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Chap 4.
1, Which of the following assumptions of H-O Theory is true:
a. nations have the same tastes and preferences
b. they use factor inputs that are of uniform quality
c. they use the same technology
d. all of the above
2. If the terms of trade of a nation are 1.5 in a two-nation world, those of the trade partner are:
a. 3/4
b. 2/3
c. 3/2
d. 4/3
3. If the terms of trade increase in a two-nation world, those of the trade partner:
a. deteriorate
b. improve
c. remain unchanged
d. any of the above
4. If the nations tastes for its import commodity increases:
a. the nations terms of trade remain unchanged
b. the nations terms of trade deteriorate
c. the partners terms of trade deteriorate
d. any of the above
5. If the tastes for a nation import commodity increases, the relative prices of this nation will be:
a. increases
b. declines
c. remains unchanged
d. any of the above
6. A deterioration of a nations terms of trade causes the nations welfare to:
a. deteriorate
b. improve
c. remain unchanged
d. any of the above
7*. The equilibrium price and quantity for a commodity traded between two nations occurs where
a. the slopes of the two offer curves are the same.
b. the two offer curves intersect
c. the slopes of the two offer curves is equal to zero
d. the price ratio of good X for good Y is equals one.
8*. Suppose nation 1 is an importer of good X. In a general equilibrium framework, an increase in the demand for good Y will
a. decreased the price of good X and increase the volume of imports of good X
b. decreased the price of good X and decrease the volume of imports of good X
c. increase the price of good X and increase the volume of imports of good X
d. increase the price of good X and decrease the volume of imports of good X
9. Suppose nation 1 is an importer of good X. In a general equilibrium framework, an increase in the cost of producing good X in nation 2 will
a. decreased the price of good X and increase the
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