Question 1

In the specific­factors model, suppose that a country has
A comparative advantage in manufacturing output.Will
Workers be better or worse off following the opening of
Trade with other countries?

Accepted Answer

Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls.

Question 2

When the demand for products competing with imports
Falls, demand for the specific factors used in their
Production falls and:

Accepted Answer

When demand for products falls, the demand for specific factors used in their production also falls, leading to a decrease in their relative prices (earnings) as they become less in demand.

Question 3

Workers displaced because of trade:

Accepted Answer

Workers displaced because of trade have experienced larger losses in manufacturing compared to services, larger losses among older workers, and often take longer than 3 years to find replacement jobs, thus experiencing all of these issues.

Question 4

An increase in demand for resources fixed or specific to
An industry will cause their earnings _____ because
Those resources cannot be released from other
Industries.

Accepted Answer

When the demand for specific resources increases in an industry, their earnings will rise disproportionately because these resources cannot be easily released from other industries. As a result, the industry will have to pay more to ensure a sufficient supply of those resources, leading to a disproportionate increase in their earnings.

Question 5

The Trade Adjustment Assistance program is:

Accepted Answer

The Trade Adjustment Assistance program is a federal program that provides assistance to workers who have lost their jobs due to increased imports or shifts in production overseas. It provides unemployment insurance, job training, and other support to help impacted workers find new employment opportunities. Therefore, option B is the best choice as it accurately describes the program.

Question 6

If trade causes some workers to be laid off, most
Economists conclude:

Accepted Answer

Most economists conclude that trade can lead to job losses in certain sectors, but it also creates jobs in other sectors and can lead to overall economic benefits. Therefore, none of the given options accurately reflects the consensus among economists.

Question 7

In the specific­factors model, an increase in the price of
The manufactured good will cause:

Accepted Answer

In the specific-factors model, an increase in the price of the manufactured good will lead to an increase in the demand for labor in the manufacturing sector, thereby increasing the wage in that sector.

Question 8

If trade causes shifts in production so that some workers
Are laid off, most economists conclude:

Accepted Answer

Most economists conclude that the situation is usually temporary because trade causes shifts in production that create new jobs in export industries. While some workers may be temporarily laid off, the overall effect of trade is to increase efficiency and expand economic opportunities, ultimately benefiting everyone. Therefore, it is not necessary to extend unemployment benefits or prevent imports to protect U.S. jobs.

Question 9

Economists believe that layoffs and wage declines due to
Increased imports:

Accepted Answer

While increased imports may contribute to layoffs and wage declines in certain industries, it is not the sole cause. Other factors such as technological advancements and changing demands for workers also play a role. Additionally, the World Trade Organization (WTO) primarily focuses on trade agreements, not individual countries' labor policies. Therefore, option B is the most accurate choice. Option A and D are incorrect as they are extreme and do not provide a nuanced view of the situation. Option C is also incorrect since the WTO does not typically address domestic labor issues.

Question 10

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
Will workers be better or worse off following the opening
Of trade with other countries?

Accepted Answer

In the specific-factors model, when the home country has a comparative advantage in manufacturing, opening trade will lead to an increase in the relative price of manufacturing goods. As a result, the real wage in terms of the agricultural good will rise and the real wage in terms of the manufactured good will fall. Therefore, workers may be better off or worse off depending on their sector of employment. Those who work in agriculture will benefit from the increase in real wage, while those who work in manufacturing will experience a decrease in real wage. Overall, the effect on workers cannot be determined with certainty without more information about the specific factors of production and their mobility between sectors.

Question 11

Which of the following is NOT a possible explanation for
Wage differences across sectors?

Accepted Answer

The government mandating that service sector jobs pay more is not a typical explanation for wage differences across sectors.

Question 12

Which of the following BEST describes changes in U.S.
Manufacturing employment between 1973 and 2011?

Accepted Answer

Manufacturing employment decreased from 1973 to 2011, as the sector faced increased global competition and automation. Additionally, the overall U.S. labor force increased during this period. As a result, manufacturing employment as a share of total U.S. employment also declined during this time.

Question 13

In an industrialized country, the amount of labor
Employed in the agriculture sector is:

Accepted Answer

In industrialized countries, the trend is for the agriculture sector to have a smaller share of employment as technology and efficiency improve, leading to larger employment in the manufacturing and service sectors. Therefore, the labor employed in the agriculture sector is lower than that employed in either the manufacturing or service sector.

Question 14

As relative prices in various industries change due to
Trade, the marginal product of fixed resources used in
The expanding industry __________, and the marginal
Product of fixed resources used in the contracting
Industry __________.

Accepted Answer

As resources are reallocated from the contracting industry to the expanding industry, the demand for resources in the expanding industry increases, leading to a rise in their marginal product. On the other hand, the reduced demand for resources in the contracting industry leads to a decrease in their marginal product. Therefore, the correct answer is option A, which states that the marginal product of fixed resources used in the expanding industry rises, while that of the contracting industry falls.

Question 15

In the specific­factors model, an increase in the price of
The agricultural good will cause:

Accepted Answer

In the specific-factors model, an increase in the price of the agricultural good raises the demand for labor in the agricultural sector, leading to higher nominal wages in both sectors due to labor mobility and competition.

Question 16

If the relative price of one product rises and labor is
Mobile, then:

Accepted Answer

If the relative price of one product rises and labor is mobile, the production of the now relatively more profitable good will expand, causing an increase in demand for labor in that sector. As a result, the equilibrium real wage will increase, but not by the same percentage as the increase in the relative price. This is because the increase in demand for labor will cause an increase in the price of labor, which will lead to increased costs for the firms producing the good. This will result in a decrease in supply and an increase in the price of the good, which will dampen the percentage increase in the equilibrium real wage.

Question 17

According to the Bureau of Labor Statistics, the people
Losing jobs in the manufacturing sector between 2009
And 2011, were:

Accepted Answer

The question asks about people who lost jobs in the manufacturing sector between 2009 and 2011. According to the Bureau of Labor Statistics, these people were less likely to find higher paying jobs than service sector workers. Therefore, choice B is the correct answer.

Question 18

Suppose that labor is mobile between sectors but that
Capital and land are specific.Then labor will tend to
Benefit from trade when:

Accepted Answer

When labor spends a large amount of its income on the imported good, it benefits from trade because trade typically lowers the price of imported goods, increasing the purchasing power of labor's income.

Question 19

As relative prices in various industries change due to
Trade, the marginal product of the mobile resources
Used in the expanding industry __________, and the
Marginal product of the mobile resources used in the
Contracting industry __________.

Accepted Answer

The answer of As relative prices in various industries change...

Question 20

The term real wages refers to:

Accepted Answer

Real wages refer to the purchasing power of a worker's wage, which takes into account inflation and the cost of goods and services. It is not simply the worker's hourly wage in dollars (A) or the productivity of their labor or capital (C, D).

Quiz 3: Gains and Losses From Trade in the Specific-Factors Model

In the specificfactors model, suppose that a country has A comparative advantage in manufacturing output.Will Workers be better or worse off following the opening of Trade with other countries?

When the demand for products competing with imports Falls, demand for the specific factors used in their Production falls and:

Workers displaced because of trade:

An increase in demand for resources fixed or specific to An industry will cause their earnings _____ because Those resources cannot be released from other Industries.

The Trade Adjustment Assistance program is:

If trade causes some workers to be laid off, most Economists conclude:

In the specificfactors model, an increase in the price of The manufactured good will cause:

If trade causes shifts in production so that some workers Are laid off, most economists conclude:

Economists believe that layoffs and wage declines due to Increased imports:

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. Will workers be better or worse off following the opening Of trade with other countries?

Which of the following is NOT a possible explanation for Wage differences across sectors?

Which of the following BEST describes changes in U.S. Manufacturing employment between 1973 and 2011?

In an industrialized country, the amount of labor Employed in the agriculture sector is:

As relative prices in various industries change due to Trade, the marginal product of fixed resources used in The expanding industry , and the marginal Product of fixed resources used in the contracting Industry .

In the specificfactors model, an increase in the price of The agricultural good will cause:

If the relative price of one product rises and labor is Mobile, then:

According to the Bureau of Labor Statistics, the people Losing jobs in the manufacturing sector between 2009 And 2011, were:

Suppose that labor is mobile between sectors but that Capital and land are specific.Then labor will tend to Benefit from trade when:

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry , and the Marginal product of the mobile resources used in the Contracting industry .

The term real wages refers to:

Quiz 3: Gains and Losses From Trade in the Specific-Factors Model

In the specific­factors model, suppose that a country has A comparative advantage in manufacturing output.Will Workers be better or worse off following the opening of Trade with other countries?

When the demand for products competing with imports Falls, demand for the specific factors used in their Production falls and:

Workers displaced because of trade:

An increase in demand for resources fixed or specific to An industry will cause their earnings _____ because Those resources cannot be released from other Industries.

The Trade Adjustment Assistance program is:

If trade causes some workers to be laid off, most Economists conclude:

In the specific­factors model, an increase in the price of The manufactured good will cause:

If trade causes shifts in production so that some workers Are laid off, most economists conclude:

Economists believe that layoffs and wage declines due to Increased imports:

Suppose that the Home country in the two­sector (manufacturing and agriculture) specific­factors model Has a comparative advantage in manufactured output. Will workers be better or worse off following the opening Of trade with other countries?

Which of the following is NOT a possible explanation for Wage differences across sectors?

Which of the following BEST describes changes in U.S. Manufacturing employment between 1973 and 2011?

In an industrialized country, the amount of labor Employed in the agriculture sector is:

As relative prices in various industries change due to Trade, the marginal product of fixed resources used in The expanding industry __________, and the marginal Product of fixed resources used in the contracting Industry __________.

In the specific­factors model, an increase in the price of The agricultural good will cause:

If the relative price of one product rises and labor is Mobile, then:

According to the Bureau of Labor Statistics, the people Losing jobs in the manufacturing sector between 2009 And 2011, were:

Suppose that labor is mobile between sectors but that Capital and land are specific.Then labor will tend to Benefit from trade when:

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry __________, and the Marginal product of the mobile resources used in the Contracting industry __________.

The term real wages refers to:

In the specificfactors model, suppose that a country has A comparative advantage in manufacturing output.Will Workers be better or worse off following the opening of Trade with other countries?

In the specificfactors model, an increase in the price of The manufactured good will cause:

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. Will workers be better or worse off following the opening Of trade with other countries?

As relative prices in various industries change due to Trade, the marginal product of fixed resources used in The expanding industry , and the marginal Product of fixed resources used in the contracting Industry .

In the specificfactors model, an increase in the price of The agricultural good will cause:

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry , and the Marginal product of the mobile resources used in the Contracting industry .