Question 1

A currency has depreciated in value if it takes more of a foreign currency to buy it.

Accepted Answer

A) True 
 B)False

Question 2

If the world supply curve is SW0,

Accepted Answer

A) domestic quantity supplied is unrelated to domestic quantity demanded. 
B) domestic quantity supplied is less than domestic quantity demanded. 
C) domestic quantity supplied exceeds domestic quantity demanded. 
D) domestic quantity supplied equals domestic quantity demanded. 
A) domestic quantity supplied is unrelated to domestic quantity demanded. 
B) domestic quantity supplied is less than domestic quantity demanded. 
C) domestic quantity supplied exceeds domestic quantity demanded. 
D) domestic quantity supplied equals domestic quantity demanded.

Question 3

The decline in the price of American goods is due in part to:

Accepted Answer

A) agglomeration effects of firms. 
B) declines in productivity. 
C) trade barriers that allow domestic firms to lower prices. 
D) globalization and increased trade. 
A) agglomeration effects of firms. 
B) declines in productivity. 
C) trade barriers that allow domestic firms to lower prices. 
D) globalization and increased trade.

Question 4

If countries decide they will no longer buy U.S. assets or lend to the United States:

Accepted Answer

A) adjustments will be set in motion to equalize comparative advantages. 
B) adjustments will be set in motion so that the United States has more comparative advantages. 
C) the United States can begin to run a trade deficit. 
D) There is no reason foreign countries will not want to buy more U.S. assets than the United States buys of foreign assets. 
A) adjustments will be set in motion to equalize comparative advantages. 
B) adjustments will be set in motion so that the United States has more comparative advantages. 
C) the United States can begin to run a trade deficit. 
D) There is no reason foreign countries will not want to buy more U.S. assets than the United States buys of foreign assets.

Question 5

The discovery of a new source of oil will lead to:

Accepted Answer

A) increased demand for a foreign currency; appreciation of the currency. 
B) increased demand for domestic currency; depreciation of the currency. 
C) decreased demand for domestic currency; appreciation of the currency. 
D) increased demand for domestic currency; appreciation of the currency. 
A) increased demand for a foreign currency; appreciation of the currency. 
B) increased demand for domestic currency; depreciation of the currency. 
C) decreased demand for domestic currency; appreciation of the currency. 
D) increased demand for domestic currency; appreciation of the currency.

Question 6

Why are the gains from trade often difficult to recognize?

Accepted Answer

A) The United States does not keep accurate records of employment. 
B) The gains are spread out over a wide variety of goods and consumers. 
C) There are no gains from trade. 
D) The gains are in services, which are difficult to measure. 
A) The United States does not keep accurate records of employment. 
B) The gains are spread out over a wide variety of goods and consumers. 
C) There are no gains from trade. 
D) The gains are in services, which are difficult to measure.

Question 7

Refer to the table shown. $$\begin{array} {c } 
{ \text { Batswana } }   \quad\quad  { \text { Zimbabwe } } \
\begin{array} { | c | c | c | c | } 
\hline \text { Gald } & \text { Nickel } & \text { Gold } & \text { Nickel } \
\hline 0 & 300 & 0 & 90 \
\hline 60 & 200 & 18 & 60 \
\hline 120 & 100 & 36 & 30 \
\hline 180 & 0 & 54 & 0 \
\hline
\end{array}\end{array}$$ In this example:

Accepted Answer

A) there are gains from trade for Botswana. 
B) there are gains from trade for Zimbabwe. 
C) there are gains from trade for both countries. 
D) there are no possible gains from trade. 
A) there are gains from trade for Botswana. 
B) there are gains from trade for Zimbabwe. 
C) there are gains from trade for both countries. 
D) there are no possible gains from trade.

Question 8

We can conclude from the table shown that Spain has a comparative advantage in the production of tables.
 $$\begin{array}{l}
\quad\quad\text { Labar Input to Praduce Chairs and Tables }\
\begin{array} { | l | c | c | } 
\hline \quad\quad& \text { Marncen }\quad\quad\quad\quad & \text { Spain }\quad\quad\quad\quad \
\hline \text { Chair } & 3 & 1 \
\hline \text { Table } & 10 & 5 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) True 
 B)False

Question 9

The depreciation of a currency will:

Accepted Answer

A) balance a trade surplus. 
B) have no impact on a country's comparative advantages. 
C) worsen a country's comparative advantages. 
D) improve a country's comparative advantages. 
A) balance a trade surplus. 
B) have no impact on a country's comparative advantages. 
C) worsen a country's comparative advantages. 
D) improve a country's comparative advantages.

Question 10

The foreign exchange market is the market in which:

Accepted Answer

A) foreigners buy U.S. real estate. 
B) foreign stocks and bonds are bought and sold. 
C) ideas from different countries are exchanged. 
D) currencies of different countries are bought and sold. 
A) foreigners buy U.S. real estate. 
B) foreign stocks and bonds are bought and sold. 
C) ideas from different countries are exchanged. 
D) currencies of different countries are bought and sold.

Question 11

Economists and laypeople see the pros and cons of international trade in different ways. Which of the following is one of those ways?

Accepted Answer

A) Laypeople enjoy the benefits of trade in terms of lower consumer prices. 
B) Laypeople believe in the law of one price and economists do not. 
C) Laypeople tend to think of foreign trade only in terms of manufactured goods. 
D) Laypeople recognize that the United States has a comparative advantage in services. 
A) Laypeople enjoy the benefits of trade in terms of lower consumer prices. 
B) Laypeople believe in the law of one price and economists do not. 
C) Laypeople tend to think of foreign trade only in terms of manufactured goods. 
D) Laypeople recognize that the United States has a comparative advantage in services.

Question 12

The country with a comparative advantage in the production of good X is the one that:

Accepted Answer

A) has the greatest technical efficiency in producing good X. 
B) has the greatest supply of the natural resources used in producing good X. 
C) can produce good X with the least labor. 
D) can produce good X at the lowest opportunity cost. 
A) has the greatest technical efficiency in producing good X. 
B) has the greatest supply of the natural resources used in producing good X. 
C) can produce good X with the least labor. 
D) can produce good X at the lowest opportunity cost.

Question 13

The text calls the type of comparative advantage that is not easily changed, such as climate:

Accepted Answer

A) stable comparative advantage. 
B) inherent comparative advantage. 
C) equilibrium comparative advantage. 
D) permanent comparative advantage. 
A) stable comparative advantage. 
B) inherent comparative advantage. 
C) equilibrium comparative advantage. 
D) permanent comparative advantage.

Question 14

The discovery of a significant new source of oil that can be exported will lead to:

Accepted Answer

A) depreciation of the currency and a loss of comparative advantage in other sectors. 
B) depreciation of the currency and a gain of comparative advantage in other sectors. 
C) appreciation of the currency and a loss of comparative advantage in other sectors. 
D) appreciation of the currency and a gain of comparative advantage in other sectors. 
A) depreciation of the currency and a loss of comparative advantage in other sectors. 
B) depreciation of the currency and a gain of comparative advantage in other sectors. 
C) appreciation of the currency and a loss of comparative advantage in other sectors. 
D) appreciation of the currency and a gain of comparative advantage in other sectors.

Question 15

Refer to the graph shown.   Given these production possibility curves, you would suggest that:

Accepted Answer

A) Country A should specialize in widgets and Country B in wadgets. 
B) No trade should take place. 
C) Country A should specialize in wadgets and Country B in widgets. 
D) Both countries should produce an equal amount of each. 
A) Country A should specialize in widgets and Country B in wadgets. 
B) No trade should take place. 
C) Country A should specialize in wadgets and Country B in widgets. 
D) Both countries should produce an equal amount of each.

Question 16

If the world supply curve is SW1, and the country's exchange rate depreciates,

Accepted Answer

A) the trade surplus will move toward balance. 
B) the trade surplus will become greater. 
C) the trade deficit will move toward balance. 
D) the trade deficit will become greater. 
A) the trade surplus will move toward balance. 
B) the trade surplus will become greater. 
C) the trade deficit will move toward balance. 
D) the trade deficit will become greater.

Question 17

The group that benefited the most from international trade has been people who:

Accepted Answer

A) financed international trade. 
B) managed firms. 
C) owners of firms. 
D) no one has benefited. 
A) financed international trade. 
B) managed firms. 
C) owners of firms. 
D) no one has benefited.

Question 18

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Accepted Answer

A) Wealth from past production 
B) The fact that English is the international language of business 
C) A substantial policy to limit immigration 
D) Extensive natural resources 
A) Wealth from past production 
B) The fact that English is the international language of business 
C) A substantial policy to limit immigration 
D) Extensive natural resources

Question 19

If a country's exchange rate appreciates, the world price level:

Accepted Answer

A) rises. 
B) falls. 
C) remains unchanged. 
D) could rise or fall. 
A) rises. 
B) falls. 
C) remains unchanged. 
D) could rise or fall.

Question 20

Explain the principle of comparative advantage.Does it tell us how the gains from trade will be distributed?

Accepted Answer

The principle of comparative advantage s

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

A currency has depreciated in value if it takes more of a foreign currency to buy it.

If the world supply curve is SW0,

The decline in the price of American goods is due in part to:

If countries decide they will no longer buy U.S. assets or lend to the United States:

The discovery of a new source of oil will lead to:

Why are the gains from trade often difficult to recognize?

Refer to the table shown. Batswana Zimbabwe Gald Nickel Gold Nickel 0 300 0 90 60 200 18 60 120 100 36 30 180 0 54 0 In this example:

We can conclude from the table shown that Spain has a comparative advantage in the production of tables. Labar Input to Praduce Chairs and Tables Marncen Spain Chair 3 1 Table 10 5

The depreciation of a currency will:

The foreign exchange market is the market in which:

Economists and laypeople see the pros and cons of international trade in different ways. Which of the following is one of those ways?

The country with a comparative advantage in the production of good X is the one that:

The text calls the type of comparative advantage that is not easily changed, such as climate:

The discovery of a significant new source of oil that can be exported will lead to:

Refer to the graph shown. Given these production possibility curves, you would suggest that:

If the world supply curve is SW1, and the country's exchange rate depreciates,

The group that benefited the most from international trade has been people who:

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

If a country's exchange rate appreciates, the world price level:

Explain the principle of comparative advantage.Does it tell us how the gains from trade will be distributed?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

If the world supply curve is S_W0,

If the world supply curve is S_W1, and the country's exchange rate depreciates,