Question 1

If the yen price of dollars falls, then the dollar price of yen rises.

Accepted Answer

A) True 
 B)False

Question 2

If a hotel room priced at 120,000 Venezuela bolivar per night can be purchased for 80 U.S. dollars, the exchange rate is:

Accepted Answer

A) 9,600 bolivar per dollar. 
B) 1,500 dollars per lira. 
C) 1,500 bolivar per dollar. 
D) .00066 bolivar per dollar. 
A) 9,600 bolivar per dollar. 
B) 1,500 dollars per lira. 
C) 1,500 bolivar per dollar. 
D) .00066 bolivar per dollar.

Question 3

Exhibit 15-5 International currency markets   Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph 15-5(A)is determined by:

Accepted Answer

A) U.S. citizens attempting to purchase Japanese-made goods. 
B) Japanese attempting to purchase U.S.-made goods. 
C) U.S. businesses attempting to sell to the Japanese. 
D) Japanese businesses attempting to sell to the U.S. 
E) the U.S. government attempting to unload dollars to the international market. 
A) U.S. citizens attempting to purchase Japanese-made goods. 
B) Japanese attempting to purchase U.S.-made goods. 
C) U.S. businesses attempting to sell to the Japanese. 
D) Japanese businesses attempting to sell to the U.S. 
E) the U.S. government attempting to unload dollars to the international market.

Question 4

Suppose Japan has a comparative advantage over Canada in the production of VCRs. This means that Japan:

Accepted Answer

A) needs fewer resources to produce DVDS than does Canada. 
B) has better technology for producing DVDs than does Canada. 
C) has a lower opportunity cost of DVD production than does Canada. 
D) can produce more VCRs in a given period of time than can Canada. 
A) needs fewer resources to produce DVDS than does Canada. 
B) has better technology for producing DVDs than does Canada. 
C) has a lower opportunity cost of DVD production than does Canada. 
D) can produce more VCRs in a given period of time than can Canada.

Question 5

Imposing a restrictive quota on imported plasma TVs will:

Accepted Answer

A) increase the price of the plasma TVs and decrease the quantity consumed. 
B) increase both the price of the plasma TVs and the quantity consumed. 
C) leave the price of the plasma TVs unchanged but decrease the quantity consumed. 
D) leave the price and the quantity consumed of plasma TVs unchanged, because domestic producers will expand production to make up for the reduction in imports 
A) increase the price of the plasma TVs and decrease the quantity consumed. 
B) increase both the price of the plasma TVs and the quantity consumed. 
C) leave the price of the plasma TVs unchanged but decrease the quantity consumed. 
D) leave the price and the quantity consumed of plasma TVs unchanged, because domestic producers will expand production to make up for the reduction in imports

Question 6

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Accepted Answer

A) The domestic price of automobiles would fall. 
B) The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 
A) The domestic price of automobiles would fall. 
B) The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

Question 7

The WTO was:

Accepted Answer

A) formed shortly after World War II. 
B) authorized in the American Constitution. 
C) formed in 1995. 
D) formed in 1876. 
E) formed to unify the European continent. 
A) formed shortly after World War II. 
B) authorized in the American Constitution. 
C) formed in 1995. 
D) formed in 1876. 
E) formed to unify the European continent.

Question 8

The primary purpose of WTO is to:

Accepted Answer

A) protect the United States from cheap foreign labor. 
B) foster trade among nations. 
C) promote the dumping of foreign products. 
D) increase worldwide tariffs. 
E) form a union of European nations. 
A) protect the United States from cheap foreign labor. 
B) foster trade among nations. 
C) promote the dumping of foreign products. 
D) increase worldwide tariffs. 
E) form a union of European nations.

Question 9

Which of the following does not result in a change in the demand for foreign currency?

Accepted Answer

A) c and d. 
B) changes in income. 
C) changes in foreign currency supply. 
D) changes in the foreign exchange rate. 
E) changes in the interest rate. 
A) c and d. 
B) changes in income. 
C) changes in foreign currency supply. 
D) changes in the foreign exchange rate. 
E) changes in the interest rate.

Question 10

Other things being equal, an increase in U.S. interest rates would be likely to cause an increase in the capital account surplus or a decrease in the capital account deficit.

Accepted Answer

A) True 
 B)False

Question 11

If people's incomes decrease, their demand for other currencies shifts to the right.

Accepted Answer

A) True 
 B)False

Question 12

International trade has the potential to ____ the availability of goods and services to ____.

Accepted Answer

A) increase; those nations who export more than they import 
B) increase; nations that have an absolute advantage in the production of a good or service 
C) increase; all nations 
D) decrease; all nations 
A) increase; those nations who export more than they import 
B) increase; nations that have an absolute advantage in the production of a good or service 
C) increase; all nations 
D) decrease; all nations

Question 13

The argument that import restrictions save jobs and promote prosperity fails to recognize that:

Accepted Answer

A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S. imports provide people in other countries with the dollars power required for the purchase of U.S. exports. 
A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S. imports provide people in other countries with the dollars power required for the purchase of U.S. exports.

Question 14

Comparative advantage explains why a nation will benefit from trade when:

Accepted Answer

A) it exports more than it imports. 
B) its trading partners are experiencing offsetting losses. 
C) it exports goods for which it is a high-opportunity cost producer, while importing those for which it is a low-opportunity cost producer. 
D) it exports goods for which it is a low-opportunity cost producer, while importing those for which it is a high-opportunity cost producer. 
A) it exports more than it imports. 
B) its trading partners are experiencing offsetting losses. 
C) it exports goods for which it is a high-opportunity cost producer, while importing those for which it is a low-opportunity cost producer. 
D) it exports goods for which it is a low-opportunity cost producer, while importing those for which it is a high-opportunity cost producer.

Question 15

A major difference between a tariff and a quota is that a tariff:

Accepted Answer

A) will reduce imports, but a quota generally will not. 
B) can easily be rescinded, but a quota cannot. 
C) will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports. 
D) typically generates tax revenue, while a quota does not. 
A) will reduce imports, but a quota generally will not. 
B) can easily be rescinded, but a quota cannot. 
C) will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports. 
D) typically generates tax revenue, while a quota does not.

Question 16

If the United States were to adopt a policy of free trade with European countries and Japan, this policy would:

Accepted Answer

A) help the United States and hurt the other countries because the United States has a larger population. 
B) help all of the countries involved because every country would have a comparative advantage in the production of some goods. 
C) hurt all of the countries involved because all the countries are capable of producing anything that could be produced in one of the other countries. 
D) help the United States and hurt the other countries because the United States has more natural resources than the other countries. 
A) help the United States and hurt the other countries because the United States has a larger population. 
B) help all of the countries involved because every country would have a comparative advantage in the production of some goods. 
C) hurt all of the countries involved because all the countries are capable of producing anything that could be produced in one of the other countries. 
D) help the United States and hurt the other countries because the United States has more natural resources than the other countries.

Question 17

When the value of our goods exports is less than the value of our goods imports,

Accepted Answer

A) d and e. 
B) the value of the dollar must fall. 
C) there will be domestic unemployment. 
D) there will be an unfavorable balance of trade. 
E) foreign currency reserves must fall. 
A) d and e. 
B) the value of the dollar must fall. 
C) there will be domestic unemployment. 
D) there will be an unfavorable balance of trade. 
E) foreign currency reserves must fall.

Question 18

If India has an absolute advantage in rug production when compared to England, then:

Accepted Answer

A) India should export rugs to England. 
B) England should export rugs to India. 
C) international trade should not occur. 
D) England uses fewer resources to produce rugs than India. 
E) India uses fewer resources to produce rugs than England. 
A) India should export rugs to England. 
B) England should export rugs to India. 
C) international trade should not occur. 
D) England uses fewer resources to produce rugs than India. 
E) India uses fewer resources to produce rugs than England.

Question 19

Flexible, or floating, exchange rate is determined by the:

Accepted Answer

A) World Bank. 
B) forces of supply and demand. 
C) price of gold. 
D) Federal Reserve. 
A) World Bank. 
B) forces of supply and demand. 
C) price of gold. 
D) Federal Reserve.

Question 20

Which of the following is included in the current account?

Accepted Answer

A) Net unilateral transfers. 
B) Goods imports. 
C) Goods exports. 
D) All are included in the current account. 
A) Net unilateral transfers. 
B) Goods imports. 
C) Goods exports. 
D) All are included in the current account.

Exam 18: International Trade and Finance

If the yen price of dollars falls, then the dollar price of yen rises.

If a hotel room priced at 120,000 Venezuela bolivar per night can be purchased for 80 U.S. dollars, the exchange rate is:

Exhibit 15-5 International currency markets Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph 15-5(A)is determined by:

Suppose Japan has a comparative advantage over Canada in the production of VCRs. This means that Japan:

Imposing a restrictive quota on imported plasma TVs will:

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

The WTO was:

The primary purpose of WTO is to:

Which of the following does not result in a change in the demand for foreign currency?

Other things being equal, an increase in U.S. interest rates would be likely to cause an increase in the capital account surplus or a decrease in the capital account deficit.

If people's incomes decrease, their demand for other currencies shifts to the right.

International trade has the potential to ____ the availability of goods and services to ____.

The argument that import restrictions save jobs and promote prosperity fails to recognize that:

Comparative advantage explains why a nation will benefit from trade when:

A major difference between a tariff and a quota is that a tariff:

If the United States were to adopt a policy of free trade with European countries and Japan, this policy would:

When the value of our goods exports is less than the value of our goods imports,

If India has an absolute advantage in rug production when compared to England, then:

Flexible, or floating, exchange rate is determined by the:

Which of the following is included in the current account?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters

International trade has the potential to the availability of goods and services to .