Question 1

A favorable balance of trade occurs when:

Accepted Answer

A)  goods exports are greater than goods imports. 
B)  goods imports are greater than goods exports. 
C)  international trade is an increasing share of total output. 
D)  the balance on capital account equals the balance on current account. 
E)  unilateral transfers are positive. 
A)  goods exports are greater than goods imports. 
B)  goods imports are greater than goods exports. 
C)  international trade is an increasing share of total output. 
D)  the balance on capital account equals the balance on current account. 
E)  unilateral transfers are positive.

Question 2

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Accepted Answer

A) True 
 B)False

Question 3

Trade restrictions imposed in the name of national security have been recommended by protectionists in order to:

Accepted Answer

A)  develop strong defense-related industries. 
B)  avoid dependence on foreign suppliers during wartime. 
C)  reduce the necessity of stockpiling strategic supplies. 
D)  all of the above. 
A)  develop strong defense-related industries. 
B)  avoid dependence on foreign suppliers during wartime. 
C)  reduce the necessity of stockpiling strategic supplies. 
D)  all of the above.

Question 4

Which of the following is the correct name of the free-trade agreement between Mexico,the U.S.,and Canada?

Accepted Answer

A)  The American Free Trade Agreement (AFT
A) . 
B)  The North American Free Trade Agreement (NAFT
A) . 
C)  The Pacific Free Trade Agreement (PFT
A) . 
D)  The Trans-American Free Trade Agreement (TAF
A) . 
A)  The American Free Trade Agreement (AFT
A) . 
B)  The North American Free Trade Agreement (NAFT
A) . 
C)  The Pacific Free Trade Agreement (PFT
A) . 
D)  The Trans-American Free Trade Agreement (TAF
A) .

Question 5

If goods imports are greater than goods exports,the nation is experiencing a:

Accepted Answer

A)  negative balance on current account. 
B)  goods trade deficit. 
C)  capital account imbalance. 
D)  weakening of its currency. 
E)  growth in foreign reserves. 
A)  negative balance on current account. 
B)  goods trade deficit. 
C)  capital account imbalance. 
D)  weakening of its currency. 
E)  growth in foreign reserves.

Question 6

When an exchange rate is determined strictly by the demands and supplies for a nation's currency,it is called:

Accepted Answer

A)  fixed. 
B)  arbitrage. 
C)  floating. 
D)  unilateral. 
E)  balance of payments. 
A)  fixed. 
B)  arbitrage. 
C)  floating. 
D)  unilateral. 
E)  balance of payments.

Question 7

When Brazil can generate a product using fewer labor hours and resources than the United States,an economist would say that Brazil had:

Accepted Answer

A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products. 
A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products.

Question 8

Exhibit 21-1 Production possibilities curves
  
-In Exhibit 21-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.Suppose Nabia produces at point A on its PPC.How many units of wheat is the country able to produce?

Accepted Answer

A)  15. 
B)  60. 
C)  5. 
D)  20. 
E)  40. 
A)  15. 
B)  60. 
C)  5. 
D)  20. 
E)  40.

Question 9

The term "balance of trade" refers to the:

Accepted Answer

A)  importing and exporting of goods. 
B)  importing and exporting of goods and services. 
C)  current account trade balance. 
D)  capital outflows minus inflows. 
A)  importing and exporting of goods. 
B)  importing and exporting of goods and services. 
C)  current account trade balance. 
D)  capital outflows minus inflows.

Question 10

A U.S.citizen's gift for famine relief in Somalia would be considered a:

Accepted Answer

A)  capital inflow. 
B)  capital outflow. 
C)  current account transaction. 
D)  service trade transaction. 
A)  capital inflow. 
B)  capital outflow. 
C)  current account transaction. 
D)  service trade transaction.

Question 11

A major difference between a tariff and a quota is that a tariff:

Accepted Answer

A)  will reduce imports, but a quota generally will not. 
B)  can easily be rescinded, but a quota cannot. 
C)  will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports. 
D)  typically generates tax revenue, while a quota does not. 
A)  will reduce imports, but a quota generally will not. 
B)  can easily be rescinded, but a quota cannot. 
C)  will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports. 
D)  typically generates tax revenue, while a quota does not.

Question 12

Capital accounts are a measure of how much ____ have invested ____.

Accepted Answer

A)  c and d 
B)  d and e 
C)  U.S. stockholders; in the market 
D)  foreign stockholders; in foreign firms 
E)  U.S. firms; in foreign nations 
A)  c and d 
B)  d and e 
C)  U.S. stockholders; in the market 
D)  foreign stockholders; in foreign firms 
E)  U.S. firms; in foreign nations

Question 13

Suppose you are traveling from the United States to Djibouti on vacation.You would be better off on your vacation if:

Accepted Answer

A)  exchange rates did not change after you bought Djiboutian francs. 
B)  you had purchased Djiboutian francs in Djibouti and not in New York. 
C)  the Djiboutian franc became more powerful with respect to the U.S. dollar. 
D)  the exchange rate increased. 
E)  the exchange rate decreased. 
A)  exchange rates did not change after you bought Djiboutian francs. 
B)  you had purchased Djiboutian francs in Djibouti and not in New York. 
C)  the Djiboutian franc became more powerful with respect to the U.S. dollar. 
D)  the exchange rate increased. 
E)  the exchange rate decreased.

Question 14

What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?

Accepted Answer

Trade barriers include the use of embarg

Question 15

If there is bilateral currency trade between Japan and the U.S.,then as the supply of U.S.dollars on the world foreign exchange market ____,the price of a dollar in terms of Japanese yen will ____.

Accepted Answer

A)  increases, fall 
B)  decreases, fall 
C)  increases, increases 
D)  decreases, stays the same 
A)  increases, fall 
B)  decreases, fall 
C)  increases, increases 
D)  decreases, stays the same

Question 16

A country that has a lower opportunity cost of producing a good:

Accepted Answer

A)  has a comparative advantage. 
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 a comparative advantage. 
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 17

Which of the following would cause the supply of dollars curve in the United States to shift to the right?

Accepted Answer

A)  Japanese imports become less popular. 
B)  The value of the dollar falls. 
C)  The supply of dollars decreases. 
D)  Japanese imports became more popular. 
A)  Japanese imports become less popular. 
B)  The value of the dollar falls. 
C)  The supply of dollars decreases. 
D)  Japanese imports became more popular.

Question 18

A weaker dollar will stimulate sales of U.S.exports.

Accepted Answer

A) True 
 B)False

Question 19

If the exchange rate of yen for dollars increases from 100 yen = $1 to 110 yen = $1,then:

Accepted Answer

A)  Japanese-produced goods would become more expensive. 
B)  the dollar has depreciated. 
C)  the yen has appreciated. 
D)  U.S.-produced goods would become more expensive. 
E)  U.S. exports would increase. 
A)  Japanese-produced goods would become more expensive. 
B)  the dollar has depreciated. 
C)  the yen has appreciated. 
D)  U.S.-produced goods would become more expensive. 
E)  U.S. exports would increase.

Question 20

Most industrialized nations today use a gold standard to establish exchange rates.

Accepted Answer

A) True 
 B)False

Exam 21: International Trade and Finance

A favorable balance of trade occurs when:

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Trade restrictions imposed in the name of national security have been recommended by protectionists in order to:

Which of the following is the correct name of the free-trade agreement between Mexico,the U.S.,and Canada?

If goods imports are greater than goods exports,the nation is experiencing a:

When an exchange rate is determined strictly by the demands and supplies for a nation's currency,it is called:

When Brazil can generate a product using fewer labor hours and resources than the United States,an economist would say that Brazil had:

Exhibit 21-1 Production possibilities curves -In Exhibit 21-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.Suppose Nabia produces at point A on its PPC.How many units of wheat is the country able to produce?

The term "balance of trade" refers to the:

A U.S.citizen's gift for famine relief in Somalia would be considered a:

A major difference between a tariff and a quota is that a tariff:

Capital accounts are a measure of how much ____ have invested ____.

Suppose you are traveling from the United States to Djibouti on vacation.You would be better off on your vacation if:

What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?

If there is bilateral currency trade between Japan and the U.S.,then as the supply of U.S.dollars on the world foreign exchange market ____,the price of a dollar in terms of Japanese yen will ____.

A country that has a lower opportunity cost of producing a good:

Which of the following would cause the supply of dollars curve in the United States to shift to the right?

A weaker dollar will stimulate sales of U.S.exports.

If the exchange rate of yen for dollars increases from 100 yen = $1 to 110 yen = $1,then:

Most industrialized nations today use a gold standard to establish exchange rates.

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

Capital accounts are a measure of how much have invested .

If there is bilateral currency trade between Japan and the U.S.,then as the supply of U.S.dollars on the world foreign exchange market ,the price of a dollar in terms of Japanese yen will .