International Economics: Theory and Policy 12th Global Edition by Paul Krugman test bank

A) This is generally true.
B) This is generally false.
C) Trade theory has nothing to say about this issue.
D) This is true if the trade partner ignores child labor laws.
E) This is true if the trade partner uses prison labor.
Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
 
11) If there are large disparities in wage levels between countries, then
A) trade is likely to be harmful to both countries.
B) trade is likely to be harmful to the country with the high wages.
C) trade is likely to be harmful to the country with the low wages.
D) trade is likely to be harmful to neither country.
E) trade is likely to have no effect on either country.
Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge
 
12) If there are large disparities in productivity between countries, then
A) trade is likely to be harmful to neither country.
B) trade is likely to be harmful to the country with the high wages.
C) trade is likely to be harmful to the country with the low wages.
D) trade is likely to be harmful to both countries.
E) trade is likely to have no effect on either country.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 

 
13) Which of the following statements is TRUE?
A) Trade is mutually beneficial when countries exchange goods and services.
B) Trade is harmful if large disparities exist between countries in productivity.
C) Trade is harmful if large disparities exist between countries in wages.
D) Trading with less-advanced, lower-wage countries will drag down a country's standard of living.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
14) The benefits of international trade are derived from trade in
A) tangible goods only.
B) intangible goods only.
C) goods but not services.
D) services but not goods.
E) anything of value.
Answer:  E
Difficulty:  Easy
AACSB:  Application of knowledge
 
15) Which of the following statements is NOT TRUE?
A) International trade will have no effects on income distribution.
B) International trade may hurt particular groups within nations.
C) International trade can adversely impact owners of resources that are specific to industries that compete with imports.
D) International trade can alter the distribution of income between broad groups, such as workers and the owners of capital.
Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
 
16) Who sells what to whom
A) has been a major preoccupation of international economics.
B) is not a valid concern of international economics.
C) is not considered important for government foreign trade policy since such decisions are made in the private competitive market.
D) is determined by political rather than economic factors.
E) is less important than international economic theory.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 

 
17) The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by
A) David Ricardo.
B) David Hume.
C) Adam Smith.
D) Eli Heckscher.
E) Lerner and Samuelson.
Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
 
18) International economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know
A) their theory is the best available.
B) their theory is internally consistent.
C) their theory passes the "reasonable person" legal criteria.
D) their theory is good enough to explain the international trade that is actually observed.
E) their theory accounts for China's unique position in international trade.
Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge
 
19) Which of the following is NOT a major concern of international economic theory?
A) protectionism
B) the balance of payments
C) exchange rate determination
D) bilateral trade relations with China
E) the international capital market
Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge
 
20) Which of the following does NOT belong?
A) NAFTA
B) Uruguay Round
C) World Trade Organization
D) non-tariff barriers
E) major free trade agreements of the 1990s
Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge