International Trade Theory
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Chapter 05
International Trade Theory
True / False Questions
1. (p. 154) Countries such as the U.S should not participate in free trade because it leads to a migration of jobs overseas and ultimately leads to lower living standards.
FALSE
Difficulty: Medium
2. (p. 154) A situation where a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country is known as free trade.
TRUE
Difficulty: Easy
3. (p. 155) According to the theories of Smith, Ricardo and Heckscher-Ohlin, if a country can produce a product itself it should not import that product.
FALSE
Difficulty: Medium
4. (p. 155) The theories of Smith, Ricardo and Heckscher-Ohlin tell us that a country's economy may gain if its citizens buy certain products from other nations that could be produced at home.
TRUE
Difficulty: Medium
5. (p. 155) The Heckscher-Ohlin theory emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are need for producing particular goods.
TRUE
Difficulty: Medium
6. (p. 155) The Heckscher-Ohlin theory has proven to be a powerful explanation of world trade patterns.
FALSE
Difficulty: Medium
7. (p. 156) New trade theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can only support a limited number of firms.
TRUE
Difficulty: Medium
8. (p. 156) Ricardo noted the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.
FALSE
Difficulty: Hard
9. (p. 156) The theory of
Chapter 05
International Trade Theory
True / False Questions
1. (p. 154) Countries such as the U.S should not participate in free trade because it leads to a migration of jobs overseas and ultimately leads to lower living standards.
FALSE
Difficulty: Medium
2. (p. 154) A situation where a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country is known as free trade.
TRUE
Difficulty: Easy
3. (p. 155) According to the theories of Smith, Ricardo and Heckscher-Ohlin, if a country can produce a product itself it should not import that product.
FALSE
Difficulty: Medium
4. (p. 155) The theories of Smith, Ricardo and Heckscher-Ohlin tell us that a country's economy may gain if its citizens buy certain products from other nations that could be produced at home.
TRUE
Difficulty: Medium
5. (p. 155) The Heckscher-Ohlin theory emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are need for producing particular goods.
TRUE
Difficulty: Medium
6. (p. 155) The Heckscher-Ohlin theory has proven to be a powerful explanation of world trade patterns.
FALSE
Difficulty: Medium
7. (p. 156) New trade theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can only support a limited number of firms.
TRUE
Difficulty: Medium
8. (p. 156) Ricardo noted the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.
FALSE
Difficulty: Hard
9. (p. 156) The theory of