Advocates of industrial policy maintain that government should ?

A. Pursue free trade as a policy that leads to maximum global efficiency
B. Grant subsidies to firms offering potential comparative advantage
C. Provide loans to domestic workers in exporting industries
D. Increase interest rates on loans made to firms in import-competing industries

By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?

A. The prices of trade goods to be lower than when there are no transportation costs
B. Specialization to stop when the production costs of the trading partners equalize
C. The volume of trade to be less than when there are no transportation costs
D. The gains from trade to be greater than when there are no transportation costs

According to the factor price equalization theorem, the ________ factor should oppose free. trade policies in any given country?

A. Abundant
B. Scarce
C. Neither
D. Can’t tell without more information

Which of the following is not true about most farmers in LDCs ?

A. The staple crop is the chief sources of food
B. Labor is underutilized except for planting and harvesting seasons
C. On the traditional farm, output is always greater than consumption
D. Cultivators farm only as much land as their

According to the Heckscher-Ohlin model ?

A. Everyone automatically gains from trade
B. The gainers from trade outnumber the losers from trade
C. The scarce factor necessarily gains from trade
D. None of the above

Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of ?

A. Research and development subsidies
B. Loan guarantees
C. Low interest rate loans
D. All of the above

If tastes are identical between countries, then comparative advantage is determined by ?

A. Supply condition only
B. Demand conditions only
C. Supply and demand conditions
D. Can’t tell without more information

One of the predictions of the Heckscher-Ohlin model is that ?

A. Countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other
B. Countries with tend to specialize but not completely in their comparative advantage good
C. Reciprocal demand leads to an equilibrium terms of trade by inducing change in both demand and supply
D. All of the above

The Heckshcer-Ohl assumes that are indentical between countries?

A. Tastes and preferences
B. Technology levels
C. Factor indowments
D. Both a and b

In his empirical test of comparative advantage Wassily Leontief found that ?

A. U.s exports are capital intensive relative to u.s imports
B. U.s imports are labor intensive relative to u.s exports
C. U.s exports are neither labor nor capital intensive
D. None of the above