CSU Online FIn333 quiz 3

Part 1 of 1 -

The Rybczynski theorem states that, given a two-good world and constant prices, growth in one of a country's inputs to production will lead to an increase in production in both the good that uses that input more intensively in production and the good that uses that input less intensively in production.

Increases in the endowments of the factors of production will increase current output, but will not contribute to long-run economic growth.

The Dutch Disease was an infectious disease that spread from the Netherlands to Britain, Norway and Australia and caused the depopulation of these countries.

Part 1 of 1 -

Referring to Figure, the outward shift of the production possibilities frontier is likely the result of:

Question 5 of 16

3.0 Points

A. I and II

B. I and III

C. I, II and III

D. None of the above

Question 6 of 16

3.0 Points

A. An equal percentage increase in the output of both goods.

B. An increase in the output of the good that uses the growing factor intensively and a decrease in the output of the other good.

C. An increase in the output of both goods but a greater percentage increase in the output of the good that uses the growing factor intensively.

D. An increase in the output of the good that uses the growing factor intensively and no change in the output of the other good.

A capital-abundant country trades two goods with the rest of the world, medical equipment and corn. Medical equipment is relatively capital-intensive. An increase in the country’s endowment of capital, with no change in the price of either medical equipment or corn, will cause the output of medical equipment to __________ and the output of corn to __________.

Assume a country that produces wine and guns. Both wine and gun production require inputs of both land and labor. Assume that wine production is a relatively land-intensive production process while gun production is a relatively labor-intensive production process. A significant rise in immigration will likely lead to:

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Question 9 of 16

3.0 Points

A. Results in balanced growth.

B. Will cause GDP to fall.

C. Will increase output in all sectors of the economy.

D. May cause output in the country’s manufacturing sector to fall.

Suppose a large country experiences economic growth which leads to a reduced willingness to trade. The country’s terms of trade will __________ because the fall in demand for imports will cause the price of its exports to __________ relative to the price that it has to pay for its imports.

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Question 12 of 16

3.0 Points

A. A country develops a new natural resource such as oil.

B. A small amount of economic growth leads to a large improvement in a country’s terms of trade.

C. The benefits from economic growth are not shared by all residents of the country.

D. Economic growth leads to a deterioration in a country’s terms of trade whose impact outweighs the production benefit from growth.

Suppose a capital-abundant country experiences a significant increase in its capital stock. This change in endowments will:

Question 13 of 16

3.0 Points

A. Cannot suffer from immiserizing growth.

B. Tend to grow faster.

C. Tend to lose out on the benefits of diffusion.

D. Do not experience biased growth.

Question 14 of 16

3.0 Points

A. A small country experiencing a balanced growth.

B. A large country experiencing a balanced growth.

C. A small country experiencing growth biased toward cloth production.

D. A large country experiencing growth biased toward wheat production.

Part 1 of 1 -

The situation presented in Figure illustrates:

uestion 16 of 16

8.0 Points