Question 1

The offer curve of a nation shows:

Accepted Answer

A)  the supply of a nation's imports 
B)  the demand for a nation's exports 
C)  the trade partner's demand for imports and supply of exports 
D)  the nation's demand for imports and supply of exports 
A)  the supply of a nation's imports 
B)  the demand for a nation's exports 
C)  the trade partner's demand for imports and supply of exports 
D)  the nation's demand for imports and supply of exports D

Question 2

All other things equal,if a nation's terms of trade deteriorate,to maintain the same quantity of imports,the nation

Accepted Answer

A)  will have to export a greater quantity of goods. 
B)  will have to export a smaller quantity of goods. 
C)  could increase or decrease its exports. 
D)  will have to accept a lower standard of living. 
A)  will have to export a greater quantity of goods. 
B)  will have to export a smaller quantity of goods. 
C)  could increase or decrease its exports. 
D)  will have to accept a lower standard of living. A

Question 3

Suppose Nation 1 has a comparative advantage in good X over Nation 2 and the two nations are currently engaged in equilibrium trade for good X.A decrease in the cost of producing good X in Nation 2 would cause the international price of good X to _______ and the quantity of good X traded to ______.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease D

Question 4

All other things equal,if a nation's terms of trade improve,the nation

Accepted Answer

A)  will have to export a greater quantity of goods. 
B)  will have to export a smaller quantity of goods. 
C)  could increase or decrease its exports. 
D)  will have to accept a lower standard of living. 
A)  will have to export a greater quantity of goods. 
B)  will have to export a smaller quantity of goods. 
C)  could increase or decrease its exports. 
D)  will have to accept a lower standard of living.

Question 5

Which of the following statements regarding general equilibrium analysis is not true?

Accepted Answer

A)  The demand and supply curve are derived from the nation's production frontier and indifference map 
B)  It shows the same basic information as offer curves 
C)  It shows the same equilibrium relative commodity prices as with offer curves 
D)  It shows the same equilibrium relative commodity prices as partial equilibrium analysis. 
A)  The demand and supply curve are derived from the nation's production frontier and indifference map 
B)  It shows the same basic information as offer curves 
C)  It shows the same equilibrium relative commodity prices as with offer curves 
D)  It shows the same equilibrium relative commodity prices as partial equilibrium analysis.

Question 6

Which of the following statements is not correct?

Accepted Answer

A)  The demand for imports is given by the excess demand for the commodity 
B)  the supply of exports is given by the excess supply of the commodity 
C)  the supply curve of exports is flatter than the total domestic supply curve of the commodity 
D)  the supply curve for exports is more inelastic than the total domestic supply curve of the commodity. 
A)  The demand for imports is given by the excess demand for the commodity 
B)  the supply of exports is given by the excess supply of the commodity 
C)  the supply curve of exports is flatter than the total domestic supply curve of the commodity 
D)  the supply curve for exports is more inelastic than the total domestic supply curve of the commodity.

Question 7

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good X and on exports of good X by Nation 1.
a. The supply of Y increases in Nation 2.
b. The demand for X decreases in Nation 1.

Accepted Answer

a.Nation 2's offer curve shifts towards

Question 8

Export prices must rise for a nation to increase its exports because the nation:

Accepted Answer

A)  incurs increasing opportunity costs in export production 
B)  faces decreasing opportunity costs in producing import substitutes 
C)  faces decreasing marginal rate of substitution in consumption 
D)  all of the above 
A)  incurs increasing opportunity costs in export production 
B)  faces decreasing opportunity costs in producing import substitutes 
C)  faces decreasing marginal rate of substitution in consumption 
D)  all of the above

Question 9

Carefully explain the importance of the terms of trade to a nation.Your answer should include an explanation of how changes in the terms of trade are likely to impact social welfare.

Accepted Answer

Answers will vary,but should include (1)

Question 10

At a relative commodity price above equilibrium

Accepted Answer

A)  the excess demand for a commodity exceeds the excess supply of the commodity 
B)  the quantity demanded of imports exceeds the quantity supplied of exports 
C)  the world price of the commodity will fall 
D)  the excess demand for the commodity will increase. 
A)  the excess demand for a commodity exceeds the excess supply of the commodity 
B)  the quantity demanded of imports exceeds the quantity supplied of exports 
C)  the world price of the commodity will fall 
D)  the excess demand for the commodity will increase.

Question 11

The offer curve of a nation curves toward the axis measuring the nation's

Accepted Answer

A)  import commodity 
B)  export commodity 
C)  export or import commodity 
D)  nontraded commodity 
A)  import commodity 
B)  export commodity 
C)  export or import commodity 
D)  nontraded commodity

Question 12

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

Accepted Answer

A)  3/4 
B)  2/3 
C)  3/2 
D)  4/3 
A)  3/4 
B)  2/3 
C)  3/2 
D)  4/3

Question 13

The index of relative U.S.export prices fell during the first few years of the 21ˢᵗ century.The primary cause of this was

Accepted Answer

A)  the growing U.S. trade deficit 
B)  the rising price of commodities, such as oil 
C)  the persistent appreciation of the U.S. dollar 
D)  the introduction of the Euro as a major world currency 
A)  the growing U.S. trade deficit 
B)  the rising price of commodities, such as oil 
C)  the persistent appreciation of the U.S. dollar 
D)  the introduction of the Euro as a major world currency

Question 14

Carefully define an offer curve and explain how it is derived.

Accepted Answer

An offer curve of a nation shows how muc

Question 15

Explain the effect of changes in petroleum prices on the terms of trade and relative export prices for the United States in recent years.

Accepted Answer

As of the date of the textbook,the nomin

Question 16

If a nation's terms of trade improve,the nation's social welfare

Accepted Answer

A)  will deteriorate. 
B)  will improve. 
C)  will remain unchanged. 
D)  might improve, deteriorate, or remain unchanged. 
A)  will deteriorate. 
B)  will improve. 
C)  will remain unchanged. 
D)  might improve, deteriorate, or remain unchanged.

Question 17

Suppose the terms of trade for nation X rises from 100 to 110.Explain how this will impact the terms of trade for nation Y.

Accepted Answer

Nation Y's terms of trade are

Question 18

Which of the following statements regarding partial equilibrium analysis is false?

Accepted Answer

A)  It relies on traditional demand and supply curves 
B)  It studies a single market. 
C)  it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade. 
D)  It can be used to show changes in prices when demand or supply changes in another country. 
A)  It relies on traditional demand and supply curves 
B)  It studies a single market. 
C)  it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade. 
D)  It can be used to show changes in prices when demand or supply changes in another country.

Question 19

If a nation does not affect world prices by its trading,its offer curve:

Accepted Answer

A)  is a straight line 
B)  bulges toward the axis measuring the import commodity 
C)  intersects the straight-line segment of the world's offer curve 
D)  intersects the positively-sloped portion of the world's offer curve 
A)  is a straight line 
B)  bulges toward the axis measuring the import commodity 
C)  intersects the straight-line segment of the world's offer curve 
D)  intersects the positively-sloped portion of the world's offer curve

Question 20

In what way does partial equilibrium analysis differ from general equilibrium analysis?

Accepted Answer

A)  The former but not the latter can be used to determine the equilibrium price with trade 
B)  the former but not the latter can be used to determine the equilibrium quantity with trade 
C)  the former but not the latter takes into consideration the interaction among all markets in the economy 
D)  the former gives only an approximation to the answer sought. 
A)  The former but not the latter can be used to determine the equilibrium price with trade 
B)  the former but not the latter can be used to determine the equilibrium quantity with trade 
C)  the former but not the latter takes into consideration the interaction among all markets in the economy 
D)  the former gives only an approximation to the answer sought.

Exam 4: Demand and Supply, offer Curves, and the Terms of Trade

The offer curve of a nation shows:

All other things equal,if a nation's terms of trade deteriorate,to maintain the same quantity of imports,the nation

Suppose Nation 1 has a comparative advantage in good X over Nation 2 and the two nations are currently engaged in equilibrium trade for good X.A decrease in the cost of producing good X in Nation 2 would cause the international price of good X to _______ and the quantity of good X traded to ______.

All other things equal,if a nation's terms of trade improve,the nation

Which of the following statements regarding general equilibrium analysis is not true?

Which of the following statements is not correct?

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good X and on exports of good X by Nation 1. a. The supply of Y increases in Nation 2. b. The demand for X decreases in Nation 1.

Export prices must rise for a nation to increase its exports because the nation:

Carefully explain the importance of the terms of trade to a nation.Your answer should include an explanation of how changes in the terms of trade are likely to impact social welfare.

At a relative commodity price above equilibrium

The offer curve of a nation curves toward the axis measuring the nation's

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

The index of relative U.S.export prices fell during the first few years of the 21ˢᵗ century.The primary cause of this was

Carefully define an offer curve and explain how it is derived.

Explain the effect of changes in petroleum prices on the terms of trade and relative export prices for the United States in recent years.

If a nation's terms of trade improve,the nation's social welfare

Suppose the terms of trade for nation X rises from 100 to 110.Explain how this will impact the terms of trade for nation Y.

Which of the following statements regarding partial equilibrium analysis is false?

If a nation does not affect world prices by its trading,its offer curve:

In what way does partial equilibrium analysis differ from general equilibrium analysis?

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters

Suppose Nation 1 has a comparative advantage in good X over Nation 2 and the two nations are currently engaged in equilibrium trade for good X.A decrease in the cost of producing good X in Nation 2 would cause the international price of good X to _ and the quantity of good X traded to .