Question 1

Climate and natural resource endowments explain all of the following happening,EXCEPT:

Accepted Answer

A)  Brazil exporting coffee.
B)  Switzerland exporting watches.
C)  China exporting crawfish.
D)  Saudi Arabia exporting oil.E) B) and C)
F) A) and C)

Question 2

Does Porter's model of competitive advantage predict the pattern of international trade that we observe in the real world?

Accepted Answer

A)  Yes,Porter's model has been supported by detailed empirical testing.
B)  We do not know because Porter's theory has not been subjected to detailed empirical testing.
C)  No,Porter's model has failed to stand the test of time and is dated.
D)  Yes,Porter's model stands out as the one single theory that best predicts international trade.E) None of the above
F) A) and C)

Question 3

According to Michael Porter,factor endowments can be affected by subsidies,policies toward capital markets,and policies toward education.

Accepted Answer

A) True 
 B)False

Question 4

What is meant by the term "free trade"? Is free trade compatible with the concept of mercantilism?

Accepted Answer

Free trade refers to the absence of gove...

Question 5

The simple model of comparative advantage used in the text is based on assuming away:

Accepted Answer

A)  the effects of trade on income distribution within a country.
B)  constant returns to scale.
C)  that all resources can move freely from the production of one good to another.
D)  that free trade does not change the efficiency with which the countries use their resources.E) None of the above
F) A) and C)

Question 6

Largely discredited and primitive,mercantilism still influences the trade policies of many countries.

Accepted Answer

A) True 
 B)False

Question 7

Advocates of free trade rely on Ricardo's theory of comparative advantage as a major intellectual weapon.

Accepted Answer

A) True 
 B)False

Question 8

Briefly describe the new trade theory.

Accepted Answer

The new trade theory began to emerge in ...

Question 9

Mercantilism,as advocated in the 16th and 17th centuries,believed that countries should simultaneously encourage both imports and exports.

Accepted Answer

A) True 
 B)False

Question 10

The new trade theory is at variance with the _____ theory,which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture.

Accepted Answer

A)  Heckscher-Ohlin
B)  product life-cycle
C)  comparative advantage
D)  Ricardo-SraffaE) A) and B)
F) B) and C)

Question 11

What was Samuelson's criticism of free trade?

Accepted Answer

A)  He argued that dynamic gains lead to a universally beneficial outcome for all countries.
B)  He argued that offshoring service jobs that were traditionally mobile will increase the market clearing wage rate.
C)  He argued that free trade has historically been beneficial only to third world countries.
D)  A rich country importing cheap goods from a poor country may not make up for the wage losses in the rich country.E) B) and C)
F) A) and D)

Question 12

Which of the following is best identified as the absence of government-imposed barriers to the free flow of goods and services between countries?

Accepted Answer

A)  Free trade
B)  Mercantilism
C)  Socialism
D)  Absolute advantageE) A) and B)
F) B) and C)

Question 13

Which of the following is NOT consistent with the central beliefs of mercantilism?

Accepted Answer

A)  Government should intervene to achieve a surplus in the balance of trade.
B)  Policies should be put in place to minimize exports and maximize imports.
C)  Imports should be limited by tariffs and quotas.
D)  Exports should be subsidizeD.E) A) and B)
F) C) and D)

Question 14

According to Porter's diamond,a nation's position in elements of production such as skilled labor or the infrastructure necessary to compete in a given industry is best referred to as:

Accepted Answer

A)  capitalization.
B)  demand conditions.
C)  factor endowments.
D)  optimization.E) B) and C)
F) All of the above

Question 15

A situation in which gains by all parties can be achieved is called a:

Accepted Answer

A)  level playing field.
B)  zero-sum game.
C)  positive-sum game.
D)  trade surplus.E) B) and D)
F) None of the above

Question 16

Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete,and that these attributes promote or impede the creation of competitive advantage.All of the following are attributes EXCEPT:

Accepted Answer

A)  factor endowments.
B)  first-mover advantages.
C)  firm strategy,structure,and rivalry.
D)  relating and supporting industries.E) A) and B)
F) None of the above

Question 17

Identify and briefly describe the four broad attributes of a nation identified by Michael Porter as shaping the environment in which local firms compete,and promote or impede the creation of competitive advantage.Also,outline Porter's conclusions from his analysis.

Accepted Answer

Porter theorizes that four broad attribu...

Question 18

According to Smith,countries should specialize in the production of goods for which they have an absolute advantage and then:

Accepted Answer

A)  retain these goods for strict domestic sales.
B)  trade these goods for goods produced by other countries.
C)  sell these goods to maintain a trade surplus.
D)  prohibit the import of these goods from other countries.E) All of the above
F) None of the above

Question 19

A country intentionally keeps its currency value low against the currency of another in order to sell more goods to the latter.This can be viewed as a(n) _____ policy.

Accepted Answer

A)  inflationist
B)  totalitarian
C)  neo-mercantilist
D)  capitalistE) None of the above
F) B) and D)

Question 20

Japan is a country that is at a disadvantage in terms of natural resources but it has achieved economic success by investing in education,thereby building a vital pool of skilled labor and technological know-how.This reflects Porter's argument that:

Accepted Answer

A)  competitive advantage is largely a product of basic factors.
B)  basic factors can be upgraded by nations,while advanced factors are endowed by nature.
C)  an initial advantage in basic factors is vital to competitive advantage.
D)  advanced factors are the most significant for competitive advantage.E) All of the above
F) None of the above

Exam 5: International Trade Theory

What is meant by the term "free trade"? Is free trade compatible with the concept of mercantilism?

Correct AnswerverifiedFree trade refers to the absence of gove...View AnswerShow Answer

Japan is a country that is at a disadvantage in terms of natural resources but it has achieved economic success by investing in education,thereby building a vital pool of skilled labor and technological know-how.This reflects Porter's argument that:

Correct AnswerverifiedShow Answer

According to Michael Porter,factor endowments can be affected by subsidies,policies toward capital markets,and policies toward education.

Correct AnswerverifiedShow Answer

Mercantilism,as advocated in the 16th and 17th centuries,believed that countries should simultaneously encourage both imports and exports.

Correct AnswerverifiedShow Answer

Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete,and that these attributes promote or impede the creation of competitive advantage.All of the following are attributes EXCEPT:

Correct AnswerverifiedShow Answer

Identify and briefly describe the four broad attributes of a nation identified by Michael Porter as shaping the environment in which local firms compete,and promote or impede the creation of competitive advantage.Also,outline Porter's conclusions from his analysis.

Correct AnswerverifiedPorter theorizes that four broad attribu...View AnswerShow Answer

A situation in which gains by all parties can be achieved is called a:

Correct AnswerverifiedShow Answer

The simple model of comparative advantage used in the text is based on assuming away:

Correct AnswerverifiedShow Answer

Which of the following is best identified as the absence of government-imposed barriers to the free flow of goods and services between countries?

Correct AnswerverifiedShow Answer

Climate and natural resource endowments explain all of the following happening,EXCEPT:

Correct AnswerverifiedShow Answer

Which of the following is NOT consistent with the central beliefs of mercantilism?

Correct AnswerverifiedShow Answer

What was Samuelson's criticism of free trade?

Correct AnswerverifiedShow Answer

According to Smith,countries should specialize in the production of goods for which they have an absolute advantage and then:

Correct AnswerverifiedShow Answer

The new trade theory is at variance with the _____ theory,which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture.

Correct AnswerverifiedShow Answer

According to Porter's diamond,a nation's position in elements of production such as skilled labor or the infrastructure necessary to compete in a given industry is best referred to as:

Correct AnswerverifiedShow Answer

Largely discredited and primitive,mercantilism still influences the trade policies of many countries.

Correct AnswerverifiedShow Answer

A country intentionally keeps its currency value low against the currency of another in order to sell more goods to the latter.This can be viewed as a(n) _____ policy.

Correct AnswerverifiedShow Answer

Advocates of free trade rely on Ricardo's theory of comparative advantage as a major intellectual weapon.

Correct AnswerverifiedShow Answer

Does Porter's model of competitive advantage predict the pattern of international trade that we observe in the real world?

Correct AnswerverifiedShow Answer

Briefly describe the new trade theory.

Correct AnswerverifiedThe new trade theory began to emerge in ...View AnswerShow Answer

Correct Answer
verified
Free trade refers to the absence of gove...
View Answer

Correct Answer
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Correct Answer
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Mercantilism,as advocated in the 16^th and 17^th centuries,believed that countries should simultaneously encourage both imports and exports.

Correct Answer
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Correct Answer
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Correct Answer
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Porter theorizes that four broad attribu...
View Answer

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The new trade theory began to emerge in ...
View Answer