Question 1

The net foreign income share of GDP represents:

Accepted Answer

A) the amount of Australian assets owned by foreign interests as a proportion of GDP. 
B) the proportion of GDP needed to pay the interest, rent and dividends owed on assets owned by foreign interests. 
C) a problem at its current level of 55 per cent of GDP. 
D) the proportion of GDP needed purely to service foreign debt. 
A) the amount of Australian assets owned by foreign interests as a proportion of GDP. 
B) the proportion of GDP needed to pay the interest, rent and dividends owed on assets owned by foreign interests. 
C) a problem at its current level of 55 per cent of GDP. 
D) the proportion of GDP needed purely to service foreign debt.

Question 2

Which is not a common argument for protecting domestic industry?

Accepted Answer

A) Infant industry argument. 
B) National security argument. 
C) Employment argument. 
D) Cheap domestic-labour argument. 
A) Infant industry argument. 
B) National security argument. 
C) Employment argument. 
D) Cheap domestic-labour argument.

Question 3

Assume Australia 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.Australia should specialise in:

Accepted Answer

A) airplanes. 
B) automobiles. 
C) both goods. 
D) neither good. 
A) airplanes. 
B) automobiles. 
C) both goods. 
D) neither good.

Question 4

Protectionism is:

Accepted Answer

A) the government's use of embargoes, tariffs, quotas and other restrictions to protect domestic producers from foreign competition. 
B) the government's use of antimonopoly policy to protect local producers. 
C) the government's use of monetary policy to protect domestic producers from overseas competition. 
D) the government's use of politics to support imports from overseas. 
A) the government's use of embargoes, tariffs, quotas and other restrictions to protect domestic producers from foreign competition. 
B) the government's use of antimonopoly policy to protect local producers. 
C) the government's use of monetary policy to protect domestic producers from overseas competition. 
D) the government's use of politics to support imports from overseas.

Question 5

Which statement best reflects the political problems associated with free trade?

Accepted Answer

A) The costs are spread wide to many, but the benefits accrue heavily on a few. 
B) The benefits are spread to the rich, but the costs accrue to the poor. 
C) The benefits are spread wide to many, but the costs accrue heavily on a few. 
D) The costs are spread to the rich, but the benefits accrue to the poor. 
E) The benefits are spread overseas, but the costs are felt at home. 
A) The costs are spread wide to many, but the benefits accrue heavily on a few. 
B) The benefits are spread to the rich, but the costs accrue to the poor. 
C) The benefits are spread wide to many, but the costs accrue heavily on a few. 
D) The costs are spread to the rich, but the benefits accrue to the poor. 
E) The benefits are spread overseas, but the costs are felt at home.

Question 6

If income in Australia falls while income in the UK rises,it is likely that:

Accepted Answer

A) Australia will increase its demand for UK imports, causing our exchange rate to depreciate. 
B) the UK will increase its demand for Australian imports, causing the Australian dollar to depreciate. 
C) the supply of Australian dollars will rise, causing our exchange rate to depreciate. 
D) the demand for Australian dollars will rise, causing the Australian dollar to appreciate. 
E) the demand for UK pounds will rise, causing the Australian dollar to appreciate. 
A) Australia will increase its demand for UK imports, causing our exchange rate to depreciate. 
B) the UK will increase its demand for Australian imports, causing the Australian dollar to depreciate. 
C) the supply of Australian dollars will rise, causing our exchange rate to depreciate. 
D) the demand for Australian dollars will rise, causing the Australian dollar to appreciate. 
E) the demand for UK pounds will rise, causing the Australian dollar to appreciate.

Question 7

If a Japanese stereo priced at 1 000 000 yen can be purchased for A$1000,the exchange rate is:

Accepted Answer

A) 1000 yen per Australian dollar. 
B) 1000 Australian dollars per yen. 
C) 0.001 Australian dollars per yen. 
D) 100 Australian dollars per yen. 
A) 1000 yen per Australian dollar. 
B) 1000 Australian dollars per yen. 
C) 0.001 Australian dollars per yen. 
D) 100 Australian dollars per yen.

Question 8

The current account balance on goods and services is:

Accepted Answer

A) C + I + 
B) C + I + G + M. 
C) C + I + G + (X - M). 
D) (X - M). 
A) C + I + 
B) C + I + G + M. 
C) C + I + G + (X - M). 
D) (X - M).

Question 9

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

Accepted Answer

A) higher number of yen per dollar means Australian goods are cheaper in Japan. 
B) lower number of yen per dollar means Australian goods are cheaper in Japan. 
C) lower number of yen per dollar means Australian goods are more expensive in Japan. 
D) lower number of yen per dollar means Australian goods are less expensive in Australia. 
A) higher number of yen per dollar means Australian goods are cheaper in Japan. 
B) lower number of yen per dollar means Australian goods are cheaper in Japan. 
C) lower number of yen per dollar means Australian goods are more expensive in Japan. 
D) lower number of yen per dollar means Australian goods are less expensive in Australia.

Question 10

Suppose a quota on foreign-made cars is proposed in parliament.Which of the following groups is most likely to oppose the legislation?

Accepted Answer

A) Car manufacturers. 
B) Consumers. 
C) Australian steel workers. 
D) Union officials. 
A) Car manufacturers. 
B) Consumers. 
C) Australian steel workers. 
D) Union officials.

Question 11

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing wheat?

Accepted Answer

A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing cars. 
A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing cars.

Question 12

Exhibit 18-1 Production possibilities curves
  
-In Exhibit 18-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.If these two nations trade,Nabia should specialise in the production of:

Accepted Answer

A) corn. 
B) corn and wheat. 
C) neither product since Pada has the comparative advantage in the production of both. 
D) neither product since Pada has the absolute advantage in the production of both. 
E) wheat. 
A) corn. 
B) corn and wheat. 
C) neither product since Pada has the comparative advantage in the production of both. 
D) neither product since Pada has the absolute advantage in the production of both. 
E) wheat.

Question 13

Which of the following groups will benefit least from free trade?

Accepted Answer

A) Consumers. 
B) Firms importing capital equipment. 
C) Exporters. 
D) Employees producing tariff-protected goods. 
E) Importers. 
A) Consumers. 
B) Firms importing capital equipment. 
C) Exporters. 
D) Employees producing tariff-protected goods. 
E) Importers.

Question 14

A quota is a:

Accepted Answer

A) tax on a specific quantity of imported goods. 
B) limited number of foreign firms that can sell imported goods. 
C) restrictive health and safety standard that raises costs. 
D) tax on domestic producers so that they can make higher profits. 
E) limit on the quantity of a good that can be imported. 
A) tax on a specific quantity of imported goods. 
B) limited number of foreign firms that can sell imported goods. 
C) restrictive health and safety standard that raises costs. 
D) tax on domestic producers so that they can make higher profits. 
E) limit on the quantity of a good that can be imported.

Question 15

One reason put forward to explain the growth in Australia's net foreign liabilities over the past 25 years is that:

Accepted Answer

A) international capital is now more mobile. 
B) domestic investment is now too high. 
C) domestic investment is now too low. 
D) a substantial increase in foreign income relative to Australia has occurred. 
A) international capital is now more mobile. 
B) domestic investment is now too high. 
C) domestic investment is now too low. 
D) a substantial increase in foreign income relative to Australia has occurred.

Question 16

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.1 per Australian dollar.The perfume costs:

Accepted Answer

A) NZ$90. 
B) A$110. 
C) A$100. 
D) A$90. 
A) NZ$90. 
B) A$110. 
C) A$100. 
D) A$90.

Question 17

Which of the following are benefits of free trade?

Accepted Answer

A) Households pay higher prices for many goods and services. 
B) It relies on an overseas market. 
C) It increases input costs for many firms. 
D) Resources are allocated more efficiently. 
A) Households pay higher prices for many goods and services. 
B) It relies on an overseas market. 
C) It increases input costs for many firms. 
D) Resources are allocated more efficiently.

Question 18

The purchase of Australian assets by foreigners is a:

Accepted Answer

A) capital inflow. 
B) capital outflow. 
C) current account deficit. 
D) unilateral transfer. 
A) capital inflow. 
B) capital outflow. 
C) current account deficit. 
D) unilateral transfer.

Question 19

Comparative advantage means that a country can produce a good at a higher opportunity cost than another country.

Accepted Answer

A) True 
 B)False

Question 20

An increase in Indonesia's income relative to Malaysia's should result in:

Accepted Answer

A) an appreciation of the Indonesian rupiah relative to the Malaysian ringgit. 
B) a depreciation of the Indonesian rupiah relative to the Malaysian ringgit. 
C) an increase in the supply of ringgits in exchange for rupiahs. 
D) an increase in the demand for rupiah in exchange for ringgits. 
A) an appreciation of the Indonesian rupiah relative to the Malaysian ringgit. 
B) a depreciation of the Indonesian rupiah relative to the Malaysian ringgit. 
C) an increase in the supply of ringgits in exchange for rupiahs. 
D) an increase in the demand for rupiah in exchange for ringgits.

The net foreign income share of GDP represents:

Which is not a common argument for protecting domestic industry?

Assume Australia 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.Australia should specialise in:

Protectionism is:

Which statement best reflects the political problems associated with free trade?

If income in Australia falls while income in the UK rises,it is likely that:

If a Japanese stereo priced at 1 000 000 yen can be purchased for A$1000,the exchange rate is:

The current account balance on goods and services is:

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

Suppose a quota on foreign-made cars is proposed in parliament.Which of the following groups is most likely to oppose the legislation?

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing wheat?

Exhibit 18-1 Production possibilities curves -In Exhibit 18-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.If these two nations trade,Nabia should specialise in the production of:

Which of the following groups will benefit least from free trade?

A quota is a:

One reason put forward to explain the growth in Australia's net foreign liabilities over the past 25 years is that:

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.1 per Australian dollar.The perfume costs:

Which of the following are benefits of free trade?

The purchase of Australian assets by foreigners is a:

Comparative advantage means that a country can produce a good at a higher opportunity cost than another country.

An increase in Indonesia's income relative to Malaysia's should result in:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

Applying graphs to economics

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Exam 18: International trade and finance

The net foreign income share of GDP represents:

Which is not a common argument for protecting domestic industry?

Assume Australia 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.Australia should specialise in:

Protectionism is:

Which statement best reflects the political problems associated with free trade?

If income in Australia falls while income in the UK rises,it is likely that:

If a Japanese stereo priced at 1 000 000 yen can be purchased for A$1000,the exchange rate is:

The current account balance on goods and services is:

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

Suppose a quota on foreign-made cars is proposed in parliament.Which of the following groups is most likely to oppose the legislation?

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing wheat?

Exhibit 18-1 Production possibilities curves -In Exhibit 18-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.If these two nations trade,Nabia should specialise in the production of:

Which of the following groups will benefit least from free trade?

A quota is a:

One reason put forward to explain the growth in Australia's net foreign liabilities over the past 25 years is that:

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.1 per Australian dollar.The perfume costs:

Which of the following are benefits of free trade?

The purchase of Australian assets by foreigners is a:

Comparative advantage means that a country can produce a good at a higher opportunity cost than another country.

An increase in Indonesia's income relative to Malaysia's should result in:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

Applying graphs to economics

Filters