Question 1

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

Accepted Answer

A) True 
 B)False

Question 2

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.?Table 20.2
  
-According to Table 20.2, Australia has an:

Accepted Answer

A)  absolute advantage in the production of only food. 
B)  absolute advantage in the production of both food and computers. 
C)  absolute disadvantage in the production of both food and computers. 
D)  absolute advantage in the production of only computers. 
E)  absolute disadvantage in the production of food. 
A)  absolute advantage in the production of only food. 
B)  absolute advantage in the production of both food and computers. 
C)  absolute disadvantage in the production of both food and computers. 
D)  absolute advantage in the production of only computers. 
E)  absolute disadvantage in the production of food.

Question 3

We benefit from trade if we are able to obtain a good from a foreign country:

Accepted Answer

A)  that has a very low domestic demand. 
B)  the production of which requires a steady supply of unskilled labor. 
C)  by giving up less of other goods than we would have to give up to obtain the good at home. 
D)  by giving up more of other goods than we would have to give up to obtain the good at home. 
E)  that has a substantial number of substitutes in the domestic market. 
A)  that has a very low domestic demand. 
B)  the production of which requires a steady supply of unskilled labor. 
C)  by giving up less of other goods than we would have to give up to obtain the good at home. 
D)  by giving up more of other goods than we would have to give up to obtain the good at home. 
E)  that has a substantial number of substitutes in the domestic market.

Question 4

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Accepted Answer

A)  the monetary value of other forgone goods is lower than that of other nations. 
B)  the monetary value of other forgone goods is greater than that of other nations. 
C)  forgone output of other goods is higher than that of other nations. 
D)  forgone output of other goods is lower than that of other nations. 
E)  forgone output of other goods is equal to that of other nations. 
A)  the monetary value of other forgone goods is lower than that of other nations. 
B)  the monetary value of other forgone goods is greater than that of other nations. 
C)  forgone output of other goods is higher than that of other nations. 
D)  forgone output of other goods is lower than that of other nations. 
E)  forgone output of other goods is equal to that of other nations.

Question 5

Countries should specialize and import goods in which they have a comparative disadvantage.

Accepted Answer

A) True 
 B)False

Question 6

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.?Table 20.2
  
-According to Table 20.2, Australia has:

Accepted Answer

A)  a comparative disadvantage in the production of both food and computers. 
B)  a comparative advantage in the production of computers. 
C)  a comparative disadvantage in the production of computers. 
D)  a comparative advantage in the production of food. 
E)  a comparative advantage in the production of both food and computers. 
A)  a comparative disadvantage in the production of both food and computers. 
B)  a comparative advantage in the production of computers. 
C)  a comparative disadvantage in the production of computers. 
D)  a comparative advantage in the production of food. 
E)  a comparative advantage in the production of both food and computers.

Question 7

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.?Table 20.2
  
-According to Table 20.2, what is the opportunity cost of 1 unit of food in Australia?

Accepted Answer

A)  Half a unit of computer 
B)  6 computers 
C)  2 computers 
D)  One-sixth of a unit of computers 
E)  1 computer 
A)  Half a unit of computer 
B)  6 computers 
C)  2 computers 
D)  One-sixth of a unit of computers 
E)  1 computer

Question 8

The proportion of domestic demand for a good that is satisfied by domestic production relative to that supplied by imports is determined by:

Accepted Answer

A)  the interplay of domestic demand and supply curves and the domestic equilibrium price of the good. 
B)  the interplay of demand and supply curves in the international market and the international equilibrium price of a good. 
C)  domestic supply and demand curves and the international equilibrium price of a good. 
D)  the different trade restrictions like tariffs and quotas created by the domestic government. 
E)  the interplay of demand and supply curves in the international market and the domestic price of the good 
A)  the interplay of domestic demand and supply curves and the domestic equilibrium price of the good. 
B)  the interplay of demand and supply curves in the international market and the international equilibrium price of a good. 
C)  domestic supply and demand curves and the international equilibrium price of a good. 
D)  the different trade restrictions like tariffs and quotas created by the domestic government. 
E)  the interplay of demand and supply curves in the international market and the domestic price of the good

Question 9

What is known as the Dutch disease?

Accepted Answer

A)  The problem that arises when a government cannot meet its foreign debts 
B)  The phenomenon of a boom in one industry causing declines in the rest of the economy 
C)  A sudden and unexpected devaluation of a currency as a consequence of policy controls 
D)  The problem that arises when high imports force an economy to borrow from external sources 
E)  A deficit in the balance of payments of the economy that arises due to a sudden appreciation of the domestic currency. 
A)  The problem that arises when a government cannot meet its foreign debts 
B)  The phenomenon of a boom in one industry causing declines in the rest of the economy 
C)  A sudden and unexpected devaluation of a currency as a consequence of policy controls 
D)  The problem that arises when high imports force an economy to borrow from external sources 
E)  A deficit in the balance of payments of the economy that arises due to a sudden appreciation of the domestic currency.

Question 10

The Dutch Disease had occurred in Netherlands because:

Accepted Answer

A)  the Netherlands government had borrowed heavily from the World Bank to meet its Balance of Payment deficits. 
B)  the price of the primary commodities declined in the international market. 
C)  the demand for natural gas exports from Netherlands increased substantially. 
D)  the currency of Netherlands depreciated in the international market. 
E)  the price of the commodities manufactured by Netherlands declined in the international market. 
A)  the Netherlands government had borrowed heavily from the World Bank to meet its Balance of Payment deficits. 
B)  the price of the primary commodities declined in the international market. 
C)  the demand for natural gas exports from Netherlands increased substantially. 
D)  the currency of Netherlands depreciated in the international market. 
E)  the price of the commodities manufactured by Netherlands declined in the international market.

Question 11

Which of the following statements in the context of U.S. exports is true?

Accepted Answer

A)  The U.S. exports products produced in the low wage industries. 
B)  Primary products account for the largest share of U.S. exports to developed nations. 
C)  The U.S. mainly exports labor intensive goods. 
D)  Most U.S. exports are produced in high-wage industries. 
E)  A bulk of U.S. exports to developing nations comprise of perishable commodities. 
A)  The U.S. exports products produced in the low wage industries. 
B)  Primary products account for the largest share of U.S. exports to developed nations. 
C)  The U.S. mainly exports labor intensive goods. 
D)  Most U.S. exports are produced in high-wage industries. 
E)  A bulk of U.S. exports to developing nations comprise of perishable commodities.

Question 12

Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?

Accepted Answer

A)  The theory of consumer preferences 
B)  The factor abundance theory 
C)  The product life cycle theory 
D)  The Ricardian model 
E)  The human skills approach 
A)  The theory of consumer preferences 
B)  The factor abundance theory 
C)  The product life cycle theory 
D)  The Ricardian model 
E)  The human skills approach

Question 13

If the world price is above the domestic "no-trade" equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

Accepted Answer

A) True 
 B)False

Question 14

If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.

Accepted Answer

A) True 
 B)False

Question 15

The oldest theory of comparative advantage is based on:

Accepted Answer

A)  factor abundance. 
B)  productivity differences. 
C)  product life cycles. 
D)  preferences. 
E)  human skills. 
A)  factor abundance. 
B)  productivity differences. 
C)  product life cycles. 
D)  preferences. 
E)  human skills.

Question 16

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

Accepted Answer

A) True 
 B)False

Question 17

The human skills theory is similar to the factor abundance theory of explaining the source of comparative advantage, except that the former concentrates only on different aspects of labor.

Accepted Answer

A) True 
 B)False

Question 18

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.?Table 20.2
  
-According to Table 20.2, what is the opportunity cost of 1 computer in Australia?

Accepted Answer

A)  half a unit of food 
B)  one-sixth of a unit of food 
C)  1 unit of food 
D)  6 units of food 
E)  2 units of food 
A)  half a unit of food 
B)  one-sixth of a unit of food 
C)  1 unit of food 
D)  6 units of food 
E)  2 units of food

Question 19

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3
  
-According to Table 20.3, what is the greatest amount Korea is willing to pay for 1 calculator?

Accepted Answer

A)  1 pound of rice 
B)  5 pounds of rice 
C)  2 pounds of rice 
D)  2.5 pounds of rice 
E)  Half a pound of rice 
A)  1 pound of rice 
B)  5 pounds of rice 
C)  2 pounds of rice 
D)  2.5 pounds of rice 
E)  Half a pound of rice

Question 20

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1
  
-Refer to Table 20.1. Which of the following assumptions holds true for the example?

Accepted Answer

A)  The goods are produced by using different factors of production 
B)  Labor productivity alone determines the comparative advantage 
C)  Each of the countries will produce and export wheat and cloth 
D)  Both the countries have identical factor endowments 
E)  The taste and preference of the consumers are dissimilar in the two countries 
A)  The goods are produced by using different factors of production 
B)  Labor productivity alone determines the comparative advantage 
C)  Each of the countries will produce and export wheat and cloth 
D)  Both the countries have identical factor endowments 
E)  The taste and preference of the consumers are dissimilar in the two countries

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

We benefit from trade if we are able to obtain a good from a foreign country:

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Countries should specialize and import goods in which they have a comparative disadvantage.

The proportion of domestic demand for a good that is satisfied by domestic production relative to that supplied by imports is determined by:

What is known as the Dutch disease?

The Dutch Disease had occurred in Netherlands because:

Which of the following statements in the context of U.S. exports is true?

Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?

If the world price is above the domestic "no-trade" equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.

The oldest theory of comparative advantage is based on:

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

The human skills theory is similar to the factor abundance theory of explaining the source of comparative advantage, except that the former concentrates only on different aspects of labor.

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3 -According to Table 20.3, what is the greatest amount Korea is willing to pay for 1 calculator?

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1 -Refer to Table 20.1. Which of the following assumptions holds true for the example?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

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Exam 19: World Trade Equilibrium

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

We benefit from trade if we are able to obtain a good from a foreign country:

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Countries should specialize and import goods in which they have a comparative disadvantage.

The proportion of domestic demand for a good that is satisfied by domestic production relative to that supplied by imports is determined by:

What is known as the Dutch disease?

The Dutch Disease had occurred in Netherlands because:

Which of the following statements in the context of U.S. exports is true?

Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?

If the world price is above the domestic "no-trade" equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.

The oldest theory of comparative advantage is based on:

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

The human skills theory is similar to the factor abundance theory of explaining the source of comparative advantage, except that the former concentrates only on different aspects of labor.

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3 -According to Table 20.3, what is the greatest amount Korea is willing to pay for 1 calculator?

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1 -Refer to Table 20.1. Which of the following assumptions holds true for the example?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters