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Multiple Choice Quiz
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1

If a country's endowment of labor increases and cloth production is relatively more labor-intensive than corn production,then according to the Rybczynski theorem, the production possibilities curve will shift outward along:
A)the cloth axis.
B)the corn axis.
C)both axes.
D)neither axis.
2

If a country has recently discovered diamonds in its hinterland and profits and production in traded manufactured goods sectors declines, then we could say that the country:
A)has balanced growth.
B)is small.
C)is large.
D)has "Dutch Disease".
3

If a country exhibits balanced growth, the production possibilities curve will:
A)shift out on the x axis.
B)shift out on the y axis.
C)shift out on both axes equally.
D)not shift.
4

Growth which is biased towards textiles production will result (given standard monotonic and homothetic preferences and a bowed-out production possibilities curve) in:
A)an increase in the export of textiles.
B)a decrease in the export of textiles.
C)no change in the export of textiles.
D)an increase in the export of both textiles and other goods.
5

If a country benefits from growth by receiving a production benefit and a better price for its exports relative to the price that it has to pay for its imports, then you can conclude that the country:
A)suffers from "Dutch Disease".
B)is labor-abundant.
C)is large.
D)is small.
6

Which of the following are crucial conditions for immiserizing growth to occur?
A)Growth must be strongly biased toward expanding the supply of exports.
B)Foreign demand for the country's exports must be price inelastic.
C)Before the growth, the country must beheavily engaged in trade.
D)All of the above.
7

Openness to trade can:
A)decrease the incentive to innovate.
B)enhance the technology that a country can use.
C)slow down long-run economic growth.
D)All of the above.





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