Question 1

Measuring the effects of labor migration shows:
A) that as workers move, they disrupt their families and cause huge costs in the recipient nation.
B) that most immigrants spend months trying to find work.
C) that immigration benefits the recipient nation by raising the marginal product of capital, expanding labor-intensive production, and lowering prices of labor-intensive goods.
D) that immigration is very harmful to the host nation because of a huge increase in the unemployment rate.

Accepted Answer

Research has shown that immigration can benefit the recipient nation by increasing economic growth, raising the marginal product of capital, expanding labor-intensive production, and lowering prices of labor-intensive goods. While there may be some costs associated with immigration, such as adjusting to cultural differences and language barriers, these are generally outweighed by the economic benefits. The notion that immigrants harm the host nation by causing a huge increase in the unemployment rate is a common misconception that is not supported by empirical evidence.

Question 2

As of 2005, the European Union had:
A) 5 members.
B) 15 members.
C) 25 members.
D) 40 members.

Accepted Answer

As of 2005, the European Union had 25 members.

Question 3

According to World Bank estimates, how large were the remittances of migrant workers to their home countries in 2013?
A) $5 trillion
B) $2.5 trillion
C) $480 billion
D) $200 million

Accepted Answer

The World Bank estimates that the remittances of migrant workers to their home countries in 2013 amounted to $480 billion. This is a significant amount of money that plays an important role in many countries' economies. Option A is not correct as it overestimates the amount of remittances. Option B is also incorrect as it underestimates the amount of remittances. Option D is too low and not a plausible estimate for remittances.

Question 4

Without productivity growth, what is the long-run effect of labor migration on the receiving country?
A) There will be an increase in production of the labor-intensive good.
B) Wages will fall.
C) Returns to capital will increase.
D) None of these is the long-run effect.

Accepted Answer

The answer of Without productivity growth, what is the long-run...

Question 5

Economists conclude that the effect on our world's standard of living as a result of labor and capital migration has been:
A) negative overall.
B) positive overall as resources move to their highest-valued use.
C) positive in some respects but very harmful in the long run to workers.
D) so small worldwide that the effect is not worth measuring.

Accepted Answer

Economists generally agree that labor and capital migration have a positive overall effect on the world's standard of living. This is because resources are being allocated to their highest-valued use, leading to increased efficiency and productivity. However, there may be short-term negative effects on some workers who lose their jobs or face wage competition. Nevertheless, in the long run, the benefits of increased economic growth and innovation outweigh these costs.

Question 6

The gains from immigration of labor or capital to the recipient nation can be summarized as:
A) the total cost of acquiring new resources versus the cost of using domestic resources.
B) the increase in prices minus the increase in the unemployment rate.
C) the gain in domestic real GDP minus costs from immigration.
D) the impact on the ability of labor unions to attract new members and the ability of domestic firms to retain profits.

Accepted Answer

The gains from immigration of labor or capital to the recipient nation can be measured by the increase in domestic real GDP minus costs from immigration. This means that the benefits of immigration should outweigh the costs associated with integrating new immigrants into the economy, such as providing education and healthcare services, and potentially increased competition for jobs. It is important to note that the impact of immigration may vary depending on the specific circumstances of the recipient nation, including its labor market conditions and political environment.

Question 7

Which of the following is a key assumption in proving the gains from immigration?
A) Immigrants are generally high skilled.
B) The productivity of labor rises as the number of workers rises.
C) Immigrants are generally low skilled.
D) The productivity of labor falls as the number of workers rises.

Accepted Answer

The answer of Which of the following is a key...

Question 8

The economic benefit to immigrating workers is:
A) political freedom and ideological peace.
B) living in a nation where they do not have to pay taxes and receive many free social services.
C) the chance to be free from discrimination and poverty.
D) the present value of higher wages minus the value of the costs involved with the immigration process.

Accepted Answer

The economic benefit to immigrating workers refers to the financial advantage of higher wages compared to their home country, minus the costs involved in the immigration process such as travel fees, visa fees, and legal fees. Therefore, the best choice is D, as it accurately describes the economic benefit. The other choices are either unrelated to the economic benefit or incorrect assumptions.

Question 9

Suppose that FDI has "spillover" benefits for the recipient nation (such as spurring technological innovation, more FDI, or growth in labor productivity). These spillover effects might help explain why:
A) in Singapore, wages fell in the short run.
B) in Singapore, wages fell and returns to capital rose in the long run.
C) in Singapore, wages rose and, depending on the calculation used, returns to capital were close to original levels in the long run, which contradicted the Heckscher-Ohlin model.
D) in Singapore, absolutely nothing changed in either the short or the long run.

Accepted Answer

Spillover benefits from FDI, such as technological innovation and growth in labor productivity, can lead to increased wages. The Heckscher-Ohlin model, which predicts outcomes based on countries' relative endowments of factors of production, might not fully account for these dynamic effects of FDI, hence the observed outcomes in Singapore where wages rose and returns to capital remained close to original levels in the long run.

Question 10

Which of the following would one expect if there were no trade in goods but resources were free to move among countries?
A) Labor will emigrate from the capital-abundant country.
B) Labor will immigrate to the capital-abundant country.
C) Labor will immigrate to the capital-scarce country.
D) Labor will emigrate from the labor-scarce country.

Accepted Answer

If resources are free to move, labor will move from the labor-scarce country to the capital-abundant country where wages are higher. Therefore, labor will immigrate to the capital-abundant country.

Question 11

In the short run, which of the following will reduce the gains from labor migration to the recipient nation?
A) Workers remit less than the value of their marginal products.
B) Migrant workers have a declining marginal product so that the equilibrium wage is lower than marginal products of earlier immigrants.
C) Immigrants are low cost in terms of adjustment costs such as crime prevention, language assimilation, and few children enrolled in school.
D) Workers remit more than the value of their marginal products.

Accepted Answer

Workers remitting more than the value of their marginal products means that a significant portion of their earnings is sent back to their home country rather than being spent or invested in the recipient nation. This can reduce the economic benefits or gains that the recipient nation might otherwise enjoy from labor migration, as less money is circulating within its economy to stimulate demand for goods and services.

Question 12

Which of the following statements describes the short-run effect(s) of labor immigration?
A) The source nation benefits from remittances and a rise in the overall marginal product of labor as some of its workers emigrate.
B) Emigrating workers create a "brain drain," and the marginal product of labor declines in the source nation.
C) Emigration of workers usually lowers the real wage of workers left behind in the source nation.
D) The source nation experiences a decline in the overall marginal product of labor as some workers emigrate.

Accepted Answer

The source nation benefits from remittances and a rise in the overall marginal product of labor as some of its workers emigrate.

Question 13

Economist George Borjas has estimated the net benefits (+) or costs (-) to the United States from labor immigration to be approximately:
A) +10% of GDP.
B) -5% of GDP.
C) +0.1% to 0.4% of GDP.
D) 0.5% capital losses and 0.8% labor gains.

Accepted Answer

According to economist George Borjas, the net benefits (+) or costs (-) to the United States from labor immigration is approximately +0.1% to 0.4% of GDP.

Question 14

Economists who have studied the impact of immigration on world welfare generally find, after considering impacts on all constituencies, that world GDP has _______ as a result of worker migration.
A) decreased
B) risen
C) remained constant
D) decreased sharply

Accepted Answer

Most economists find that the impact of immigration on world welfare is positive and results in an overall increase in global GDP.

Question 15

Without productivity growth, what is the long-run effect of labor migration?
A) There will be an increase in production in the sector using labor intensively.
B) There will be clear gains to owners of capital versus labor.
C) There will be clear gains to labor versus owners of capital.
D) There will be a shift of world resources toward the high-income nations.

Accepted Answer

Without productivity growth, labor migration will only increase the supply of labor, leading to a decrease in wages in the receiving country. However, there will be an increase in production in the sector using labor intensively, as there will be more workers to employ. This may lead to an increase in output in the short run, but in the long run, productivity growth is necessary for sustained economic growth and higher wages.

Question 16

Some economists have proposed a "brain drain" tax to be administered though the United Nations. This tax would:
A) compensate firms that hire people who need remedial reading and writing skills to be able to function in an advanced economy.
B) repay the nations of origin of highly educated immigrants for their losses.
C) force immigrants to pay taxes where they work instead of where they live.
D) require the national government to pay taxes to states to recover the cost of educating immigrants.

Accepted Answer

The "brain drain" tax proposed by these economists would aim to repay the nations of origin of highly educated immigrants for their losses. This refers to the fact that many highly educated individuals leave their home countries to work in more developed economies, depriving their home nations of their skills and potential contributions to their economies. The tax would help compensate for this loss. None of the other options presented match the proposed purpose of the tax.

Question 17

Which of the following terms is used to describe payments made by foreign resident workers to families in their home nations or in the form of taxes paid to their home nations?
A) worker redistribution
B) worker earnings
C) worker remittances
D) worker repayments

Accepted Answer

Worker remittances refer to payments made by foreign resident workers to families in their home nations or in the form of taxes paid to their home nations.

Question 18

Which of the following is a key assumption in factor price insensitivity in response to a fall in FDI?
A) Technology is changing in the capital-intensive sector.
B) Technology is changing in the labor-intensive sector.
C) Prices are changing for the capital-intensive good.
D) None of these is a key assumption.

Accepted Answer

The key assumption in factor price insensitivity is that the factor prices do not change in response to a fall in FDI. None of the given options mention this assumption.

Question 19

Which of the following BEST describes the short-run effects of FDI inflows to Singapore during the latter part of the twentieth century?
A) The effects contradicted the specific-factors model because wages fell, while the rental on capital rose.
B) The effects confirmed the specific-factors model because wages rose, while the rental on capital fell.
C) FDI did not have any measurable effects on either wages or the rental on capital in Singapore.
D) FDI confounded economists because both the rental on capital rose and wages rose in Singapore.

Accepted Answer

According to the specific-factors model, FDI inflows should increase demand for labor, thereby increasing wages, and decrease demand for capital, thereby decreasing the rental on capital. This is exactly what happened in Singapore during the latter part of the twentieth century, as FDI inflows led to an increase in wages and a decrease in the rental on capital, confirming the specific-factors model.

Question 20

Which of the following is nearly always true of highly educated immigrants?
A) They impose high costs on the recipient nation.
B) They move from high-wage nations to low-wage nations.
C) They impose costs on the source nation in terms of lost opportunity and provide benefits to the recipient nation.
D) They impose high costs on the recipient nation, and they move from high-wage nations to low-wage nations.

Accepted Answer

Highly educated immigrants often leave their source nation for better opportunities and higher wages in the recipient nation. However, they also bring valuable skills, expertise, and knowledge to the recipient nation, which can benefit the economy and society in the long run. This may lead to a brain drain effect in the source nation, where they lose talented individuals and resources. However, overall, the benefits of highly educated immigrants to the recipient nation tend to outweigh the costs.

Quiz 5: Movement of Labor and Capital Between Countries

Measuring the effects of labor migration shows:

As of 2005, the European Union had:

According to World Bank estimates, how large were the remittances of migrant workers to their home countries in 2013?

Without productivity growth, what is the long-run effect of labor migration on the receiving country?

Economists conclude that the effect on our world's standard of living as a result of labor and capital migration has been:

The gains from immigration of labor or capital to the recipient nation can be summarized as:

Which of the following is a key assumption in proving the gains from immigration?

The economic benefit to immigrating workers is:

Suppose that FDI has "spillover" benefits for the recipient nation (such as spurring technological innovation, more FDI, or growth in labor productivity) . These spillover effects might help explain why:

Which of the following would one expect if there were no trade in goods but resources were free to move among countries?

In the short run, which of the following will reduce the gains from labor migration to the recipient nation?

Which of the following statements describes the short-run effect(s) of labor immigration?

Economist George Borjas has estimated the net benefits (+) or costs (-) to the United States from labor immigration to be approximately:

Economists who have studied the impact of immigration on world welfare generally find, after considering impacts on all constituencies, that world GDP has _______ as a result of worker migration.

Without productivity growth, what is the long-run effect of labor migration?

Some economists have proposed a "brain drain" tax to be administered though the United Nations. This tax would:

Which of the following terms is used to describe payments made by foreign resident workers to families in their home nations or in the form of taxes paid to their home nations?

Which of the following is a key assumption in factor price insensitivity in response to a fall in FDI?

Which of the following BEST describes the short-run effects of FDI inflows to Singapore during the latter part of the twentieth century?

Which of the following is nearly always true of highly educated immigrants?