Question 1

The study of exchange rate determination is a relatively new part of international economics, since

Accepted Answer

A)  for much of the past century, exchange rates were fixed by government action. 
B)  the calculations required for this were not possible before modern computers became available. 
C)  economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time. 
D)  dynamic overshooting asset pricing models are a recent theoretical development. 
E)  the exchange rate never fluctuates. 
A)  for much of the past century, exchange rates were fixed by government action. 
B)  the calculations required for this were not possible before modern computers became available. 
C)  economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time. 
D)  dynamic overshooting asset pricing models are a recent theoretical development. 
E)  the exchange rate never fluctuates. A

Question 2

In September 2010, the finance minister of ________ declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the ________.

Accepted Answer

A)  England; pound sterling 
B)  Germany; euro 
C)  Japan; yen 
D)  China; renminbi 
E)  Brazil; Real 
A)  England; pound sterling 
B)  Germany; euro 
C)  Japan; yen 
D)  China; renminbi 
E)  Brazil; Real E

Question 3

For almost 70 years international trade policies have been governed

Accepted Answer

A)  by the World Trade Organization. 
B)  by the International Monetary Fund. 
C)  by the World. 
D)  by an international treaty known as the General Agreement on Tariffs and Trade (GATT). 
E)  by the North American Free Trade Agreement (NAFT
A) . 
A)  by the World Trade Organization. 
B)  by the International Monetary Fund. 
C)  by the World. 
D)  by an international treaty known as the General Agreement on Tariffs and Trade (GATT). 
E)  by the North American Free Trade Agreement (NAFT
A) . D

Question 4

Cost-benefit analysis of international trade

Accepted Answer

A)  is basically useless. 
B)  is empirically intractable. 
C)  focuses attention primarily on conflicts of interest within countries. 
D)  focuses attention on conflicts of interest between countries. 
E)  never leads to government intervention in international trade. 
A)  is basically useless. 
B)  is empirically intractable. 
C)  focuses attention primarily on conflicts of interest within countries. 
D)  focuses attention on conflicts of interest between countries. 
E)  never leads to government intervention in international trade.

Question 5

Historians of economic thought often describe ________ written by ________ and published in ________ as the first real exposition of an economic model.

Accepted Answer

A)  "Of the Balance of Trade," David Hume, 1776 
B)  "Wealth of Nations," David Hume, 1758 
C)  "Wealth of Nations," Adam Smith, 1758 
D)  "Wealth of Nations," Adam Smith, 1776 
E)  "Of the Balance of Trade," David Hume, 1758 
A)  "Of the Balance of Trade," David Hume, 1776 
B)  "Wealth of Nations," David Hume, 1758 
C)  "Wealth of Nations," Adam Smith, 1758 
D)  "Wealth of Nations," Adam Smith, 1776 
E)  "Of the Balance of Trade," David Hume, 1758

Question 6

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by

Accepted Answer

A)  Adam Smith. 
B)  David Hume. 
C)  David Ricardo. 
D)  Eli Heckscher. 
E)  Lerner and Samuelson. 
A)  Adam Smith. 
B)  David Hume. 
C)  David Ricardo. 
D)  Eli Heckscher. 
E)  Lerner and Samuelson.

Question 7

International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread. How might you reconcile these two facts?

Accepted Answer

This question is meant to allo

Question 8

The benefits of international trade are derived from trade in

Accepted Answer

A)  tangible goods only. 
B)  intangible goods only. 
C)  goods but not services. 
D)  services but not goods. 
E)  anything of value. 
A)  tangible goods only. 
B)  intangible goods only. 
C)  goods but not services. 
D)  services but not goods. 
E)  anything of value.

Question 9

It is argued that if a rich high wage country such as the United States were to expand trade with a relatively poor and low wage country such as Mexico, then U.S. industry would migrate south, and U.S. wages would fall to the level of Mexico's. What do you think about this argument?

Accepted Answer

The student may think anything

Question 10

International economics ________ use the same fundamental methods of analysis as other branches of economics, because ________.

Accepted Answer

A)  does not, the level of complexity of international issues is unique 
B)  does not, the interactions associated with international economic relations is highly mathematical 
C)  does not, international economics takes a different perspective on economic issues 
D)  does not, international economic policy requires cooperation with other countries 
E)  does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions 
A)  does not, the level of complexity of international issues is unique 
B)  does not, the interactions associated with international economic relations is highly mathematical 
C)  does not, international economics takes a different perspective on economic issues 
D)  does not, international economic policy requires cooperation with other countries 
E)  does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions

Question 11

International monetary analysis focuses on

Accepted Answer

A)  the real side of the international economy. 
B)  the international trade side of the international economy. 
C)  the international investment side of the international economy. 
D)  the issues of international cooperation between Central Banks. 
E)  the monetary side of the international economy, such as currency exchange. 
A)  the real side of the international economy. 
B)  the international trade side of the international economy. 
C)  the international investment side of the international economy. 
D)  the issues of international cooperation between Central Banks. 
E)  the monetary side of the international economy, such as currency exchange.

Question 12

How are the patterns of international trade, that is the pattern of what different countries export and import, explained?

Accepted Answer

Climate explains why Brazil exports coff

Question 13

Theories of international economics from the 18th and 19th centuries are

Accepted Answer

A)  not relevant to current policy analysis. 
B)  only of moderate relevance in today's modern international economy. 
C)  highly relevant in today's modern international economy. 
D)  the only theories that are actually relevant to modern international economy. 
E)  not well understood by modern mathematically oriented theorists. 
A)  not relevant to current policy analysis. 
B)  only of moderate relevance in today's modern international economy. 
C)  highly relevant in today's modern international economy. 
D)  the only theories that are actually relevant to modern international economy. 
E)  not well understood by modern mathematically oriented theorists.

Question 14

It is argued that global trade tends to be more important to countries with smaller economies than the U.S. Is this empirically verified?

Accepted Answer

Yes. Figure 1-2 shows exports and import

Question 15

An improvement in a country's balance of payments means a decrease in its balance of payments deficit, or an increase in its surplus. In fact we know that a surplus in a balance of payments

Accepted Answer

A)  is always beneficial. 
B)  is usually beneficial. 
C)  is never harmful. 
D)  is sometimes harmful. 
E)  is always harmful. 
A)  is always beneficial. 
B)  is usually beneficial. 
C)  is never harmful. 
D)  is sometimes harmful. 
E)  is always harmful.

Question 16

International economics can be divided into two broad sub-fields

Accepted Answer

A)  macro and micro. 
B)  developed and less developed. 
C)  monetary and barter. 
D)  international trade and international money. 
E)  static and dynamic. 
A)  macro and micro. 
B)  developed and less developed. 
C)  monetary and barter. 
D)  international trade and international money. 
E)  static and dynamic.

Question 17

The United States is less dependent on trade than most other countries because

Accepted Answer

A)  the United States is a relatively large country with diverse resources. 
B)  the United States is a "Superpower." 
C)  the military power of the United States makes it less dependent on anything. 
D)  the United States invests in many other countries. 
E)  many countries invest in the United States. 
A)  the United States is a relatively large country with diverse resources. 
B)  the United States is a "Superpower." 
C)  the military power of the United States makes it less dependent on anything. 
D)  the United States invests in many other countries. 
E)  many countries invest in the United States.

Question 18

"Trade is generally harmful if there are large disparities between countries in wages."

Accepted Answer

A)  This is generally true. 
B)  This is generally false. 
C)  Trade theory has nothing to say about this issue. 
D)  This is true if the trade partner ignores child labor laws. 
E)  This is true if the trade partner uses prison labor. 
A)  This is generally true. 
B)  This is generally false. 
C)  Trade theory has nothing to say about this issue. 
D)  This is true if the trade partner ignores child labor laws. 
E)  This is true if the trade partner uses prison labor.

Question 19

Because the Constitution forbids restraints on interstate trade

Accepted Answer

A)  the U.S. may not impose tariffs on imports from NAFTA countries. 
B)  the U.S. may not affect the international value of the $ U.S. 
C)  the U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State. 
D)  the U.S. may not impose export duties. 
E)  the U.S. may not disrupt commerce between Florida and Hawaii. 
A)  the U.S. may not impose tariffs on imports from NAFTA countries. 
B)  the U.S. may not affect the international value of the $ U.S. 
C)  the U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State. 
D)  the U.S. may not impose export duties. 
E)  the U.S. may not disrupt commerce between Florida and Hawaii.

Question 20

International economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know

Accepted Answer

A)  their theory is the best available. 
B)  their theory is internally consistent. 
C)  their theory passes the "reasonable person" legal criteria. 
D)  their theory is good enough to explain the international trade that is actually observed. 
E)  their theory accounts for China's unique position in international trade. 
A)  their theory is the best available. 
B)  their theory is internally consistent. 
C)  their theory passes the "reasonable person" legal criteria. 
D)  their theory is good enough to explain the international trade that is actually observed. 
E)  their theory accounts for China's unique position in international trade.

Exam 1: Introduction

The study of exchange rate determination is a relatively new part of international economics, since

In September 2010, the finance minister of ________ declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the ________.

For almost 70 years international trade policies have been governed

Cost-benefit analysis of international trade

Historians of economic thought often describe ________ written by ________ and published in ________ as the first real exposition of an economic model.

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by

International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread. How might you reconcile these two facts?

The benefits of international trade are derived from trade in

It is argued that if a rich high wage country such as the United States were to expand trade with a relatively poor and low wage country such as Mexico, then U.S. industry would migrate south, and U.S. wages would fall to the level of Mexico's. What do you think about this argument?

International economics ________ use the same fundamental methods of analysis as other branches of economics, because ________.

International monetary analysis focuses on

How are the patterns of international trade, that is the pattern of what different countries export and import, explained?

Theories of international economics from the 18th and 19th centuries are

It is argued that global trade tends to be more important to countries with smaller economies than the U.S. Is this empirically verified?

An improvement in a country's balance of payments means a decrease in its balance of payments deficit, or an increase in its surplus. In fact we know that a surplus in a balance of payments

International economics can be divided into two broad sub-fields

The United States is less dependent on trade than most other countries because

"Trade is generally harmful if there are large disparities between countries in wages."

Because the Constitution forbids restraints on interstate trade

International economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

In September 2010, the finance minister of declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the .

Historians of economic thought often describe written by and published in as the first real exposition of an economic model.

International economics use the same fundamental methods of analysis as other branches of economics, because .