Question 1

What event in Japan increased demand for imported natural gas in Japan?

Accepted Answer

A) Deposits of natural gas in Japan have been exhausted. 
B) The largest deposits of natural gas available to Japan are located in the islands in the South China Sea and Japan and China have a dispute about who owns those islands. 
C) A tsunami in 2011 damaged the nuclear reactor in Fukushima causing Japan to shut down all of its nuclear generation of electricity. 
D) Japan imposed strict environmental requirements for the generation of electricity that can only be met by using natural gas to produce electricity. 
A) Deposits of natural gas in Japan have been exhausted. 
B) The largest deposits of natural gas available to Japan are located in the islands in the South China Sea and Japan and China have a dispute about who owns those islands. 
C) A tsunami in 2011 damaged the nuclear reactor in Fukushima causing Japan to shut down all of its nuclear generation of electricity. 
D) Japan imposed strict environmental requirements for the generation of electricity that can only be met by using natural gas to produce electricity.

Question 2

What is the effect on trade deficits of a country's saving rate?

Accepted Answer

A) A low savings rate means that consumers are buying more, and more buying leads to an increase in a country's trade deficit. 
B) A low savings rate means that people are spending more than they earn and that results in increased financial difficulties for consumers, higher interest rate, and fewer international sales, resulting in a decrease in a country's trade deficit. 
C) A high savings rate means that there is more money available for investment which results in greater production and increased international sales which lead to lower trade deficits. 
D) A country's savings rate has no effect on the country's trade deficit. 
A) A low savings rate means that consumers are buying more, and more buying leads to an increase in a country's trade deficit. 
B) A low savings rate means that people are spending more than they earn and that results in increased financial difficulties for consumers, higher interest rate, and fewer international sales, resulting in a decrease in a country's trade deficit. 
C) A high savings rate means that there is more money available for investment which results in greater production and increased international sales which lead to lower trade deficits. 
D) A country's savings rate has no effect on the country's trade deficit.

Question 3

On July 21st, 2005, the Chinese government changed the value of the yuan from 8.28 yuan per U.S. dollar to 8.11 yuan per U.S. dollar. One effect of this change should have been

Accepted Answer

A) an increase in the prices of American goods in the Chinese market. 
B) an increase in the dollar price of the Chinese goods. 
C) a decline in the average price level in the United States 
D) market pressure to return the rate to 8.28 yuan per dollar. 
A) an increase in the prices of American goods in the Chinese market. 
B) an increase in the dollar price of the Chinese goods. 
C) a decline in the average price level in the United States 
D) market pressure to return the rate to 8.28 yuan per dollar.

Question 4

Which of the following is NOT a fiscal policy?

Accepted Answer

A) Increasing tariffs to reduce imports 
B) Offering subsidies to export firms 
C) Increasing the money supply to expand aggregate demand 
D) Lowering personal tax rates to influence labor supply 
A) Increasing tariffs to reduce imports 
B) Offering subsidies to export firms 
C) Increasing the money supply to expand aggregate demand 
D) Lowering personal tax rates to influence labor supply

Question 5

A law in the U.S. prohibits the export of natural gas unless such exports are in the "public interest." What does "public interest" mean in the context of that law?

Accepted Answer

A) The amount received for the exported natural gas is enough to cover the production and transportation costs plus a reasonable profit 
B) The U.S.government is able to collect export taxes set by law on the exported natural gas 
C) The exports leave an adequate supply of natural gas for domestic users and consumers of natural gas 
D) The exported natural gas does not fall into the hands of groups or countries that the U.S.government has designated as terrorists 
A) The amount received for the exported natural gas is enough to cover the production and transportation costs plus a reasonable profit 
B) The U.S.government is able to collect export taxes set by law on the exported natural gas 
C) The exports leave an adequate supply of natural gas for domestic users and consumers of natural gas 
D) The exported natural gas does not fall into the hands of groups or countries that the U.S.government has designated as terrorists

Question 6

What would be the effect in the U.S. of increased exports of natural gas from the U.S. to foreign countries?

Accepted Answer

A) Exports of natural gas from the U.S.would force the world-wide price of natural gas to an equilibrium and reduce the price of natural gas for consumers in the U.S. 
B) Exports of natural gas from the U.S.would result in higher prices for natural gas, benefiting producers and exporters of natural gas in the U.S.and harming consumers of natural gas in the U.S. 
C) Exports of natural gas from the U.S.would force the world-wide price of natural gas to an equilibrium which would mean that producers of natural gas in the U.S.could not charge more than the cost to produce the natural gas. 
D) The U.S.government would eventually have to prohibit exports of natural gas to foreign countries in order to control the price of natural gas. 
A) Exports of natural gas from the U.S.would force the world-wide price of natural gas to an equilibrium and reduce the price of natural gas for consumers in the U.S. 
B) Exports of natural gas from the U.S.would result in higher prices for natural gas, benefiting producers and exporters of natural gas in the U.S.and harming consumers of natural gas in the U.S. 
C) Exports of natural gas from the U.S.would force the world-wide price of natural gas to an equilibrium which would mean that producers of natural gas in the U.S.could not charge more than the cost to produce the natural gas. 
D) The U.S.government would eventually have to prohibit exports of natural gas to foreign countries in order to control the price of natural gas.

Question 7

The unskilled wage rate in a country may decline if

Accepted Answer

A) the corporate taxes are lowered by the government. 
B) there's increased immigration of low-skilled workers. 
C) the aggregate demand for goods and services increases in the country. 
D) the demand for unskilled workers increases. 
A) the corporate taxes are lowered by the government. 
B) there's increased immigration of low-skilled workers. 
C) the aggregate demand for goods and services increases in the country. 
D) the demand for unskilled workers increases.

Question 8

In 2004, China had a substantial trade surplus with

Accepted Answer

A) Russia 
B) Japan 
C) the United States 
D) Brazil 
A) Russia 
B) Japan 
C) the United States 
D) Brazil

Question 9

_____ is considered to be the least mobile factor internationally.

Accepted Answer

A) Labor 
B) Capital 
C) Entrepreneurship 
D) Land 
A) Labor 
B) Capital 
C) Entrepreneurship 
D) Land

Question 10

A country cannot set its own policies toward the international movement of productive resources.

Accepted Answer

A) True 
 B)False

Question 11

The exchange rate policy of a "crawling peg" adopted by the Chinese government in 2005 means that the government

Accepted Answer

A) allowed small and controlled changes in the exchange-rate value over time. 
B) pegged the Yuan to the U.S.dollar at the equilibrium exchange rate. 
C) held a balanced portfolio of assets including a variety of foreign currencies. 
D) caved in to pressures from foreign governments. 
A) allowed small and controlled changes in the exchange-rate value over time. 
B) pegged the Yuan to the U.S.dollar at the equilibrium exchange rate. 
C) held a balanced portfolio of assets including a variety of foreign currencies. 
D) caved in to pressures from foreign governments.

Question 12

If the dollar per pound exchange rate changes from $1.50 per pound to $2 per pound, it implies that the dollar has appreciated against the pound.

Accepted Answer

A) True 
 B)False

Question 13

In mid-2010, the Chinese government ended its fixed exchange rate to the U.S. dollar and began to allow the yuan to appreciate gradually. How would this shift affect the Chinese economy?

Accepted Answer

From mid-2008 to mid-2010, the Chinese g

Question 14

Although financial capital is relatively mobile as an input, it is subject to a "home bias" in which people prefer to invest within their own country.

Accepted Answer

A) True 
 B)False

Question 15

The supply of money in a country like the United States is controlled by the

Accepted Answer

A) central bank of the country. 
B) political party in charge of the government of the country. 
C) International Monetary Fund. 
D) commercial banks in the country. 
A) central bank of the country. 
B) political party in charge of the government of the country. 
C) International Monetary Fund. 
D) commercial banks in the country.

Question 16

By mid-2014, the U.S. government had approved multiple LNG export facilities so natural gas exports from the U.S. have increased significantly.

Accepted Answer

A) True 
 B)False

Question 17

What is fracking?

Accepted Answer

A) A process that uses a combination of hydraulic pressure and horizontal drilling to allow the extraction of natural gas that cannot otherwise be extracted. 
B) The difference between the cost of producing natural gas and transporting it to consumers and the price that consumers are willing to pay for the natural gas. 
C) The sale of natural gas on the black market in foreign countries without approval of the U.S.government. 
D) The imposition of import tariffs on natural gas exported from the U.S.to protect domestic producers in the importing country. 
A) A process that uses a combination of hydraulic pressure and horizontal drilling to allow the extraction of natural gas that cannot otherwise be extracted. 
B) The difference between the cost of producing natural gas and transporting it to consumers and the price that consumers are willing to pay for the natural gas. 
C) The sale of natural gas on the black market in foreign countries without approval of the U.S.government. 
D) The imposition of import tariffs on natural gas exported from the U.S.to protect domestic producers in the importing country.

Question 18

If the U.S. allowed the export of significant amounts of natural gas, what would be the economic effect?

Accepted Answer

A) There would be no net economic effect on international trade because increased exports from the U.S.would be offset by increased imports to the U.S.of other goods. 
B) The economic effect on international trade would be negative because increased amounts of natural gas in the importing countries would drive down the price of domestically produced natural gas in the importing countries. 
C) The foreign demand for natural gas from the U.S.would increase the price of natural gas in the U.S., production of natural gas in the U.S.would increase, and consumption of natural gas in the U.S.would decrease slightly. 
D) Increased demand for natural gas form the U.S.in foreign countries would increase the price of natural gas world-wide and result in many countries not being able to afford the price of natural gas. 
A) There would be no net economic effect on international trade because increased exports from the U.S.would be offset by increased imports to the U.S.of other goods. 
B) The economic effect on international trade would be negative because increased amounts of natural gas in the importing countries would drive down the price of domestically produced natural gas in the importing countries. 
C) The foreign demand for natural gas from the U.S.would increase the price of natural gas in the U.S., production of natural gas in the U.S.would increase, and consumption of natural gas in the U.S.would decrease slightly. 
D) Increased demand for natural gas form the U.S.in foreign countries would increase the price of natural gas world-wide and result in many countries not being able to afford the price of natural gas.

Question 19

Why does Dow Chemical object to exports of natural gas from the U.S., and what does economic analysis suggest about that objection?

Accepted Answer

Dow Chemical object to the export of nat

Question 20

In November 2011, the interest rate on 10 year Spanish and Italian bonds were 4 to 5 percentage points higher than the interest rate on comparable German bonds. What did that difference indicate?

Accepted Answer

A) German bonds were considered to be safer investments than Spanish or Italian bonds. 
B) There was a higher demand for Spanish and Italian bonds than for German bonds. 
C) The integration of the markets in EU countries promised by the introduction of the euro worked. 
D) The German economy was reducing the value of Spanish and Italian bonds. 
A) German bonds were considered to be safer investments than Spanish or Italian bonds. 
B) There was a higher demand for Spanish and Italian bonds than for German bonds. 
C) The integration of the markets in EU countries promised by the introduction of the euro worked. 
D) The German economy was reducing the value of Spanish and Italian bonds.

Exam 1: International Economics Is Different

What event in Japan increased demand for imported natural gas in Japan?

What is the effect on trade deficits of a country's saving rate?

On July 21st, 2005, the Chinese government changed the value of the yuan from 8.28 yuan per U.S. dollar to 8.11 yuan per U.S. dollar. One effect of this change should have been

Which of the following is NOT a fiscal policy?

A law in the U.S. prohibits the export of natural gas unless such exports are in the "public interest." What does "public interest" mean in the context of that law?

What would be the effect in the U.S. of increased exports of natural gas from the U.S. to foreign countries?

The unskilled wage rate in a country may decline if

In 2004, China had a substantial trade surplus with

_____ is considered to be the least mobile factor internationally.

A country cannot set its own policies toward the international movement of productive resources.

The exchange rate policy of a "crawling peg" adopted by the Chinese government in 2005 means that the government

If the dollar per pound exchange rate changes from $1.50 per pound to $2 per pound, it implies that the dollar has appreciated against the pound.

In mid-2010, the Chinese government ended its fixed exchange rate to the U.S. dollar and began to allow the yuan to appreciate gradually. How would this shift affect the Chinese economy?

Although financial capital is relatively mobile as an input, it is subject to a "home bias" in which people prefer to invest within their own country.

The supply of money in a country like the United States is controlled by the

By mid-2014, the U.S. government had approved multiple LNG export facilities so natural gas exports from the U.S. have increased significantly.

What is fracking?

If the U.S. allowed the export of significant amounts of natural gas, what would be the economic effect?

Why does Dow Chemical object to exports of natural gas from the U.S., and what does economic analysis suggest about that objection?

In November 2011, the interest rate on 10 year Spanish and Italian bonds were 4 to 5 percentage points higher than the interest rate on comparable German bonds. What did that difference indicate?

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

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