International Economics 3rd Edition By Robert C. Feenstra Test Bank

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International Economics 3rd Edition By Robert C. Feenstra Test Bank

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WITH ANSWERS
International Economics 3rd Edition By Robert C. Feenstra Test Bank

Chapter 5- Movement of Labor and Capital Between Countries

1. The Mariel boatlift of Cuban immigrants into Miami caused the:
  A) population of unskilled workers in Miami to decline.
  B) population of skilled workers in Miami to decline.
  C) supply of labor to increase, but it did not decrease the wages.
  D) wages of all workers to decline.
  Ans:  C     Difficulty:  Easy     Section:  Introduction     Skill Descriptor:  Fact-Based     Topic:  Introduction

 

 

2. The immigration of Russian Jews to Israel:
  A) increased the population of Israel and caused wages to plummet.
  B) decreased the native population of Israel.
  C) increased the population of skilled workers but did not decrease wages.
  D) caused wages of skilled workers to decrease.
  Ans:  C     Difficulty:  Easy     Section:  Introduction     Skill Descriptor:  Fact-Based     Topic:  Introduction

 

 

3. The results of the influx of workers into Miami in 1980 as a consequence of the Mariel boatlift and from Russia to Israel in 1989 after the fall of the Soviet Union:
  A) were different: wages fell in Miami but rose in Israel.
  B) were similar: wages fell in Israel but rose in Miami.
  C) surprised most people because the outcome was no reduction in wages in either area.
  D) were that wages fell in both regions, confirming that immigration hurts domestic workers.
  Ans:  C     Difficulty:  Easy     Section:  Introduction     Skill Descriptor:  Fact-Based     Topic:  Introduction

 

 

4. Interesting real-life examples tell us that labor migration often:
  A) reduces wages in both the source nation and the destination nation.
  B) has no negative effect on wages in the destination nation.
  C) increases labor productivity.
  D) changes the labor market so that competition for workers rises.
  Ans:  B     Difficulty:  Moderate     Section:  Introduction     Skill Descriptor:  Fact-Based     Topic:  Introduction

 

 

5. When some factors are fixed, it is a short-run model. This is called  ____________ model.
  A) the Heckscher-Ohlin
  B) the Ricardian
  C) the specific-factors
  D) the purchasing power parity
  Ans:  C     Difficulty:  Easy     Section:  Introduction     Skill Descriptor:  Concept-Based     Topic:  Introduction

 

 

6. To study labor migration using the specific-factors model, we assume ________ and ________ cannot move within the domestic economy, but we allow ________ to move both domestically and internationally.
  A) land; capital; labor
  B) labor; land; capital
  C) land; loanable funds; capital
  D) labor; capital; land
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

7. When we use the specific-factors model to study immigration, we assume that:
  A) land is immobile internationally but capital and labor are internationally mobile.
  B) land and capital are immobile internationally but labor is internationally mobile.
  C) land, labor, and capital are internationally mobile.
  D) land, labor, and capital are internationally immobile.
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

8. Which model can we use to analyze the short-run effects of migration?
  A) specific-factors
  B) Ricardian
  C) Heckscher-Ohlin
  D) purchasing power parity
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

9. When the supply of labor increases, according to the specific-factors model, which of the following is NOT likely to happen?
  A) The number of workers employed will increase.
  B) The wages for workers will decline.
  C) The marginal product of labor shifts to the right.
  D) The overall wage in the economy increases in the short run.
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

10. When the supply of labor increases, according to the specific-factors model, which of the following is likely to happen in the sending country?
  A) The number of workers employed will decrease.
  B) The wages for workers will rise.
  C) The marginal product of labor shifts to the right.
  D) All of these are likely to happen in the sending country.
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

11. The specific-factors model predicts that after immigration, the equilibrium wage in both industries in the destination nation:
  A) rises.
  B) falls.
  C) remains the same.
  D) cannot be determined with the information given.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

12. If a person leaves Sweden to work in the United States, she is said to ________from Sweden and __________to the United States.
  A) immigrate; emigrate
  B) emigrate; immigrate
  C) immigrate; immigrate
  D) emigrate; emigrate
  Ans:  B     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Definitional     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

13. One example of emigration from Europe was during the period between 1870 and 1913. Wages grew rather than declined in the destination nations of the United States, Canada, and Australia. Why?
  A) The economic theory did not predict well.
  B) Workers from Europe were highly skilled and raised the equilibrium wage.
  C) The government stepped in and raised the minimum wage.
  D) Wages rose due to the industrial revolution and higher levels of capital but grew more slowly because of the immigration.
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

14. Large-scale immigration into the New World, between 1870 and 1913 caused the real wages to:
  A) decrease in comparison with Europe.
  B) increase at a slower pace in comparison with Europe.
  C) increase at a higher pace in comparison with Europe.
  D) stay constant.
  Ans:  B     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

15. The large-scale labor migration that occurred during 1870 to 1913 from Europe to America ____ wages in the destination nations and ____ wages in the source nations, thus leading to _____ of wages between the regions.
  A) lowered; raised; convergence
  B) raised; raised; divergence
  C) lowered; lowered; divergence
  D) raised; lowered; convergence
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

16. Between 1870 and 1913, labor migration from the Old World (Europe) to the New World (the United States, Canada, and Australia) caused:
  A) real wages to rise in the New World.
  B) real wages to fall in the Old World.
  C) real wages to diverge between the New and Old Worlds.
  D) real wages to converge between the New and Old Worlds.
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

17. Between 1870 and 1913, labor migration from the Old World (Europe) to the New World (the United States, Canada, and Australia):
  A) decreased the rate of growth of real wages in the New World and increased the rate of growth of real wages in the Old World.
  B) increased the rate of growth of real wages in the New World and decreased the rate of growth of real wages in the Old World.
  C) decreased the rate of growth of real wages in both the New and Old Worlds.
  D) increased the rate of growth of real wages in both the New and Old Worlds.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

18. Emigration and immigration are:
  A) when workers leave and workers come in.
  B) two ways of saying workers are coming in.
  C) when workers come in and workers leave.
  D) two ways of saying workers leave.
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Definitional     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

19. The specific-factors model can also apply to recent immigration into the United States. There are two major categories of U.S. immigrants:
  A) male and female.
  B) young and middle-aged.
  C) very low skilled and highly educated and skilled.
  D) middle-income artisans and performance artists.
  Ans:  C     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

20. U.S. immigrants from Mexico are mainly _________workers and U.S. immigrants from India are mainly ___________workers.
  A) low-skilled; highly skilled
  B) middle-income artisans; performance artists
  C) male; female
  D) younger; older
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

21. Which group of U.S. citizens competes with illegal immigrants in the United States?
  A) medical doctors
  B) high school dropouts
  C) college graduates
  D) all U.S. citizens
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

22. The H1-B visa program is designed:
  A) to keep out undocumented workers.
  B) to encourage bright U.S. college students to study abroad.
  C) to attract scientists and engineers from other nations to help U.S. industry prosper.
  D) to have a way to force foreign students to go back to their native lands after graduation.
  Ans:  C     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

23. Of the 10% of the U.S. work force with advanced (Masters, other professional, and Ph.D.) degrees, the share of those who are foreign born is:
  A) more than 50%.
  B) between 16 and 40%.
  C) less than 15%.
  D) less than 5%.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

24. The combination of legal and illegal immigrants in the United States creates a U-shaped pattern between the number of immigrants and:
  A) wages of competing American workers.
  B) their wages.
  C) their educational level.
  D) their jobs.
  Ans:  C     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

25. Foreign-born workers in the United States tend to:
  A) be poorly educated (high school dropouts) or very highly educated (graduate degrees).
  B) be mainly very poorly educated.
  C) be mainly very highly educated.
  D) have educational levels similar to U.S.-born workers.
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

26. In the United States the share of foreign-born workers with 12 years of education or less is:
  A) less than 10%.
  B) less than 50%.
  C) more than 70%.
  D) negligible.
  Ans:  C     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

27. Illegal immigrants into the United States tend to compete mainly with:
  A) highly educated American workers.
  B) poorly educated American workers.
  C) all American workers.
  D) one another.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

28. Legal immigrants into the United States tend to compete mainly with:
  A) highly educated American workers.
  B) poorly educated American workers.
  C) all American workers.
  D) one another.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

29. Because most immigrants into the United States are either highly skilled or unskilled, the majority of workers:
  A) see very little impact on their wages as a result of immigration.
  B) have difficulty finding jobs and getting raises because of all the competition from immigrants.
  C) feel a big hit on wages and unemployment.
  D) must rely on trade adjustment assistance for help retraining and relocating.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Effects of Immigration in the Short Run: Specific-Factors Model

 

 

30. In the specific-factors model, migration of labor will cause:
  A) the wage to rise in the receiving country and the wage to fall in the sending country.
  B) the wage to fall in the receiving country and the wage to rise in the sending country.
  C) the wage to rise in both the receiving and sending countries.
  D) the wage to fall in both the receiving and sending countries.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

31. In the specific-factors model, labor migration from Mexico to the United States will cause _________ in U.S. low-skilled wages and _________ in Mexican low-skilled wages.
  A) increases; decreases
  B) increases; increases
  C) decreases; decreases
  D) decreases; increases
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

32. If capital is specific to manufacturing and land is specific to agriculture, then migration of labor from low-income to high-income countries will cause:
  A) the wage to rise in the high-income country and the wage to fall in the low-income country.
  B) the wage to fall in the high-income country and the wage to rise in the low-income country.
  C) the wage to rise in both the high-income and low-income countries.
  D) the wage to fall in both the high-income and low-income countries.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

33. Emigration causes __________ in the capitallabor ratio and __________ in the return to capital.
  A) increases; decreases
  B) increases; increases
  C) decreases; decreases
  D) decreases; increases
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

34. Immigration causes __________ in the capitallabor ratio and __________ in the return to capital.
  A) increases; decreases
  B) increases; increases
  C) decreases; decreases
  D) decreases; increases
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

35. What is the likely attitude of owners of capital and land toward immigration?
  A) They are likely to support closing the borders to foreign labor.
  B) They are likely to support more open borders and an influx of workers.
  C) They are not likely to worry about immigration issues,
  D) They are likely to reject legislation easing rules on immigration.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Critical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

36. In destination countries, as immigration occurs and more labor is employed, in the short run, wages fall and the marginal products of land and capital (fixed resources):
  A) are unaffected.
  B) both rise.
  C) both fall.
  D) rise for one and fall for the other.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

37. In destination countries, as immigration occurs and more labor is employed, in the short run, wages fall and the rental (return to) of land and capital (fixed resources):
  A) are unaffected.
  B) both rise.
  C) both fall.
  D) rise for one and fall for the other.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

38. Because immigration raises the marginal products and the return to non-labor factors of production, in the short run owners of non-labor resources often support:
  A) open borders.
  B) tighter restrictions on immigration.
  C) controls on the flow of foreign direct investment (FDI).
  D) immigration of persons only for humanitarian reasons.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Critical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

39. U.S. and European immigration policies are best described as welcoming:
  A) all foreign workers.
  B) foreign workers in most industries.
  C) foreign workers in select industries.
  D) no foreign workers.
  Ans:  C     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Fact-Based     Topic:  Other Effects of Immigration in the Short Run

 

 

40. The effect of immigration on industry output in the short run is:
  A) to lower it across all industry.
  B) to raise it in sectors that do not get immigrant workers but lower it where immigrants are employed.
  C) that, surprisingly, additional workers are employed, but there is no effect on industry output.
  D) that it raises industry output overall, and the rise is skewed so industries employing immigrants rise by morethus shifting the PPF.
  Ans:  D     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

41. Which legislation would U.S. labor unions support?
  A) legislation to eliminate all restrictions on immigration
  B) legislation to increase direct foreign investment in the United States
  C) legislation to ease rules on immigration
  D) Labor unions would support all of these measures.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Critical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

42. In the specific-factors model, immigration causes:
  A) a rightward shift in the receiving countrys production possibilities frontier.
  B) a leftward shift in the receiving countrys production possibilities frontier.
  C) no change in the receiving countrys production possibilities frontier.
  D) a rightward shift in the sending countrys production possibilities frontier.
  Ans:  A     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Other Effects of Immigration in the Short Run

 

 

43. Suppose labor and capital are the only two resources used for production. In the short run:
  A) only capital can move freely between sectors.
  B) only labor can move freely between sectors.
  C) both capital and labor can move freely between sectors.
  D) both resources are restricted in their movement.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Other Effects of Immigration in the Short Run

 

 

44. Which of the following events will cause the production possibility frontier to shift outward (to the right)?
  A) a natural disaster that causes widespread damage
  B) a computer problem that affects all business that rely on computers
  C) a wave of immigration caused by new easier rules
  D) a war that destroys the nations infrastructure
  Ans:  C     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Other Effects of Immigration in the Short Run

 

 

45. Suppose labor and capital are the only two resources used for production. In the long run:
  A) both capital and labor can move freely between sectors.
  B) only labor can move between sectors.
  C) only capital can move between sectors.
  D) both capital and labor are blocked from moving between sectors.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

46. In order to analyze migration in the long run, it is appropriate to use:
  A) the specific-factors model with free movement of labor across borders.
  B) the Heckscher-Ohlin model with free movement of labor across borders.
  C) the Ricardian model with no movement of labor across borders.
  D) the PPF modified for three goods, three factors of production (all fixed), and three nations.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

47. In the specific-factors model, how will immigration affect the sending countrys production possibilities frontier?
  A) It will shift it to the right.
  B) It will shift it to the left.
  C) It will not affect its production possibilities curve.
  D) Immigration will first shift it to the left, then shift it back to its original position.
  Ans:  B     Difficulty:  Easy     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

48. Which is the best approach to analyzing migration in the long run?
  A) the specific-factors model with no resource mobility across borders
  B) the specific-factors model with free movement of labor across borders
  C) the Heckscher-Ohlin model with free movement of labor across borders
  D) the Heckscher-Ohlin model with no resource mobility across borders
  Ans:  C     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

49. Consider an economy that only produces steel and shoes; steel is capital intensive and shoes are labor intensive. Which industry has a lower capital-labor ratio?
  A) steel
  B) shoes
  C) neither steel nor shoes
  D) The capital-labor ratios are identical in steel and shoes.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

50. In the long run, immigration will lead to a rightward shift in the receiving countrys production possibilities frontier. As a result, this shift will:
  A) favor the labor-intensive good.
  B) favor the capital-intensive good.
  C) equally favor the labor-intensive and the capital-intensive good.
  D) cause an increase in the production of the labor-intensive good and a decrease in the capital-intensive good.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Long Run

 

 

51. In the long run, immigration will shift the sending countrys production possibilities frontier inward. This shift will cause:
  A) a larger decline in the potential output of the capital-intensive good.
  B) a larger decline in the potential output of the labor-intensive good.
  C) equal declines in the potential output of both the labor-intensive and the capital-intensive good.
  D) a decline in the potential output of the labor-intensive good and an increase in the potential output of the capital-intensive good.
  Ans:  B     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Long Run

 

 

52. In the HO model, a box diagram describes the distribution of:
  A) output between the two producing sectors in a country.
  B) output between the two countries of the model.
  C) labor and capital between the two producing sectors of a country.
  D) labor between the two countries of the model.
  Ans:  A     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

53. When factors of production are not fixed (as in the long run) and labor immigrates, capital will:
  A) remain fixed because capital is never mobile.
  B) increase in the capital-intensive industry.
  C) move to the higher productivity use in the labor-intensive industry until returns are again equalized.
  D) become idled as owners of capital seek more profitable opportunities.
  Ans:  C     Difficulty:  Difficult     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

54. Consider a hypothetical economy in which only computers and shoes are produced and in which computer production is capital intensive as compared with shoe production. If two resources are being used, labor and capital, then the capital-labor ratio would be:
  A) higher in the shoe industry.
  B) lower in the computer industry.
  C) the same in both industries.
  D) higher in the computer industry.
  Ans:  D     Difficulty:  Moderate     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Concept-Based     Topic:  Effects of Immigration in the Long Run

 

 

55. Consider an economy that only produces steel and shoes; steel is capital intensive and shoes are labor intensive. How will emigration of labor from this economy affect the marginal productivity of labor?
  A) It will fall.
  B) It will not change.
  C) It will rise.
  D) It will fall in the short run and rise in the long run.
  Ans:  B     Difficulty:  Difficult     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Long Run

 

 

56. In the long run (the HO model), immigration will lead to:
  A) an increase in the production of both the labor-intensive and the capital-intensive goods in the receiving country.
  B) an increase in the production of the labor-intensive good and a decrease in the production of the capital-intensive good in the receiving country.
  C) a decrease in the production of both the labor-intensive and the capital-intensive goods in the receiving country.
  D) a decrease in the production of the labor-intensive and an increase in the production of the capital-intensive good in the receiving country.
  Ans:  B     Difficulty:  Difficult     Section:  Movement of Labor Between Countries: Migration     Skill Descriptor:  Analytical Thinking     Topic:  Effects of Immigration in the Long Run

 

 

57. In the long run, when there is immigration of labor and all domestic factors of production are mobile:
 

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