Quiz 2 – Econ 4
True False: Answer A for True
and B for False. Please keep
your answers covered with your
hand so people cannot cheat off
of you, thanks in advance. We
will NOT be coming back to
questions so make sure you
answer in allotted time.
1. If Adam Smith were still alive
he would be a proponent of
protection (trade barriers) since
protection is consistent with
workers maximizing their
individual welfare.
2. In a free trade
environment, the distribution
of income tends to be more
unequal relative to a closed
economy, no trade
environment.
3. If you have the highest
opportunity cost in an
activity then you are said to
possess a comparative
advantage that activity.
4. Workers that have a
comparative advantage in an
activity are usually the first ones
to cry out for trade protection
(tariffs and quotas) so that they
can keep their jobs.
5. We argued that the US has
more flexible labor markets than
many of our trading partners
which implies that the US is more
likely to benefit from free trade
than our trading partners.
Put your pencil down – no
more writing allowed as
everyone is now done with
quiz #2
Quiz 3 – Econ 4
True False: Answer A for True and B
for False. Please keep your
answers covered with your hand so
people cannot cheat off of you,
thanks in advance. We will NOT be
coming back to questions so make
sure you answer in allotted time.
1. A person who can produce
same amount of a good with
fewer resources (less inputs)
than another person is said to
possess an absolute
advantage.
2. According to the Samuelson
model, if the innovation gap
closes then US welfare may fall
to the point where we would be
better off, in terms of welfare, if
we closed the economy and
therefore, conducted no trading
of goods and services with the
rest of the world.
3. Suppose the exchange rate
last week was one euro = $1.40.
This week it is one euro = $1.30.
Given this change we can say
that the US$ has gotten stronger.
4. A weaker US$ implies less
inflationary pressures since a
weaker US $ implies people will
buy less US produced goods and
services.
5. When we refer to “a race to
the bottom,” we are simply
stating that firms cut corners to
lower the opportunity costs of
production in hopes of gaining a
comparative advantage.
Put your pencil down – no
more writing allowed as
everyone is now done with
quiz #3