1. As a nation opens trade, the relative prices of products it exports will ____
ID: 1094145 • Letter: 1
Question
1.
As a nation opens trade, the relative prices of products it exports will __________ and the relative prices of products it imports will ___________.
A)
rise; fall
B)
fall; rise
C)
remain constant; fall
D)
rise; remain constant
2.
Suppose that the Home country in the two sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs?
A)
It will fall.
B)
It will rise.
C)
It will not change.
D)
It will first fall, then rise.
3.
In the specific-factors model, suppose that a country has a comparative advantage in manufacturing output. Will landowners be better or worse off following the opening of trade with other countries?
A)
They will be better off.
B)
They will be worse off.
C)
They may be better off or worse off because the real rental on capital in terms of the agricultural good rises and the real rental in terms of the manufactured good falls.
D)
They may be better off or worse off because the real rental on capital in terms of the manufactured good rises and the real rental in terms of the agricultural good falls.
4.
The specific-factors model is termed a
1.
As a nation opens trade, the relative prices of products it exports will __________ and the relative prices of products it imports will ___________.
A)
rise; fall
B)
fall; rise
C)
remain constant; fall
D)
rise; remain constant
2.
Suppose that the Home country in the two sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs?
A)
It will fall.
B)
It will rise.
C)
It will not change.
D)
It will first fall, then rise.
3.
In the specific-factors model, suppose that a country has a comparative advantage in manufacturing output. Will landowners be better or worse off following the opening of trade with other countries?
A)
They will be better off.
B)
They will be worse off.
C)
They may be better off or worse off because the real rental on capital in terms of the agricultural good rises and the real rental in terms of the manufactured good falls.
D)
They may be better off or worse off because the real rental on capital in terms of the manufactured good rises and the real rental in terms of the agricultural good falls.
4.
The specific-factors model is termed a
Explanation / Answer
B
C
A
C
B
C
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