Exam 14: Macroeconomics and International Trade

International trade flows only in goods,not services.

Scenario: There are two workers in a factory that produces two goods, Good X and Good Y. Worker 1 adds a value of $200 per hour in the production of Good X and a value of $100 per hour in the production of Good Y. Worker 2 adds a value of $125 per hour in the production of Good X and a value of $87.50 per hour in the production of Good Y. -Refer to the scenario above.Identify the correct statement.

Scenario: There are two countries-Country X and Country Y-that trade only with each other. During a particular year, the residents of Country X purchased buildings worth $10 billion in Country Y. None of the other transactions between the two countries during that year involved the purchase or sale of assets. -Refer to the scenario above.Based on this information,it can be concluded that ________.

Scenario: Mike and John work as waiters in a restaurant. Mike can efficiently wait on ten customers per hour, while John can efficiently wait on seven customers per hour. The restaurant also has a bar. If both of them work as bartenders, Mike is able to serve nine customers per hour and John is able to serve ten customers per hour. -Refer to the scenario above.Identify the correct statement about Mike and John.

A trade surplus is an excess of exports over ________.

Suppose that the United States sends foreign aid to Brazil.The direct consequence is that ________.

Factor payments from foreigners represent payments that domestic residents receive from assets owned in foreign countries.

A factory manufactures bags and shoes.There are two workers in the factory.The number of bags or pairs of shoes that each of them can produce in a day is given in the table below: a)What is the opportunity cost of producing a bag for each worker? b)Which worker should specialize in the production of shoes and why?

Explain how foreign direct investment leads to a higher cross-country interdependence.

Scenario: The table below shows the payments received from foreigners by the residents of Country Y and the payments made to foreigners by the residents of Country Y during a certain year. -Refer to the scenario above.Country Y's net factor payments from abroad equal ________.

A current account deficit occurs when a country's ________,all else equal.

The dividend earned by a domestic resident on a stock owned in a foreign company is an example of a ________.

An economy that trades freely with the rest of the world is called a(n)________ economy.

Scenario: The table below shows the payments received from foreigners by the residents of Country Y and the payments made to foreigners by the residents of Country Y during a certain year. -Refer to the scenario above.Country Y's net exports equal ________.

Edward lives in England,and he makes a donation of $100,000 to a charitable organization in the United States.Edward's donation will be considered ________.

Scenario: Mark can make three tables and one chair in a day, while John can make four tables and one chair in a day. -Refer to the scenario above.Mark's opportunity cost of making a table is ________.

Scenario: Consider two economies, Beta and Zeta. Each farmer in Beta can grow 1,000 pounds of apples or 500 pounds of oranges in a year. Each farmer in Zeta can grow 400 pounds of apples or 1,200 pounds of oranges in a year. -Refer to the scenario above.The opportunity cost of producing 1 pound of oranges in Zeta is ________.

Suppose a country's net exports equal $1.9 billion.Which of the following will happen if the volume of imports increases by $2 billion without any change in the volume of exports?

A producer is said to have a comparative advantage in the production of a good when the producer ________ compared to other producers.

Scenario: There are two countries-Country X and Country Y-that trade only with each other. During a particular year, the residents of Country X purchased buildings worth $10 billion in Country Y. None of the other transactions between the two countries during that year involved the purchase or sale of assets. -Refer to the scenario above.The purchase of assets by the residents of County X would lead to a ________ in County Y.