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1. The capital stock in India is $22 trillion, and the labor force is 511 million people. The capital stock in Sri Lanka is $584 billion, and the labor force is 8 million people. Which country is relatively capital abundant?

A.India.

B.Sri Lanka

2. The capital to labor ratio in steel production in India and Sri Lanka is higher than the capital to labor ratio in textile production in both countries. We can say that the steel industry is

A.relatively capital abundant in both countries.

B.relatively capital intensive in both countries.

C.has a comparative advantage over the textile industry.

D.has an absolute advantage over the textile industry.

3. Using the data from the previous two problems, and assuming that the only two countries in the world are Sri Lanka and India, the Heckscher-Ohlin Theorem predicts that ________ , and the Stolper Samuelson Theorem predicts that _____________.

  A.

India will export steel; labor in India will benefit from trade.
  B.

Sri Lanka will export steel; labor in Sri Lanka will benefit from trade.
  C.

India will export steel; capital owners in India will benefit from trade.
  D.

Sri Lanka will export steel; capital owners in Sri Lanka will benefit from trade.

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Sonal BahlLv10
29 Sep 2019
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Related questions

Consider the following Heckscher-Ohlin model. Spain and Italy produce shoes and T-shirts using capital and labor. Spain is labor abundant and Italy is capital abundant. Shoes are capital-intensive and T-shirts are labor-intensive.

For each statement below determine if it is true or false. Then briefly explain why.

suppose both countries are in closed economy equilibria.

1. Spain has a larger labor force than Italy (i.e. ) because Spain is labor abundant.

2. In Italy, the shoe industry employs more capital than the T-shirt industry because shoes are capital intensive.

3. The shoe industry has a lower labor-capital ratio than the T-shirt industry in both countries.

4. The relative price of shoes, in terms of T-shirts, is lower in Italy than in Spain.

1) You will need information on the total land area of countries, the % of land area that is arable, and the labor force (employed + unemployed, a measure of how many people are active in a labor market in a country). The World Bank compiles data on each economic variable below:

Arable land:http://data.worldbank.org/indicator/AG.LND.ARBL.ZS

Total land area:http://data.worldbank.org/indicator/AG.LND.TOTL.K2

Labor force:http://data.worldbank.org/indicator/SL.TLF.TOTL.IN

We will focus on two countries: Japan and Ukraine.

Compute the ratio of labor (labor force) to arable land (in square kilometers) in Japan and Ukraine. Which country is land-abundant? Which country is labor-abundant? Please use data from the year 2013.

Suppose there are two products: wheat and televisions. Wheat is land-intensive and televisions are labor-intensive. According to the Heckscher-Ohlin theory of trade, which country would export televisions? Which country would export wheat?

Examine the exports of each country using the following data compiled by MIT:

http://atlas.media.mit.edu/en/profile/country/jpn/

http://atlas.media.mit.edu/en/profile/country/ukr/

Do the exports of each country generally match the predictions of the Heckscher-Ohlin theory of trade? Hint: You may want to toggle HS2 under depth on the export diagram to get a better idea of the categories of products the countries export.

31. A country's tax system influences the attractiveness of investing in that country and affects the relative level of profitability for an MNC.

a. True

b. False

32. Points inside a production possibilities frontier represent

a. unattainable production combinations

b. efficiency

c. situations where supply exceeds demand

d. unemployment of resources

33. Firms in a high-wage nation like the U.S. can compete effectively with imports from low-wage nations if

a. the U.S. reduces tariffs on imports

b. low-wage nations impose tariffs on U.S. made goods

c. labor productivity is higher in the low-wage nation

d. labor productivity is higher in the U.S.

34. Assume that production in the United States is valued at $100,000. National income is therefore $100,000. Of their income, workers save $2000, pay $6,000 in taxes, spend $89,000 on consumer goods, and spend $2000 on imports. Businesses spend $5,000 in new investment spending. And, foreigners spend $1000 on exports. To avoid any problems of inflation or unemployment, the government should have a budget deficit or surplus of:

a. $2,000 surplus

b. $1,000 deficit

c. $2,000 deficit

d. $1000 surplus

e. $0 deficit

35. Autarky means-----------------------------------------------------------------

a. the absence of government

b. lack of agriculture

c. self-sufficient, in the absence of international trade

d. short of exchange rates

36. The more people there are----------------------, the less the public as a whole will spend on goods and services.

a. unemployed

b. underemployed

c. employed

d. as discouraged workers

37, Which of the following theories holds that countries will produce and export products that use large amounts of production factors that they have in abundance?

a. Mercantilism

b. The theory of absolute advantage

c. The factor endowment theory

d. None of the above.

38. Suppose that a consumer has a marginal propensity to consume of 0.79. If this consumer earns an extra $1220, her saving would be expected to increase by-----------------------------

39. Many countries in Asia, Africa, and South America-----------------------

a. Are developing countries

b. Are industrialized nations

c. Have a high demand for nonessential products

d. Do not trade

40. Which two of the following are regarded as the main aims of the World Trade Organization (WTO)?

a) To eliminate discrimination in world trade

b) To provide financial assistance to countries with debt

c) To reduce tariff barriers

d) To make infant industry protection illegal

e) To help give preferences to smaller economies

b) and e) a) and c) a) and d) c) and e) b) and d)

41. Last year Sophia's nominal income increased by 12% while the price level rose by 5.5%. Consequently, Sophia's real income:

a. rose by approximately 7%

b. fell by approximately 1%

c. rose by approximately 2%

d. ------------------------------------

42. Consumer surplus

a. is always positive.

b. for a particular unit of consumption is computed by taking the difference between quantity demand and quantity supplied.

c. for all units consumed is the area below demand and below market price over all the units consumed.

d. added to producer surplus provides a measure of the net gain to society from the production and consumption of the good.

43. A decline in Real GDP for six or more consecutive months is called-------------------------------

a. A trough

b. A recession

c. An expansion

d. A recovery

44. What do we call the situation where capital grows faster than the labor force?

a. economic growth

b. technological change

c. productivity growth

d. capital deepening

45. The terms of trade are-------------------------------------------

a. the cost of transportation between countries

b. the ratio of wages in two countries

c. the terms which are used in the trade negotiations

d. the rate at which two products can be exchanged

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