Economics MCQs

Page No. 336

According to the Heckscher-Ohlin model ?


aeveryone automatically gains from trade


bThe gainers from trade outnumber the losers from trade


cThe scarce factor necessarily gains from trade


dNone of the above



In his empirical test of comparative advantage Wassily Leontief found that ?


aU.S exports are capital intensive relative to U.S imports


bU.S imports are labor intensive relative to U.S exports


cU.S exports are neither labor nor capital intensive


dNone of the above


View Answer None of the above

The Heckshcer-Ohl assumes that are indentical between countries?


atastes and preferences


b technology levels


c factor indowments


dBoth A and B


View Answer Both A and B

One of the predictions of the Heckscher-Ohlin model is that ?


acountries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other


bcountries with tend to specialize but not completely in their comparative advantage good


c reciprocal demand leads to an equilibrium terms of trade by inducing change in both demand and supply


dAll of the above


View Answer All of the above

If tastes are identical between countries, then comparative advantage is determined by ?


a supply condition only


b demand conditions only


c supply and demand conditions


dcan’t tell without more information



Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of ?


aresearch and development subsidies


bloan guarantees


clow interest rate loans


dAll of the above


View Answer All of the above

The product cycle theory of trade is essentially a ?


astatic, short run trade theory


b dynamic long run trade theory


czero-sum theory of trade


dnegative-sum theory of trade



The Heckscher-Ohl in model rules out the classical model’s basis for trade by assuming that _________ is (are) identical between countries?


afactor endowments


bfactor intensities


ctechnology


dopportunity costs


View Answer technology

Declining costs per unit of output results from international trade especially if ?


a Ininternational trade affords producers monopoly power


b National governments levy imports tariffs and quotas


cProducing goods entails increasing costs


dEconomies of scale exist for producers



Dynamic comparative advantage theory ?


a helps explain why some nations use industrial policy to support potentially competitive new firms


bcannot explain strategic competition between firms such as Boeing and Airbus


c Is another name for Ricardo’s comparative advantage theory


d None of the above



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