1. If increased Heckscher-Ohlin-type trade were the major factor leading to increased income inequality in the United States, then one would expect

1. If increased Heckscher-Ohlin-type trade were the major factor leading to increased income inequality in the United States, then one would expect that the relative prices of skilled labor-intensive goods to unskilled labor-intensive goods would have _____ and that nontraded goods industries would have _____ their use of unskilled labor relative to skilled labor. (Points: 1)risen; decreased risen; increased fallen; decreased fallen; increased 2. If demand reversal is the explanation for the Leontief paradox, this would imply that the demand by the United States for labor-intensive goods is relatively _____; therefore, U.S. wages would be relatively _____ compared to wages in U.S. trading partners. (Points: 1)low; low low; high high; low high; high 3. If the capital/labor ratio in import-competing industries in country A is $8,000 per worker and the capital/labor ratio in A’s export industries is $4,000 per worker, then country A’s Leontief statistic is (Points: 1)0.50. 0.67. 1.00. 2.00. 4. Suppose that, in a real-world situation, a labor-abundant country’s tariffs and nontariff barriers are levied relatively more heavily on labor-intensive goods than on capital-intensive goods. In this situation, a Leontief two-factor test would, other things being equal, be _____ the country’s adherence to the Heckscher-Ohlin trade pattern, compared with a situation in which trade barriers were absent. (Points: 1)biased toward confirming biased against confirming unbiased in its finding concerning The answer cannot be determined without more information. 5. Since about 1970, in both developed and developing countries, the ratio of trade to GDP has _____; over the same time period, in the United States and the European Union, the ratio of imports from developing countries to total imports _____. (Points: 1)increased; has decreased increased; also has increased decreased; also has decreased decreased; has increased 6. If relatively labor-abundant country A has a Leontief statistic greater than 1.0 and relatively capital-abundant country B has a Leontief statistic less than 1.0, this suggests that (Points: 1)neither country is conforming to the prediction of the Heckscher-Ohlin theorem. both countries are conforming to the prediction of the Heckscher-Ohlin theorem. country A is conforming to the prediction of the Heckscher-Ohlin theorem, but country B is not. country B is conforming to the prediction of the Heckscher-Ohlin theorem, but country A is not. 7. If the U.S. trade pattern is as indicated by the Leontief test, this would suggest that participation in trade rather than in autarky by the United States has _____ the real return to U.S. capital and _____ the real wage of U.S. labor. (Points: 1)increased; also has increased increased; has decreased decreased; has increased decreased; also has decreased 8. Which one of the following could NOT theoretically be offered to help explain the Leontief paradox? (Points: 1)a relatively strong U.S. demand for relatively labor-intensive goods relatively high U.S. tariffs on relatively labor-intensive imports U.S. importation of goods that are relatively natural-resource-intensive in their production processes a relatively strong U.S. demand for relatively capital-intensive goods and/or a relatively strong foreign demand for relatively labor-intensive goods 9. If the Heckscher-Ohlin theorem is valid in practice (and assuming that capital and labor are treated as the only two factors in the real world), then the Leontief statistic for a labor-abundant country would be (Points: 1)greater than 1.0. equal to 1.0. less than 1.0 but greater than zero. less than zero. 10. In the United States, in approximately the last 2-3 decades, the supply of highly skilled (HS) labor relative to less highly skilled (LS) labor has been rising. At the same time, the ratio of HS labor wages relative to LS labor wages has been _____; therefore, the demand for HS labor relative to LS labor must have been increasing _____ than the supply of HS labor relative to LS labor. (Points: 1)falling; less rapidly falling; more rapidly rising; less rapidly rising; more rapidly 11. A criticism of the argument that trade has been an important cause of increased U.S. wage inequality in recent decades is that, if trade were an important cause, the nontraded goods industries would have responded to the _____ in the price of skilled labor relative to unskilled labor by using _____ skilled labor relative to unskilled labor. (Points: 1)rise; more rise; less fall; more fall; less 12. Which of the following is NOT an example of a nontariff barrier to the free flow of goods and services in accordance with comparative advantage? (Points: 1)import quotas government procurement provisions that favor home products specific duty of $1.00 per unit on each imported item voluntary export quotas (VERs) 13. The 2007 U.S. MFN/normal trade relations tariff on refills for ball point pens was 0.4¢ per refill 2.7 percent of the value of the refill. This is an example of (Points: 1)a specific tariff. an ad valorem tariff. a combination of a specific tariff and an ad valorem tariff. a nontariff barrier. 14. An import quota specifies the _____ amount of a good that can be imported into a country; a step to becoming more protectionist would involve _____ in the quota. (Points: 1)maximum; a reduction maximum; an enlargement minimum; a reduction minimum; an enlargement 15. Which one of the following is NOT an example of making a trade instrument more restrictive against imports, other things being equal? (Points: 1)a decrease in the size of an import quota a shifting of an import good from an administrative classification category with a high tariff to an administrative classification category with a low tariff a withdrawal of GSP treatment for goods from a particular country a denial of most-favored-nation (MFN) treatment to a country that previously received such treatment 16. Other things being equal, which one of the following will cause an increase in the effective rate of protection (ERP) in the automobile industry? (Points: 1)a decrease in the nominal tariff rate on automobiles an increase in the nominal tariff rates on imported inputs used in making automobiles an increase in the world price of imported inputs used in making automobiles a decrease in the nominal tariff rates on imported inputs used in making automobiles 17. The United States now gives China permanent most-favored-nation (MFN) treatment [or normal trade relations (NTR)]. This means that the tariff schedules applicable to U.S. imports from China (Points: 1)have lower tariff rates than the rates applicable to other countries to which the United States grants MFN treatment. have the same tariff rates as the rates applicable to other countries to which the United States grants MFN treatment. have lower tariff rates than the rates applicable to any other country sending goods to the United States. have tariff rates of zero percent. 18. In general, a country’s unweighted-average nominal tariff rate tends to be _____ than the country’s weighted-average nominal tariff rate. The difference between the two would be _____ if the goods with the highest tariffs became imported relatively more heavily. (Points: 1)lower; smaller lower; larger higher; smaller higher; larger 19. The use of the most-favored-nation (MFN) principle (or normal trade relations [NTR]) is an attempt to attain _____ toward competing suppliers of imports to a country. Hence, the arrangement whereby developed countries permit duty-free entry on some goods coming from developing countries but levy tariffs on the same goods if coming from other developed countries is _____ the MFN (or NTR) principle. (Points: 1)discrimination; a departure from discrimination; an example of nondiscrimination; a departure from nondiscrimination; an example of 20. Suppose that the offshore assembly provisions (OAP) of country A are extended to final good X that is imported as well as produced domestically. This action will most likely (Points: 1)stimulate production in country A of components to final good X. stimulate production in country A of final good X. raise the price of imports of final good X to consumers in country A. cause foreign assemblers of final good X to use relatively more components of X that are supplied by countries other than country A. 21. Suppose that the nominal tariff rate on final good X is 8 percent and that the weighted average of the nominal tariff rates on the inputs used in producing good X is 12 percent. In this situation, the effective rate of protection (ERP) for final good industry X (Points: 1)must be greater than 12 percent. must be between 8 percent and 12 percent. must be less than 8 percent and greater than zero percent. must be less than 8 percent and can be negative. 22. Suppose that a country’s unweighted-average (nominal) tariff rate (call it tU) and weighted-average (nominal) tariff rate (call it tW) are calculated both with and without the inclusion of prohibitive tariffs, and that the country does in fact have some prohibitive tariffs. In this situation, the tU that includes the prohibitive tariffs _____ the same as the tU that excludes the prohibitive tariffs, and the tW that includes the prohibitive tariffs _____ the same as the tW that excludes the prohibitive tariffs. (Points: 1)would not be; would be would not be; would not be would be; would be would be; would not be 23. The situation in the United States (and other developed countries) whereby an import good faces a lower tariff if the good comes from a developing country than if the good comes from a developed country is known as (Points: 1)GSP treatment. MFN (or NTR) treatment. OAP treatment. ERP treatment. 24. The imposition of an export tax by a home country will lead to _____ in home country consumer surplus and will _____ in home country producer surplus. (Points: 1)a decrease; also lead to a decrease a decrease; lead to an increase an increase; lead to a decrease an increase; also lead to an increase 25. In the case of nonhomogeneous goods, the imposition of an import tariff (Points: 1)produces a transfer from consumers to producers in the domestic market. taxes the domestic product as well as the import product. has no impact on the price of the domestic substitute. results in deadweight losses in both the domestic market and the import market.

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