Question 1

Exhibit 15-4 Coffee and tea output (pounds per hour)
 
As shown in Exhibit 15-4, compared to Brazil, China has a comparative advantage in the production of:

Accepted Answer

A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea. 
A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea.

Question 2

When Brazil can generate a product using fewer labor hours and resources than the United States, an economist would say that Brazil had:

Accepted Answer

A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products. 
A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products.

Question 3

If one country can produce a good with fewer resources than another country, this is called:

Accepted Answer

A)  specialization. 
B)  geographic advantage. 
C)  comparative advantage. 
D)  absolute advantage. 
A)  specialization. 
B)  geographic advantage. 
C)  comparative advantage. 
D)  absolute advantage.

Question 4

If a country has a lower opportunity cost of producing oranges, then this is:

Accepted Answer

A)  inefficient resource use. 
B)  an absolute advantage. 
C)  a situation in which oranges should be imported. 
D)  a comparative advantage. 
A)  inefficient resource use. 
B)  an absolute advantage. 
C)  a situation in which oranges should be imported. 
D)  a comparative advantage.

Question 5

Discuss the determinants of a nation's exchange rate value for its currency in foreign exchange markets. What happens to a nation's balance of trade if the nation's currency appreciates? Why?

Accepted Answer

A nation's exchange rate value is determ

Question 6

A tariff has the effect of granting ____ a larger share of the domestic market.

Accepted Answer

A)  domestic consumers 
B)  foreign consumers 
C)  domestic producers 
D)  foreign producers 
A)  domestic consumers 
B)  foreign consumers 
C)  domestic producers 
D)  foreign producers

Question 7

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

Accepted Answer

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

Question 8

An increase in the equilibrium price of Japanese yen per dollar could be caused by a(n):

Accepted Answer

A)  increase in the general level of prices in Japan. 
B)  increase in the U.S. demand for domestically-built automobiles. 
C)  decrease in the U.S. income relative to the income in Japan. 
D)  increase in the supply of dollars on the foreign market. 
A)  increase in the general level of prices in Japan. 
B)  increase in the U.S. demand for domestically-built automobiles. 
C)  decrease in the U.S. income relative to the income in Japan. 
D)  increase in the supply of dollars on the foreign market.

Question 9

Which of the following transactions would be excluded in the capital account?

Accepted Answer

A)  A Japanese citizen purchases a U.S. Treasury bill. 
B)  A Japanese citizen purchases an office building in Manhattan. 
C)  A U.S. citizen purchases a share of stock from a Japanese company. 
D)  An American purchases a Toyota. 
A)  A Japanese citizen purchases a U.S. Treasury bill. 
B)  A Japanese citizen purchases an office building in Manhattan. 
C)  A U.S. citizen purchases a share of stock from a Japanese company. 
D)  An American purchases a Toyota.

Question 10

Which of the following would be recorded in the U.S. goods export account?

Accepted Answer

A)  Harry, an American citizen, spends 1,000 francs on vacation in the south of France. 
B)  A machine shop in Ohio purchases a grinder made in Italy. 
C)  Martha receives a $50 dividend check on stock she owns in a business in Germany. 
D)  France purchases a new jet fighter aircraft from the Boeing Company in the United States. 
A)  Harry, an American citizen, spends 1,000 francs on vacation in the south of France. 
B)  A machine shop in Ohio purchases a grinder made in Italy. 
C)  Martha receives a $50 dividend check on stock she owns in a business in Germany. 
D)  France purchases a new jet fighter aircraft from the Boeing Company in the United States.

Question 11

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

Accepted Answer

A)  fixed. 
B)  government-determined. 
C)  set by the value of gold. 
D)  floating. 
A)  fixed. 
B)  government-determined. 
C)  set by the value of gold. 
D)  floating.

Question 12

A basic problem with the infant-industry argument is that:

Accepted Answer

A)  most industries need protection when they are mature, not when they are first established. 
B)  the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C)  political pressure will likely prevent the withdrawal of the tariff when the industry matures. 
D)  domestic consumers will continue to buy the foreign products anyway, regardless of the tariff. 
A)  most industries need protection when they are mature, not when they are first established. 
B)  the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C)  political pressure will likely prevent the withdrawal of the tariff when the industry matures. 
D)  domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.

Question 13

Exhibit 15-4 Coffee and tea output (pounds per hour)
 
As shown in Exhibit 15-4, the opportunity cost to Brazil of producing one pound of coffee is:

Accepted Answer

A)  1 pound of tea. 
B)  5 pounds of tea. 
C)  1/2 pound of tea. 
D)  10 pounds of tea. 
A)  1 pound of tea. 
B)  5 pounds of tea. 
C)  1/2 pound of tea. 
D)  10 pounds of tea.

Question 14

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 15

A depreciation of one's currency means that:

Accepted Answer

A)  the country's exports will become more expensive. 
B)  the country's imports will become more expensive. 
C)  the country's imports will become less expensive. 
D)  it now requires less of this currency in exchange for one unit of another currency. 
A)  the country's exports will become more expensive. 
B)  the country's imports will become more expensive. 
C)  the country's imports will become less expensive. 
D)  it now requires less of this currency in exchange for one unit of another currency.

Question 16

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

Accepted Answer

A)  current account. 
B)  capital account. 
C)  official reserve account. 
D)  goods account. 
A)  current account. 
B)  capital account. 
C)  official reserve account. 
D)  goods account.

Question 17

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

Accepted Answer

A)  5. 
B)  4. 
C)  3. 
D)  2. 
A)  5. 
B)  4. 
C)  3. 
D)  2.

Question 18

A depreciation in the value of the U.S. dollar would:

Accepted Answer

A)  encourage foreigners to travel on American owned airlines. 
B)  make U.S. goods more expensive to foreign consumers. 
C)  decrease the number of dollars it takes to buy a Swiss franc. 
D)  make it more expensive for U.S. citizens to travel abroad. 
A)  encourage foreigners to travel on American owned airlines. 
B)  make U.S. goods more expensive to foreign consumers. 
C)  decrease the number of dollars it takes to buy a Swiss franc. 
D)  make it more expensive for U.S. citizens to travel abroad.

Question 19

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. 
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.

Question 20

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

A)  A decrease in domestic interest rates 
B)  An increase in foreign interest rates 
C)  Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices 
D)  Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation 
A)  A decrease in domestic interest rates 
B)  An increase in foreign interest rates 
C)  Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices 
D)  Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation

Exam 28: International Trade and Finance

Exhibit 15-4 Coffee and tea output (pounds per hour) As shown in Exhibit 15-4, compared to Brazil, China has a comparative advantage in the production of:

When Brazil can generate a product using fewer labor hours and resources than the United States, an economist would say that Brazil had:

If one country can produce a good with fewer resources than another country, this is called:

If a country has a lower opportunity cost of producing oranges, then this is:

Discuss the determinants of a nation's exchange rate value for its currency in foreign exchange markets. What happens to a nation's balance of trade if the nation's currency appreciates? Why?

A tariff has the effect of granting ____ a larger share of the domestic market.

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

An increase in the equilibrium price of Japanese yen per dollar could be caused by a(n):

Which of the following transactions would be excluded in the capital account?

Which of the following would be recorded in the U.S. goods export account?

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

A basic problem with the infant-industry argument is that:

Exhibit 15-4 Coffee and tea output (pounds per hour) As shown in Exhibit 15-4, the opportunity cost to Brazil of producing one pound of coffee is:

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

A depreciation of one's currency means that:

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

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

A depreciation in the value of the U.S. dollar would:

The primary purpose of WTO is to:

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

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

Understanding Direct and Inverse Relationships between Variables

Filters