomerate are:

A) rising transportation costs
B) a shift from an agricultural society to an industry-based society.
C) diminishing returns.
D) All of the above.
E) None of the above.

Question 26

Which of the following statements about the nature of innovation is false?

A) Innovation can be accurately measured by the number of patents, citations, and copyrights.
B) The accumulation of knowledge makes the creation of new knowledge more difficult.
C) Innovative activity is less likely to agglomerate than manufacturing activity does.
D) All of the above.
E) None of the above.

Question 27

Which of the following statements about the nature of innovation is false?

A) Once an idea is conceived, it can be used by many people without diminishing its value.
B) The tacit nature of most knowledge and technology means adoption requires costly and time-consuming person-to-person interactions.
C) Innovation is more often characterized by agglomeration than manufacturing.
D) All of the above.
E) None of the above.

Question 28

Which of the following statements about happiness and income is true?

A) All you need is love. Income has no effect on happiness.
B) After basic needs are met, there is less happiness gained with higher income.
C) There remains a strong positive relationship between happiness and income with increasing level of income.
D) Relative income is not as important for happiness in poor countries as compared to more wealthy countries.
E) None of the above.

Question 29

Among the many things that are positively related to happiness is:

A) being older.
B) being male.
C) being retired.
D) never being married.
E) having more years of education.

Question 30

The Heckscher-Ohlin (HO) model addresses the distributional effects of international trade with its:

A) one-price theorem.
B) factor price equalization theorem.
C) comparative advantage theorem.
D) Gini correlary.

Question 31

Immiserizing growth is more probable in countries where exports are based in:

A) financial services.
B) industrial production of consumer durables.
C) agricultural products.
D) service industries, such as tourism.

Question 32

Immiserizing growth can occur when economic growth:

A) lowers the costs of producing an export for which world demand is very elastic.
B) raises the costs of producing an export for which world demand is very inelastic.
C) lowers the costs of producing an export for which world demand is very inelastic.
D) raises the costs of producing an export for which world demand is very elastic.

Question 33

Immiserizing growth occurs when:

A) the welfare losses from a decline in the terms of trade exceed the welfare gains from increasing the supply of exports.
B) an outward shift in the economy's production possibilities reduces overall welfare.
C) investment increases the real quantity of national output but leaves the country with a lower aggregate level of welfare.
D) All of the above.
E) None of the above.

Question 34

The conditions that make immizerizing growth possible include:

A) the exporting country's growth in productive capacity is concentrated in the sectors of the economy that compete with imports.
B) the price elasticity of demand for the export product is inelastic.
C) exports account for a miniscule share of the exporting country's total production.
D) there is very rapid technological change.

Question 35

The conditions that make immizerizing growth possible include:

A) the exporting country's growth in productive capacity is concentrated in the sectors of the economy that export.
B) the price elasticity of demand for the export product is inelastic.
C) exports account for a large share of the country's GDP.
D) All of the above.
E) None of the above.

Question 36

The conditions that make immizerizing growth possible include:

A) the exporting country's growth in productive capacity is concentrated in the sectors of the economy that export.
B) the price elasticity of demand for the export product is elastic.
C) the export country supplies a small, almost imperceptible, portion of world output.
D) the export country does not restrict trade.

Question 37

The resource curse refers to:

A) the resulting pollution from mining of dirty energy sources, such as coal and tar sands.
B) the lack of economic growth due to lack of critical natural resources, such as, petroleum, water, etc.
C) the inevitable invasion of resource rich countries by more powerful countries who want to obtain those resources.
D) the negative correlation between growth and resource exporting countries.