Economics MCQs

Page No. 336

According to the Heckscher-Ohlin model ?


aeveryone automatically gains from trade

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bThe gainers from trade outnumber the losers from trade

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cThe scarce factor necessarily gains from trade

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dNone of the above

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


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

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

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cU.S exports are neither labor nor capital intensive

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dNone of the above

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View Answer None of the above

The Heckshcer-Ohl assumes that are indentical between countries?


atastes and preferences

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b technology levels

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c factor indowments

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dBoth A and B

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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

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

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

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dAll of the above

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View Answer All of the above

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


a supply condition only

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b demand conditions only

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c supply and demand conditions

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dcan’t tell without more information

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


aresearch and development subsidies

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bloan guarantees

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clow interest rate loans

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dAll of the above

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View Answer All of the above

The product cycle theory of trade is essentially a ?


astatic, short run trade theory

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b dynamic long run trade theory

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czero-sum theory of trade

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dnegative-sum theory of trade

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


afactor endowments

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bfactor intensities

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ctechnology

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dopportunity costs

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View Answer technology

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


a Ininternational trade affords producers monopoly power

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b National governments levy imports tariffs and quotas

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cProducing goods entails increasing costs

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dEconomies of scale exist for producers

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Dynamic comparative advantage theory ?


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

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bcannot explain strategic competition between firms such as Boeing and Airbus

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c Is another name for Ricardo’s comparative advantage theory

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d None of the above

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