Question 1

Without trade,the consumption possibilities for two nations are:

Accepted Answer

A)  outside their production possibilities curve. 
B)  inside their production possibilities curve. 
C)  along their production possibilities curve. 
D)  at a point equal to the world production possibilities curve. 
A)  outside their production possibilities curve. 
B)  inside their production possibilities curve. 
C)  along their production possibilities curve. 
D)  at a point equal to the world production possibilities curve.

Question 2

In international trade,an infant industry is one:

Accepted Answer

A)  that protects firms that produce products for infants. 
B)  with a large number of very small firms. 
C)  in which the firms are experiencing very small profits. 
D)  in the early stages of its development. 
A)  that protects firms that produce products for infants. 
B)  with a large number of very small firms. 
C)  in which the firms are experiencing very small profits. 
D)  in the early stages of its development.

Question 3

Suppose that the Zubians can produce 1000 pounds of flour per hours,or catch 500 pounds of fish per hour.In contrast,the Zirconians can produce 1800 pounds of flour per hour,or catch 300 pounds of fish per hours.What is the comparative advantage of the Zubians?

Accepted Answer

A)  Flour. 
B)  Fish. 
C)  Neither flour nor fish. 
D)  Both flour and fish. 
A)  Flour. 
B)  Fish. 
C)  Neither flour nor fish. 
D)  Both flour and fish.

Question 4

In a two good,two-country world,a country has a comparative advantage in any good for which it has a:

Accepted Answer

A)  lower absolute cost than the other country. 
B)  lower opportunity cost than the other country. 
C)  higher absolute cost than the other country. 
D)  higher opportunity cost than the other country. 
A)  lower absolute cost than the other country. 
B)  lower opportunity cost than the other country. 
C)  higher absolute cost than the other country. 
D)  higher opportunity cost than the other country.

Question 5

If nation A has a comparative advantage over nation B in the production of a product,this implies:

Accepted Answer

A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  that nation B could not benefit by engaging in trade with A. 
D)  that nation A should acquire this product by trading with B. 
E)  that nation A could not benefit by engaging in trade with B. 
A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  that nation B could not benefit by engaging in trade with A. 
D)  that nation A should acquire this product by trading with B. 
E)  that nation A could not benefit by engaging in trade with B.

Question 6

Exhibit 21-7 Foreign exchange market for U.S. dollars and British pounds
  
-Exhibit 21-7 shows a situation in which:

Accepted Answer

A)  both the dollar and the pound have depreciated. 
B)  both the dollar and the pound have appreciated. 
C)  the dollar has depreciated and the pound has appreciated. 
D)  the dollar has appreciated and the pound has depreciated. 
A)  both the dollar and the pound have depreciated. 
B)  both the dollar and the pound have appreciated. 
C)  the dollar has depreciated and the pound has appreciated. 
D)  the dollar has appreciated and the pound has depreciated.

Question 7

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 8

International trade has the potential to ____ the availability of goods and services to ____.

Accepted Answer

A)  increase, those nations who export more than they import 
B)  increase, nations that have an absolute advantage in the production of a good or service 
C)  increase, all nations 
D)  decrease, all nations 
A)  increase, those nations who export more than they import 
B)  increase, nations that have an absolute advantage in the production of a good or service 
C)  increase, all nations 
D)  decrease, all nations

Question 9

If nation A has an absolute advantage over nation B in the production of a product,this implies that:

Accepted Answer

A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  nation B could not benefit by engaging in trade with A. 
D)  nation A should acquire this product by trading with B. 
E)  nation A could not benefit by engaging in trade with B. 
A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  nation B could not benefit by engaging in trade with A. 
D)  nation A should acquire this product by trading with B. 
E)  nation A could not benefit by engaging in trade with B.

Question 10

If a country has a comparative advantage in the production of all goods,it should:

Accepted Answer

A)  specialize in the production of goods with the lowest opportunity cost. 
B)  specialize in the production of goods with the highest opportunity cost. 
C)  specialize in the production of goods with the absolute advantage. 
D)  specialize in the production of goods without the absolute advantage. 
E)  not specialize at all and produce all the goods itself. 
A)  specialize in the production of goods with the lowest opportunity cost. 
B)  specialize in the production of goods with the highest opportunity cost. 
C)  specialize in the production of goods with the absolute advantage. 
D)  specialize in the production of goods without the absolute advantage. 
E)  not specialize at all and produce all the goods itself.

Question 11

An increase in demand for a nation's currency in the foreign exchange market will:

Accepted Answer

A)  cause the nation's currency to appreciate. 
B)  make it more expensive for the nation to import goods. 
C)  cause the nation's balance on current account to shift toward a surplus. 
D)  make it less expensive for foreigners to buy the nation's goods. 
A)  cause the nation's currency to appreciate. 
B)  make it more expensive for the nation to import goods. 
C)  cause the nation's balance on current account to shift toward a surplus. 
D)  make it less expensive for foreigners to buy the nation's goods.

Question 12

If Country A has an absolute advantage over Country B in the production of every commodity:

Accepted Answer

A)  mutual gains from trade between Country A and Country B would be impossible. 
B)  Country B would be able to gain from trade but not country A. 
C)  the joint output of the two countries could not be increased through specialization and exchange. 
D)  mutual gains from trade would still be possible. 
A)  mutual gains from trade between Country A and Country B would be impossible. 
B)  Country B would be able to gain from trade but not country A. 
C)  the joint output of the two countries could not be increased through specialization and exchange. 
D)  mutual gains from trade would still be possible.

Question 13

A country is said to have a comparative advantage in the production of a good when it:

Accepted Answer

A)  has the lower opportunity cost of producing the good. 
B)  can produce the good using fewer resources than another country. 
C)  requires fewer labor hours to produce the good. 
D)  all of the above. 
A)  has the lower opportunity cost of producing the good. 
B)  can produce the good using fewer resources than another country. 
C)  requires fewer labor hours to produce the good. 
D)  all of the above.

Question 14

The balance on the current account ____.

Accepted Answer

A)  d and e 
B)  c and d 
C)  will show a trade deficit or surplus, if one exists 
D)  must always be zero 
E)  multiplied by -1 becomes the capital account 
A)  d and e 
B)  c and d 
C)  will show a trade deficit or surplus, if one exists 
D)  must always be zero 
E)  multiplied by -1 becomes the capital account

Question 15

Absolute advantage is the ability of a country to produce a good with ____ than another country.

Accepted Answer

A)  a lower opportunity cost 
B)  a higher opportunity cost 
C)  fewer resources 
D)  more resources 
A)  a lower opportunity cost 
B)  a higher opportunity cost 
C)  fewer resources 
D)  more resources

Question 16

A country that can produce a good using fewer resources than another country has a(n):

Accepted Answer

A)  lower opportunity cost of producing the good than another country. 
B)  absolute advantage. 
C)  specialization in the production of the good. 
D)  all of the above. 
A)  lower opportunity cost of producing the good than another country. 
B)  absolute advantage. 
C)  specialization in the production of the good. 
D)  all of the above.

Question 17

The North American Free Trade Agreement affects trade between:

Accepted Answer

A)  the United States, Cuba, and Brazil. 
B)  the United States, Canada, and Mexico. 
C)  the United States, Puerto Rico, and Cuba. 
D)  Brazil, Bolivia, Peru, and Columbia. 
E)  China and the United States. 
A)  the United States, Cuba, and Brazil. 
B)  the United States, Canada, and Mexico. 
C)  the United States, Puerto Rico, and Cuba. 
D)  Brazil, Bolivia, Peru, and Columbia. 
E)  China and the United States.

Question 18

An appreciation in the U.S.dollar benefits which of the following groups of people?

Accepted Answer

A)  All people living in the United States 
B)  U.S. producers who export farm equipment to other countries 
C)  U.S. consumers who buy imported automobiles 
D)  Foreigners who wish to travel to the United States 
E)  U.S. consumers who buy only goods made entirely in the United States 
A)  All people living in the United States 
B)  U.S. producers who export farm equipment to other countries 
C)  U.S. consumers who buy imported automobiles 
D)  Foreigners who wish to travel to the United States 
E)  U.S. consumers who buy only goods made entirely in the United States

Question 19

Exhibit 21-4 Coffee and tea output (pounds per hour)
  
-As shown in Exhibit 21-4,If each country produced according to its comparative advantage,Brazil would produce:

Accepted Answer

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

Question 20

Suppose a U.S.-made machine costs $500 and the exchange rate is 100 yen = $1.A Japanese citizen purchasing this machine would pay:

Accepted Answer

A)  100 yen. 
B)  500 yen. 
C)  5,000 yen. 
D)  10,000 yen. 
E)  50,000 yen. 
A)  100 yen. 
B)  500 yen. 
C)  5,000 yen. 
D)  10,000 yen. 
E)  50,000 yen.

Exam 21: International Trade and Finance

Without trade,the consumption possibilities for two nations are:

In international trade,an infant industry is one:

Suppose that the Zubians can produce 1000 pounds of flour per hours,or catch 500 pounds of fish per hour.In contrast,the Zirconians can produce 1800 pounds of flour per hour,or catch 300 pounds of fish per hours.What is the comparative advantage of the Zubians?

In a two good,two-country world,a country has a comparative advantage in any good for which it has a:

If nation A has a comparative advantage over nation B in the production of a product,this implies:

Exhibit 21-7 Foreign exchange market for U.S. dollars and British pounds -Exhibit 21-7 shows a situation in which:

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

International trade has the potential to ____ the availability of goods and services to ____.

If nation A has an absolute advantage over nation B in the production of a product,this implies that:

If a country has a comparative advantage in the production of all goods,it should:

An increase in demand for a nation's currency in the foreign exchange market will:

If Country A has an absolute advantage over Country B in the production of every commodity:

A country is said to have a comparative advantage in the production of a good when it:

The balance on the current account ____.

Absolute advantage is the ability of a country to produce a good with ____ than another country.

A country that can produce a good using fewer resources than another country has a(n):

The North American Free Trade Agreement affects trade between:

An appreciation in the U.S.dollar benefits which of the following groups of people?

Exhibit 21-4 Coffee and tea output (pounds per hour) -As shown in Exhibit 21-4,If each country produced according to its comparative advantage,Brazil would produce:

Suppose a U.S.-made machine costs $500 and the exchange rate is 100 yen = $1.A Japanese citizen purchasing this machine would pay:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Economies in Transition

Growth and the Less-Developed Countries

Filters

International trade has the potential to the availability of goods and services to .