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Macroeconomics Study Set 42

Business

Quiz 32 :

The Gains From International Trade

Quiz 32 :

The Gains From International Trade

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If a country has a comparative advantage in the production of soybeans, and it trades freely with other countries, it will most probably
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C

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Consider the following information about the production of two goods, X and Y, in two countries, A and B: ∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y. ∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y. ∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously. TABLE 32-1 -Refer to Table 32-1. Country A has a comparative advantage in producing good X if
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Answer:

A

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Consider the following information about the production of two goods, X and Y, in two countries, A and B: ∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y. ∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y. ∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously. TABLE 32-1 -Refer to Table 32-1. There is no scope for gains from trade due to specialization between the two countries if
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Answer:

C

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Consider a country that is initially autarkic and then engages freely in international trade. If this country has a comparative advantage in the production of soybeans, it will most probably
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A country that engages in no foreign trade is said to be in a situation of
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The existence of any ʺgains from tradeʺ relies on
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The existence of ʺabsolute advantageʺ
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Consider two countries that can produce rice and other products. If neither country has an absolute advantage in the production of rice,
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Trade, whether between individuals or nations, generally promotes
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There will be no gains from specialization and trade between two countries if 1) neither country has an absolute advantage in the production of any good; 2) neither country has a comparative advantage in the production of any good; 3) opportunity costs differ too much between the two countries.
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The increases in a nationʹs output and consumption that result from specialization and trade are called
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One region is said to have an absolute advantage over another region in the production of good X when
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Consider the following information about the production of two goods, X and Y, in two countries, A and B: ∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y. ∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y. ∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously. TABLE 32-1 -Refer to Table 32-1. If Xa is less than Xb, we can conclude with certainty that
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The concept of ʺcomparative advantageʺ refers to the
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Since 1950, the worldʹs real GDP has increased by seven times and the volume of world trade has increased by roughly
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There will be no gains from specialization and trade between two countries if 1) neither country has an absolute advantage in the production of any good; 2) neither country has a comparative advantage in the production of any good; 3) opportunity costs are the same in the two countries.
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In 2014 the value of goods exported from Canada was approximately $ while the value of goods imported was approximately $ . Each of these flows represents % of Canadaʹs GDP.
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Consider the following information about the production of two goods, X and Y, in two countries, A and B: ∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y. ∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y. ∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously. TABLE 32-1 -Refer to Table 32-1. Country A has an absolute advantage in producing good X if
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Consider the following information about the production of two goods, X and Y, in two countries, A and B: ∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y. ∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y. ∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously. TABLE 32-1 -Refer to Table 32-1. If the ratio Xa/Ya is less than the ratio Xb/Yb, then we can say with certainty that
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The principle of comparative advantage was first formulated in the 18th century by
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