Question 1

An export subsidy will cause the terms of trade of the ________ country to ________ and will ________ the country.

Accepted Answer

A) exporting;suffer;harm 
B) exporting;improve;benefit 
C) importing;suffer;harm 
D) importing;suffer;benefit 
E) importing;improve;harm 
A) exporting;suffer;harm 
B) exporting;improve;benefit 
C) importing;suffer;harm 
D) importing;suffer;benefit 
E) importing;improve;harm A

Question 2

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

Accepted Answer

A) the world terms of trade differ from its domestic relative costs. 
B) the country specializes in one product. 
C) the country avoids international trade. 
D) the world terms of trade equal the domestic relative costs. 
E) the country's domestic production value equals world relative value. 
A) the world terms of trade differ from its domestic relative costs. 
B) the country specializes in one product. 
C) the country avoids international trade. 
D) the world terms of trade equal the domestic relative costs. 
E) the country's domestic production value equals world relative value. A

Question 3

An increase in the real interest rate,all other things held constant,will cause a country's ________ to ________.

Accepted Answer

A) current consumption: increase 
B) current consumption: decrease 
C) terms of trade;improve 
D) terms of trade;worsen 
E) welfare level;improve 
A) current consumption: increase 
B) current consumption: decrease 
C) terms of trade;improve 
D) terms of trade;worsen 
E) welfare level;improve B

Question 4

If Slovenia is a large country in world trade,then if it imposes a large set of tariffs on many of its imports,this would

Accepted Answer

A) improve its terms of trade. 
B) have no effect on its terms of trade. 
C) harm its terms of trade. 
D) decrease its marginal propensity to consume. 
E) increase its exports. 
A) improve its terms of trade. 
B) have no effect on its terms of trade. 
C) harm its terms of trade. 
D) decrease its marginal propensity to consume. 
E) increase its exports.

Question 5

The meaning of "terms of trade" is

Accepted Answer

A) the price of a country's exports divided by the price of its imports. 
B) the amount of exports sold by a country. 
C) the price conditions bargained for in international markets. 
D) the quantities of imports received in free trade. 
E) the tariffs in place between two trading countries. 
A) the price of a country's exports divided by the price of its imports. 
B) the amount of exports sold by a country. 
C) the price conditions bargained for in international markets. 
D) the quantities of imports received in free trade. 
E) the tariffs in place between two trading countries.

Question 6

Describe the nature of trade between two countries based on intertemporal comparative advantage.

Accepted Answer

Intertemporal comparative advantage aris

Question 7

The price of ________ consumption in terms of ________ consumption is ________.

Accepted Answer

A) future;current;1/(1 + r) 
B) present;future;1/(1 + r) 
C) future;current;r 
D) present;future;r 
E) future;current;1 + r 
A) future;current;1/(1 + r) 
B) present;future;1/(1 + r) 
C) future;current;r 
D) present;future;r 
E) future;current;1 + r

Question 8

An export subsidy has the opposite effect on terms of trade to the effect of an import tariff.Domestically a tariff will raise the price of the import good,deteriorating the domestic terms of trade.A production subsidy for the export product will lower the local price of the export good,lowering the domestic terms of trade for the country.Hence the export subsidy and the import tariff have the same effect.This analysis seems to contradict the first sentence in this paragraph.Discuss this paradox.

Accepted Answer

While this (Lerner)equivalence may well

Question 9

An increase in a country's net commodity terms of trade will

Accepted Answer

A) not always guarantee positive changes in the country's economy. 
B) always increase the country's economic welfare. 
C) always increase the country's real income. 
D) never increase the country's quantity of exports. 
E) always increase the country's production of its import competing good. 
A) not always guarantee positive changes in the country's economy. 
B) always increase the country's economic welfare. 
C) always increase the country's real income. 
D) never increase the country's quantity of exports. 
E) always increase the country's production of its import competing good.

Question 10

If the U.S.(a large country)imposes a tariff on its imported good,this will tend to

Accepted Answer

A) improve the terms of trade of the United States. 
B) have no effect on terms of trade. 
C) improve the terms of trade of all countries. 
D) cause a deterioration of U.S.terms of trade. 
E) raise the world price of the good imported by the United States. 
A) improve the terms of trade of the United States. 
B) have no effect on terms of trade. 
C) improve the terms of trade of all countries. 
D) cause a deterioration of U.S.terms of trade. 
E) raise the world price of the good imported by the United States.

Question 11

International borrowing and lending may be interpreted as one form of

Accepted Answer

A) intertemporal trade. 
B) intermediate trade. 
C) trade in services. 
D) unrequited international transfers. 
E) aid to offset trade advantages. 
A) intertemporal trade. 
B) intermediate trade. 
C) trade in services. 
D) unrequited international transfers. 
E) aid to offset trade advantages.

Question 12

The intertemporal budget constraint is defined as:

Accepted Answer

A) DP + DF/(1 + r)= QP + QF/(1 + r) 
B) V = QP + QF/(1 + r) 
C) V = DP + DF/(1 + r) 
D) DF + DP/(1 + r)= QF + QP/(1 + r) 
E) DP + DF(1 + r)= QP + QF(1 + r) 
A) DP + DF/(1 + r)= QP + QF/(1 + r) 
B) V = QP + QF/(1 + r) 
C) V = DP + DF/(1 + r) 
D) DF + DP/(1 + r)= QF + QP/(1 + r) 
E) DP + DF(1 + r)= QP + QF(1 + r)

Question 13

A fall in the real interest rate,all other things held constant,will cause a country's ________ to ________.

Accepted Answer

A) current consumption: increase 
B) current consumption: decrease 
C) terms of trade;improve 
D) terms of trade;worsen 
E) welfare level;improve 
A) current consumption: increase 
B) current consumption: decrease 
C) terms of trade;improve 
D) terms of trade;worsen 
E) welfare level;improve

Question 14

If points A and B are two locations on a country's production possibility frontier,then

Accepted Answer

A) the country could produce either of the two bundles. 
B) consumers are indifferent between the two bundles. 
C) producers are indifferent between the two bundles. 
D) at any point in time,the country could produce both. 
E) both bundles must have the same relative cost. 
A) the country could produce either of the two bundles. 
B) consumers are indifferent between the two bundles. 
C) producers are indifferent between the two bundles. 
D) at any point in time,the country could produce both. 
E) both bundles must have the same relative cost.

Question 15

Suppose that a "small country" experiences growth strongly biased toward its export,cloth

Accepted Answer

A) this will have no effect on terms of trade for the country's trading partner. 
B) this will tend to worsen the country's terms of trade. 
C) this will tend to improve the country's terms of trade. 
D) this will tend to worsen terms of trade for the country's trading partner. 
E) this will tend to improve terms of trade for the country's trading partner. 
A) this will have no effect on terms of trade for the country's trading partner. 
B) this will tend to worsen the country's terms of trade. 
C) this will tend to improve the country's terms of trade. 
D) this will tend to worsen terms of trade for the country's trading partner. 
E) this will tend to improve terms of trade for the country's trading partner.

Question 16

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

Accepted Answer

A) point b;point c;remain unchanged 
B) point a;point b;increase 
C) point c;point b;increase 
D) point c;point b;decrease 
E) point a;point c;remain unchanged 
A) point b;point c;remain unchanged 
B) point a;point b;increase 
C) point c;point b;increase 
D) point c;point b;decrease 
E) point a;point c;remain unchanged

Question 17

-Refer to above figure.Albania refused to engage in international trade for ideological reasons.To maximize its economic welfare it would choose to produce at which point in the diagram above? Suppose the PA/PB at point a was equal to 1.Given this information,in which good (A orB)does Albania enjoy a comparative advantage?
Now that the Cold War is over,Albania is interested in obtaining economic welfare gains from trade.The relevant international relative price is PA/PB = 2.Albania would therefore choose to produce at which point (a,b,or c)? Given this additional information,in which good does Albania enjoy a comparative advantage?

Accepted Answer

Albania would choose to produce at point

Question 18

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

Accepted Answer

A) world relative quantity of cloth supplied will increase. 
B) world relative quantity of cloth supplied and demanded will increase. 
C) world relative quantity of cloth supplied and demanded will decrease. 
D) world relative quantity of cloth demanded will decrease. 
E) world relative quantity of food will increase. 
A) world relative quantity of cloth supplied will increase. 
B) world relative quantity of cloth supplied and demanded will increase. 
C) world relative quantity of cloth supplied and demanded will decrease. 
D) world relative quantity of cloth demanded will decrease. 
E) world relative quantity of food will increase.

Question 19

-Suppose,as a result of various dynamic factors associated with exposure to international competition,Albania's economy grew,and is now represented by the rightmost production possibility frontier in the figure above.If its point of production with trade was point b,would you consider this growth to be export-biased or import biased? If Albania were a large country with respect to the world trade of A and B,how would this growth affect Albania's terms of trade? Its real income? What if Albania were a small country?

Accepted Answer

If the production with trade point was p

Question 20

It may be argued that theoretically,international capital movements

Accepted Answer

A) tend to hurt labor in donor countries. 
B) tend to hurt the donor countries. 
C) tend to hurt the recipient countries. 
D) tend to hurt labor in recipient countries. 
E) increase future production in donor countries. 
A) tend to hurt labor in donor countries. 
B) tend to hurt the donor countries. 
C) tend to hurt the recipient countries. 
D) tend to hurt labor in recipient countries. 
E) increase future production in donor countries.

An export subsidy will cause the terms of trade of the country to and will the country.

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

An increase in the real interest rate,all other things held constant,will cause a country's to .

If Slovenia is a large country in world trade,then if it imposes a large set of tariffs on many of its imports,this would

The meaning of "terms of trade" is

Describe the nature of trade between two countries based on intertemporal comparative advantage.

The price of consumption in terms of consumption is .

An increase in a country's net commodity terms of trade will

If the U.S.(a large country)imposes a tariff on its imported good,this will tend to

International borrowing and lending may be interpreted as one form of

The intertemporal budget constraint is defined as:

A fall in the real interest rate,all other things held constant,will cause a country's to .

If points A and B are two locations on a country's production possibility frontier,then

Suppose that a "small country" experiences growth strongly biased toward its export,cloth

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

If the ratio of price of cloth (P_C)divided by the price of food (P_F)increases in the international marketplace,then

It may be argued that theoretically,international capital movements

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money,Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

Exam 6: The Standard Trade Model

An export subsidy will cause the terms of trade of the ________ country to ________ and will ________ the country.

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

An increase in the real interest rate,all other things held constant,will cause a country's ________ to ________.

If Slovenia is a large country in world trade,then if it imposes a large set of tariffs on many of its imports,this would

The meaning of "terms of trade" is

Describe the nature of trade between two countries based on intertemporal comparative advantage.

The price of ________ consumption in terms of ________ consumption is ________.

An increase in a country's net commodity terms of trade will

If the U.S.(a large country)imposes a tariff on its imported good,this will tend to

International borrowing and lending may be interpreted as one form of

The intertemporal budget constraint is defined as:

A fall in the real interest rate,all other things held constant,will cause a country's ________ to ________.

If points A and B are two locations on a country's production possibility frontier,then

Suppose that a "small country" experiences growth strongly biased toward its export,cloth

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ________,then moving to ________ will cause utility to ________.

If the ratio of price of cloth (PC)divided by the price of food (PF)increases in the international marketplace,then

It may be argued that theoretically,international capital movements

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money,Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

An export subsidy will cause the terms of trade of the country to and will the country.

An increase in the real interest rate,all other things held constant,will cause a country's to .

The price of consumption in terms of consumption is .

A fall in the real interest rate,all other things held constant,will cause a country's to .

-Refer to the figure above,which shows a country's possible production possibility frontiers and indifference curves.If the country is producing at ,then moving to will cause utility to .

If the ratio of price of cloth (P_C)divided by the price of food (P_F)increases in the international marketplace,then