Question 1

Since the late 1990s, to prevent the yuan from appreciating against the U.S. dollar, the Chinese central bank

Accepted Answer

A) has been trying to hold euros and British pounds as foreign assets. 
B) has been buying dollars and selling yuan in the foreign exchange market. 
C) has purchased Chinese government bonds. 
D) has been selling foreign assets to replenish it dollar reserves. 
A) has been trying to hold euros and British pounds as foreign assets. 
B) has been buying dollars and selling yuan in the foreign exchange market. 
C) has purchased Chinese government bonds. 
D) has been selling foreign assets to replenish it dollar reserves.

Question 2

The ECB is prohibited from

Accepted Answer

A) lending to national governments or purchasing government debt directly from the government. 
B) owning government debt. 
C) accepting deposits from EU countries. 
D) paying interest on deposits. 
A) lending to national governments or purchasing government debt directly from the government. 
B) owning government debt. 
C) accepting deposits from EU countries. 
D) paying interest on deposits.

Question 3

Most of the countries that would be customers for natural gas exported from the U.S. are countries that have free trade agreements with the U.S.

Accepted Answer

A) True 
 B)False

Question 4

"China is not a typical developing nation." Which of the following economic features is most likely to justify this claim?

Accepted Answer

A) China has a large trade deficit with the United States. 
B) The Chinese government favors a freely floating exchange rate policy. 
C) China has a high national saving rate. 
D) The government of China spends a significant portion of its revenue on national defense. 
A) China has a large trade deficit with the United States. 
B) The Chinese government favors a freely floating exchange rate policy. 
C) China has a high national saving rate. 
D) The government of China spends a significant portion of its revenue on national defense.

Question 5

The Hong Kong dollar is pegged to the U.S. dollar at a rate of 7.8 Hong Kong dollars to 1 U.S. dollar. Suppose the central bank of Hong Kong changes the exchange value to 7.3 Hong Kong dollars to 1 U.S. dollar. Which of the following is most likely to be true in this context?

Accepted Answer

A) The Hong Kong dollar has been revalued by 0.5 percent. 
B) The Hong Kong dollar has been devalued by 0.5 percent. 
C) The Hong Kong dollar has been revalued by 6.4 percent. 
D) The Hong Kong dollar has been devalued by 6.2 percent. 
A) The Hong Kong dollar has been revalued by 0.5 percent. 
B) The Hong Kong dollar has been devalued by 0.5 percent. 
C) The Hong Kong dollar has been revalued by 6.4 percent. 
D) The Hong Kong dollar has been devalued by 6.2 percent.

Question 6

"Job-seeking immigration brings net economic benefits not only to the immigrants, but also to the receiving country overall." Justify the statement.

Accepted Answer

Immigration leaves some better off and s

Question 7

Which of the following exchange rate policies was undertaken by the Chinese government in 1994?

Accepted Answer

A) The Chinese yuan was revalued against the U.S.dollar. 
B) A free floating exchange rate regime was adopted. 
C) The Chinese yuan was revalued against the euro. 
D) The Chinese yuan was pegged to the U.S.dollar. 
A) The Chinese yuan was revalued against the U.S.dollar. 
B) A free floating exchange rate regime was adopted. 
C) The Chinese yuan was revalued against the euro. 
D) The Chinese yuan was pegged to the U.S.dollar.

Question 8

How did the ECB's Security Market Program acquire Greek, Irish and Portuguese government bonds in 2010-2011?

Accepted Answer

A) By buying those bonds from those governments 
B) By buying securities backed by those government bonds and foreclosing on the bonds when the securities were not paid 
C) By buying the bonds on the secondary markets 
D) By loaning money to private companies which bought the bonds and then used the government bonds to repay the loans 
A) By buying those bonds from those governments 
B) By buying securities backed by those government bonds and foreclosing on the bonds when the securities were not paid 
C) By buying the bonds on the secondary markets 
D) By loaning money to private companies which bought the bonds and then used the government bonds to repay the loans

Question 9

How did the global financial crisis that began in the U.S. in 2007 affect countries in Europe?

Accepted Answer

Some European countries suffered from ho

Question 10

Which of following is most likely to happen when the dollar appreciates against the euro?

Accepted Answer

A) There will be a huge inflow of "hot money" to the European nations. 
B) The prices of American goods in the European countries will decline. 
C) The prices of European goods in the U.S.markets will decline. 
D) The rate of inflation in the United States will increase. 
A) There will be a huge inflow of "hot money" to the European nations. 
B) The prices of American goods in the European countries will decline. 
C) The prices of European goods in the U.S.markets will decline. 
D) The rate of inflation in the United States will increase.

Question 11

Evidence shows that the Chinese Yuan was substantially overvalued against the U.S. dollar in mid-2005.

Accepted Answer

A) True 
 B)False

Question 12

The central bank of Alanza, a developing economy, persistently intervenes in the foreign exchange market to prevent its currency from appreciating against the dollar. Which of the following is the most probable consequence of this intervention by the central bank?

Accepted Answer

A) The money supply in Alanza will decline. 
B) Alanza's exports will decline in the near future. 
C) The rate of inflation in Alanza will increase. 
D) Alanza is most likely to have a trade deficit with the United States. 
A) The money supply in Alanza will decline. 
B) Alanza's exports will decline in the near future. 
C) The rate of inflation in Alanza will increase. 
D) Alanza is most likely to have a trade deficit with the United States.

Question 13

A computer programmer working in India relocates to the United States. This is an example of

Accepted Answer

A) international outsourcing. 
B) factor mobility. 
C) cross-border trade. 
D) factor intensity reversal. 
A) international outsourcing. 
B) factor mobility. 
C) cross-border trade. 
D) factor intensity reversal.

Question 14

Importation of natural gas into Japan would cause the price of natural gas in Japan to fall and consumption to increase.

Accepted Answer

A) True 
 B)False

Question 15

During 2001-2004 the European Union had a large trade surplus with China.

Accepted Answer

A) True 
 B)False

Question 16

Monetary policies adopted by a country do not affect its trading partners as long as the partner countries use different currencies.

Accepted Answer

A) True 
 B)False

Question 17

The primary objective of the European Central Bank is to

Accepted Answer

A) bailout EU countries in financial trouble. 
B) assure full employment. 
C) maintain price stability. 
D) protect EU countries from unfair trade practices. 
A) bailout EU countries in financial trouble. 
B) assure full employment. 
C) maintain price stability. 
D) protect EU countries from unfair trade practices.

Question 18

Banks open branches in countries where profits are taxed less and their books of accounts are less scrutinized.

Accepted Answer

A) True 
 B)False

Question 19

As the recession in the euro area appeared to end on mid-2009, to address a perceived weakness in the Irish banking system, the Irish government did what?

Accepted Answer

A) It decreed that all debts of Irish banks were being canceled. 
B) It decreed that Irish banks would thereafter pay not more than 3 percent per annum on deposits. 
C) It decreed that it would loan Irish banks the equivalent of 3 billion U.S.dollars. 
D) It decreed that the Irish government would guarantee all deposits and debts of the largest Irish banks. 
A) It decreed that all debts of Irish banks were being canceled. 
B) It decreed that Irish banks would thereafter pay not more than 3 percent per annum on deposits. 
C) It decreed that it would loan Irish banks the equivalent of 3 billion U.S.dollars. 
D) It decreed that the Irish government would guarantee all deposits and debts of the largest Irish banks.

Question 20

Which of the following is an impact of increased illegal immigration on an economy?

Accepted Answer

A) The rate of inflation in the receiving country increases. 
B) The demand for labor in the receiving country declines. 
C) The demand for public goods like education and health care increases. 
D) The real wage rate of workers increases. 
A) The rate of inflation in the receiving country increases. 
B) The demand for labor in the receiving country declines. 
C) The demand for public goods like education and health care increases. 
D) The real wage rate of workers increases.

Exam 1: International Economics Is Different

Since the late 1990s, to prevent the yuan from appreciating against the U.S. dollar, the Chinese central bank

The ECB is prohibited from

Most of the countries that would be customers for natural gas exported from the U.S. are countries that have free trade agreements with the U.S.

"China is not a typical developing nation." Which of the following economic features is most likely to justify this claim?

The Hong Kong dollar is pegged to the U.S. dollar at a rate of 7.8 Hong Kong dollars to 1 U.S. dollar. Suppose the central bank of Hong Kong changes the exchange value to 7.3 Hong Kong dollars to 1 U.S. dollar. Which of the following is most likely to be true in this context?

"Job-seeking immigration brings net economic benefits not only to the immigrants, but also to the receiving country overall." Justify the statement.

Which of the following exchange rate policies was undertaken by the Chinese government in 1994?

How did the ECB's Security Market Program acquire Greek, Irish and Portuguese government bonds in 2010-2011?

How did the global financial crisis that began in the U.S. in 2007 affect countries in Europe?

Which of following is most likely to happen when the dollar appreciates against the euro?

Evidence shows that the Chinese Yuan was substantially overvalued against the U.S. dollar in mid-2005.

The central bank of Alanza, a developing economy, persistently intervenes in the foreign exchange market to prevent its currency from appreciating against the dollar. Which of the following is the most probable consequence of this intervention by the central bank?

A computer programmer working in India relocates to the United States. This is an example of

Importation of natural gas into Japan would cause the price of natural gas in Japan to fall and consumption to increase.

During 2001-2004 the European Union had a large trade surplus with China.

Monetary policies adopted by a country do not affect its trading partners as long as the partner countries use different currencies.

The primary objective of the European Central Bank is to

Banks open branches in countries where profits are taxed less and their books of accounts are less scrutinized.

As the recession in the euro area appeared to end on mid-2009, to address a perceived weakness in the Irish banking system, the Irish government did what?

Which of the following is an impact of increased illegal immigration on an economy?

The Basic Theory Using Demand and Supply

Why Everybody Trades: Comparative Advantage

Trade: Factor Availability and Factor Proportions Are Key

Who Gains and Who Loses From Trade

Scale Economies, Imperfect Competition, and Trade

Growth and Trade Part II: Trade Policy

Analysis of a Tariff

Nontariff Barriers to Imports

Arguments for and Against Protection

Pushing Exports

Trade Blocs and Trade Blocks

Trade and the Environment

Trade Policies for Developing Countries

Multinationals and Migration: International Factor Movements

Payments Among Nations

The Foreign Exchange Market

Forward Exchange and International Financial Investment

What Determines Exchange Rates

Government Policies Toward the Foreign Exchange Market

International Lending and Financial Crises

How Does the Open Macroeconomy Work

Internal and External Balance With Fixed Exchange Rates

Floating Exchange Rates and Internal Balance

National and Global Choices: Floating Rates and the Alternatives

Filters