Exam 19: Comparative Advantage, International Trade, and Exchange Rates

How have U.S.imports and exports,as a fraction of GDP,changed from 1970 to the present?

Figure 19-12 -Refer to Figure 19-12.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

The concept of ________ explains how trade between two countries can make each better off.

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to shift to the ________,increasing the exchange rate and the value of the yen.

An economic principle that explains why people pursue different occupations is

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

One of the main sources of comparative advantage is natural resources.

Figure 19-4 Figure 19-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

A tariff is the same as a quota.

In the 1930s,the United States charged an average tariff rate ________.Today,the rate is ________.

Table 19-11 Output per hour Production and Production of work Consumption without Trade with Trade Clocks Hats Clocks Hats Clocks Hats Denmark 6 3 900 150 1,200 0 Belize 1 2 150 100 0 400 Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 19-11 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 19-11.Which country has a comparative advantage in producing clocks?

Figure 19-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.As a result of the tariff,domestic producers increase their quantity supplied by

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expressed in terms of dollars per peso?

Table 19-12 Output per hour Production and Production of work Consumption without Trade with Trade Swords Belts Swords Belts Swords Belts Estonia 5 3 100 40 200 0 Morocco 2 2 60 60 0 120 Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 19-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. -Refer to Table 19-12.Which country has an absolute advantage in producing swords?

a.Distinguish between a tariff and a quota. b.In what ways are tariffs and quotas similar? c.In what ways are tariffs and quotas different? d.Why might a foreign producer prefer a quota rather than a tariff?

Figure 19-1 Figure 19-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the producer surplus is

Table 19-7 Output Per Hour of Work Handbags Jackets Cambodia 15 3 Thailand 24 6 Table 19-7 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand. -Refer to Table 19-7. a.Which country has an absolute advantage in the production of handbags and jackets? b.Which country has a comparative advantage in the production of handbags? c.Which country has a comparative advantage in the production of jackets?