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Chapter 7: Economic Growth and International Trade Multiple-Choice Questions

1. Dynamic factors in trade theory refer to changes in: A. factor endowments B. technology C. tastes

*D. all of the above

2. Doubling the amount of L and K under constant returns to scale: A. doubles the output of the L-intensive commodity B. doubles the output of the K-intensive commodity C. leaves the shape of the production frontier unchanged *D. all of the above.

.רҵ.ÕûÀí.

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3. Doubling only the amount of L available under constant returns to scale: A. less than doubles the output of the L-intensive commodity *B. more than doubles the output of the L-intensive commodity C. doubles the output of the K-intensive commodity

D. leaves the output of the K-intensive commodity unchanged

4. The Rybczynski theorem postulates that doubling L at constant relative commodity prices:

A. doubles the output of the L-intensive commodity *B. reduces the output of the K-intensive commodity C. increases the output of both commodities D. any of the above

5. Doubling L is likely to:

A. increases the relative price of the L-intensive commodity B. reduces the relative price of the K-intensive commodity *C. reduces the relative price of the L-intensive commodity

.רҵ.ÕûÀí.

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D. any of the above

Technical progress that increases the productivity of L proportionately more than the

productivity of K is called: *A. capital saving B. labor saving C. neutral

D. any of the above

7. A 50 percent productivity increase in the production of commodity Y: A. increases the output of commodity Y by 50 percent B. does not affect the output of X

C. shifts the production frontier in the Y direction only *D. any of the above

8. Doubling L with trade in a small L-abundant nation: *A. reduces the nation's social welfare

.רҵ.ÕûÀí.

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B. reduces the nation's terms of trade C. reduces the volume of trade D. all of the above

9. Doubling L with trade in a large L-abundant nation: A. reduces the nation's social welfare B. reduces the nation's terms of trade C. reduces the volume of trade *D. all of the above

If, at unchanged terms of trade, a nation wants to trade more after growth, then the

nation's terms of trade can be expected to: *A. deteriorate B. improve

C. remain unchanged D. any of the above

.רҵ.ÕûÀí.