Supply-Side Policies & Sources of Comparative Advantage Mcqs

MCQ: According to supply-side economists, as tax rates are reduced, labor supply should increase. This implies that ?

  1. there is no income effect when tax rates are changed
  2. the income effect of a wage change is greater than the substitution effect of a wage change.
  3. there is no substitution effect when tax rates are changed
  4. the substitution effect of a wage change is greater than the income effect of a wage change

Releted Questions

Supply-Side Policies & Sources of Comparative Advantage Mcqs

MCQ: The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries ?

  1. Economies of large-scale production
  2. Relative abundance of various resources
  3. Relative costs of labor
  4. Research and development expenditures

B

MCQ: Boeing aircraft company was able to over its production costs of the first – jumbo jetll in the seventies because Boeing could market it to several foreign airlines in addition to domestic airlines. This illustrates ?

  1. How economies of scale make possible a larger variety of products in international trade
  2. A transfer of wealth from domestic consumer to domestic producer as the result of trade
  3. How a natural monopoly is forced to behave more competitively with international trade
  4. How a natural monopoly is forced to behave less competitively with international trade

A

MCQ: The theory of overlapping demand predicts that trade in manufactured goods is unimportant for countries with very different ?

  1. Tastes and preferences
  2. Expectations of future interest rate levels
  3. Per-capita income levels
  4. Labor productivities

C

MCQ: According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will ?

  1. Devote excessive amounts of resources to agricultural production
  2. Devote insufficient amounts of resources to agricultural production
  3. Export products that are land-intensive
  4. Import products that are land-intensive

C

MCQ: According to the trade theory of Staffan Linder trade tends to be most pronounced in manufactured goods when trading countries have ?

  1. similar endowments of natural resources
  2. similar levels of technology
  3. similar per-capita incomes
  4. similar wage levels

C

Multiple Choice Questions and Answers