Exam 18: International Trade and Finance

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats. Under a system of free trade, each country specializes and then trades with the other. If the price starts at four hats per doormat, and then increases to five hats per doormat, then:

Trade between nations A and B:

If Japan gives up ten bushels of rice to produce one bicycle, while the United States gives up five bushels of rice to produce one bicycle, then:

Exhibit 15-3 Potatoes and wheat output (tons per day) If each nation in Exhibit 15-3 specializes in producing the good for which it has a comparative advantage, then:

Who would benefit if the exchange rate with yen (in U.S. dollars)increased?

Expenditures for services such as tourism, income for foreign investment, and foreign gifts are tabulated in the:

Suppose a country with a large domestic textile industry removed all tariffs on imported textiles, we would expect domestic:

The nice thing about foreign exchange markets is that the goods are money, and they are paid for with money. This means that if the U.S. dollar ____ the Japanese yen ____.

Which of the following statements is true ?

A weak U.S. dollar is one that has:

In terms of production possibilities curves, the benefits of trade between two nations are that each nation moves to a higher:

The Japanese demand curve for dollars is downward-sloping because a:

Assume the United States can use a given amount of its resources to produce either 20 airplanes or 8 automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:

Absolute advantage is the ability of a country to produce a good with ________ than another country.

Exhibit 15-1 Production possibilities curves In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producing one more unit of wheat is equal to:

Exhibit 15-1 Production possibilities curves In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producing one more unit of corn is equal to:

Comparative advantage indicates that:

Exhibit 15-6 Dollars per British pound In Exhibit 15-6, the equilibrium exchange rate is:

The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that: