Question

Question 36

At a current wage rate less than the market equilibrium wage rate,

Select one:

a. workers are willing to provide more labor than firms wish to hire.

b. there is a shortage of labor.

c. there is a surplus of workers, or unemployment.

d. firms wish to hire fewer units of labor than workers desire to provide.

Question 37

In principle, a tendency for firms to congregate in a single nation to reap trade-cost advantages related to key inputs located within that nation, thereby yielding a trade advantage for that nation, could result from:

Select one:

a. external economies and agglomeration.

b. diseconomies of scale and a first-mover advantage.

c. internal economies and attainment of minimum efficient scale.

d. economies of scale and government-erected entry barriers.

Question 39

Which of the following two elements are both central to "gravity" models of international trade?

Select one:

a. Countries' sizes and geographic distances separating them.

b. Depths of waterways and heights of surfaces along which international trade flows occur.

c. The relative weights that nations' residents place on physical goods versus intangible services when voting on trade policies.

d. Countries' latitudinal and longitudinal locations along the surface of the planet.

Question 40

If the expected proportionate change in the nominal exchange rate, measured in units of domestic currency per unit of foreign currency, is 2 percent and the domestic interest rate is 6 percent, then according to the uncovered interest parity condition, the foreign interest rate should be equal to:

Select one:

a. 6 percent - 2 percent = 4 percent

b. 6 percent + 2 percent=8 percent

c. 6 percent ÷ 2 percent = 3 percent

d. 6 percent × 2 percent =12 Percent

Answer 1

Q36) option B)

As the current wage is less than the market wage level , so firms will demand more Labor & less labor will be supplied.

Thus shortage of labor will occur.so c is false

So a is false, as workers are willing to supply less labor

Firms want to hire more Labor , d is false

37) option A)

This imply the external economies of scale, bcoz internal economies are related to increase in size of a firm

Economies & dis-economies of scale, are related to the Average cost of production

39) option A)

In gravity model, trade between two nations depend upon the size of the two economies & distance between two nations

40) option B)

As per uncovered Interest rate parity

i = if + ∆e/e

i : domestic Interest rate

if : foreign interest rate

∆e/e : expected appreciation of the foreign currency

So , 6 = if + (-2)

So if = 6+2 = 8%

domestic currency appreciates by 2 %

so foreign currency depreciates by 2% ( expected)