Question 1

The account which records a nation's foreign economic transactions is called:

Accepted Answer

A)  the trade account. 
B)  the stock market. 
C)  the exchange market. 
D)  the balance of payments. 
E)  a bill of lading. 
A)  the trade account. 
B)  the stock market. 
C)  the exchange market. 
D)  the balance of payments. 
E)  a bill of lading.

Question 2

Australia largely exports _____ and imports _____.

Accepted Answer

A)  manufactured goods; primary commodities 
B)  services; manufactured goods 
C)  manufactured goods; services 
D)  primary commodities and mineral products; manufactured goods 
A)  manufactured goods; primary commodities 
B)  services; manufactured goods 
C)  manufactured goods; services 
D)  primary commodities and mineral products; manufactured goods

Question 3

Narrbegin Exhibit 18.1 Production possibilities curves   
-In Exhibit 18.1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialise in the production of:

Accepted Answer

A)  corn. 
B)  corn and wheat. 
C)  neither product since Pada has the comparative advantage in the production of both. 
D)  wheat. 
A)  corn. 
B)  corn and wheat. 
C)  neither product since Pada has the comparative advantage in the production of both. 
D)  wheat.

Question 4

Assume Australia can use a given amount of its resources to produce either 20 airplanes or eight automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. Australia should specialise in:

Accepted Answer

A)  airplanes. 
B)  automobiles. 
C)  both goods. 
D)  neither good. 
A)  airplanes. 
B)  automobiles. 
C)  both goods. 
D)  neither good.

Question 5

Narrbegin Exhibit 18.2 Production possibilities curves for US and Mexico   
-As shown in Exhibit 18.2, in Mexico, producing one additional ton of wheat costs:

Accepted Answer

A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth. 
A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth.

Question 6

The Japanese demand curve for dollars is downward-sloping because a:

Accepted Answer

A)  higher number of yen per dollar means Australian goods are cheaper in Japan. 
B)  lower number of yen per dollar means Australian goods are cheaper in Japan. 
C)  lower number of yen per dollar means Australian goods are more expensive in Japan. 
D)  lower number of yen per dollar means Australian goods are less expensive in Australia. 
A)  higher number of yen per dollar means Australian goods are cheaper in Japan. 
B)  lower number of yen per dollar means Australian goods are cheaper in Japan. 
C)  lower number of yen per dollar means Australian goods are more expensive in Japan. 
D)  lower number of yen per dollar means Australian goods are less expensive in Australia.

Question 7

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing cars?

Accepted Answer

A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing wheat. 
A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing wheat.

Question 8

The current account deficit represents the extent to which a nation's:

Accepted Answer

A)  spending exceeds its income. 
B)  production exceeds its income. 
C)  output exceeds its income. 
D)  employment exceeds its income. 
A)  spending exceeds its income. 
B)  production exceeds its income. 
C)  output exceeds its income. 
D)  employment exceeds its income.

Question 9

Free trade can be strongly opposed because:

Accepted Answer

A)  free trade provides consumers with lower prices and larger quantities of products. 
B)  reduced tariffs result in extra buying power of consumers. 
C)  free trade can stimulate other areas of domestic production. 
D)  cheaper imports can reduce incomes of the owners of the domestic firms competing with the cheaper imports. 
A)  free trade provides consumers with lower prices and larger quantities of products. 
B)  reduced tariffs result in extra buying power of consumers. 
C)  free trade can stimulate other areas of domestic production. 
D)  cheaper imports can reduce incomes of the owners of the domestic firms competing with the cheaper imports.

Question 10

The current account balance on goods and services is:

Accepted Answer

A)  C + I +G 
B)  C + I + G + M. 
C)  C + I + G + (X - M). 
D)  (X - M). 
A)  C + I +G 
B)  C + I + G + M. 
C)  C + I + G + (X - M). 
D)  (X - M).

Question 11

If a country's goods exports are less than its goods imports, then it experiences a:

Accepted Answer

A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  balance of trade surplus. 
D)  balance of trade deficit. 
A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  balance of trade surplus. 
D)  balance of trade deficit.

Question 12

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

Accepted Answer

A) True 
 B)False

Question 13

If a small country is protecting its industry that might mean that:

Accepted Answer

A)  tariffs are necessary because otherwise wages in the small country will be very low. 
B)  tariffs are necessary to protect employment in the small country. 
C)  workers in other countries are more productive than workers in the small country. 
D)  it is too small to be able to achieve economies of scale in this industry. 
A)  tariffs are necessary because otherwise wages in the small country will be very low. 
B)  tariffs are necessary to protect employment in the small country. 
C)  workers in other countries are more productive than workers in the small country. 
D)  it is too small to be able to achieve economies of scale in this industry.

Question 14

If Australia has a capital account surplus, this indicates:

Accepted Answer

A)  Australians made more investments overseas than foreign interests made in Australia. 
B)  Australia has exported more goods and services than it imported. 
C)  Australia has imported more goods and services than it exported. 
D)  foreign interests made more investments in Australia than Australians made overseas. 
A)  Australians made more investments overseas than foreign interests made in Australia. 
B)  Australia has exported more goods and services than it imported. 
C)  Australia has imported more goods and services than it exported. 
D)  foreign interests made more investments in Australia than Australians made overseas.

Question 15

If country A lowers its tariffs even if country B doesn't, then:

Accepted Answer

A)  only country A will be at a disadvantage. 
B)  both countries will be worse off. 
C)  both countries will be better off. 
D)  country A will be better off than if it kept tariffs high. 
A)  only country A will be at a disadvantage. 
B)  both countries will be worse off. 
C)  both countries will be better off. 
D)  country A will be better off than if it kept tariffs high.

Question 16

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country should specialise in producing cars?

Accepted Answer

A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing wheat. 
A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing wheat.

Question 17

If it costs the DuPont Chemical Company more to make the chemical flaxinate in the United States than it does to make it in Taiwan, the Taiwanese must have:

Accepted Answer

A)  lower demand for flaxinate. 
B)  tariffs on flaxinate. 
C)  inefficient markets. 
D)  an absolute advantage in flaxinate production. 
A)  lower demand for flaxinate. 
B)  tariffs on flaxinate. 
C)  inefficient markets. 
D)  an absolute advantage in flaxinate production.

Question 18

The purchase of Australian assets by foreigners is a:

Accepted Answer

A)  capital inflow. 
B)  capital outflow. 
C)  current account deficit. 
D)  unilateral transfer. 
A)  capital inflow. 
B)  capital outflow. 
C)  current account deficit. 
D)  unilateral transfer.

Question 19

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing wheat?

Accepted Answer

A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing cars. 
A)  Australia and Malaysia. 
B)  Australia. 
C)  Malaysia. 
D)  Both countries have to specialise in producing cars.

Question 20

By continually running current account deficits, Australia:

Accepted Answer

A)  has been experiencing a lower standard of living than it otherwise might have. 
B)  has encouraged continual capital account deficits. 
C)  is accumulating more assets overseas than foreign interests accumulate here. 
D)  is effectively spending more than it is earning. 
A)  has been experiencing a lower standard of living than it otherwise might have. 
B)  has encouraged continual capital account deficits. 
C)  is accumulating more assets overseas than foreign interests accumulate here. 
D)  is effectively spending more than it is earning.

The account which records a nation's foreign economic transactions is called:

Australia largely exports _ and imports _.

Narrbegin Exhibit 18.1 Production possibilities curves -In Exhibit 18.1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialise in the production of:

Assume Australia can use a given amount of its resources to produce either 20 airplanes or eight automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. Australia should specialise in:

Narrbegin Exhibit 18.2 Production possibilities curves for US and Mexico -As shown in Exhibit 18.2, in Mexico, producing one additional ton of wheat costs:

The Japanese demand curve for dollars is downward-sloping because a:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing cars?

The current account deficit represents the extent to which a nation's:

Free trade can be strongly opposed because:

The current account balance on goods and services is:

If a country's goods exports are less than its goods imports, then it experiences a:

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

If a small country is protecting its industry that might mean that:

If Australia has a capital account surplus, this indicates:

If country A lowers its tariffs even if country B doesn't, then:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country should specialise in producing cars?

If it costs the DuPont Chemical Company more to make the chemical flaxinate in the United States than it does to make it in Taiwan, the Taiwanese must have:

The purchase of Australian assets by foreigners is a:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing wheat?

By continually running current account deficits, Australia:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

Filters

Exam 19: International Trade and Finance

The account which records a nation's foreign economic transactions is called:

Australia largely exports _____ and imports _____.

Narrbegin Exhibit 18.1 Production possibilities curves -In Exhibit 18.1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialise in the production of:

Assume Australia can use a given amount of its resources to produce either 20 airplanes or eight automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. Australia should specialise in:

Narrbegin Exhibit 18.2 Production possibilities curves for US and Mexico -As shown in Exhibit 18.2, in Mexico, producing one additional ton of wheat costs:

The Japanese demand curve for dollars is downward-sloping because a:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing cars?

The current account deficit represents the extent to which a nation's:

Free trade can be strongly opposed because:

The current account balance on goods and services is:

If a country's goods exports are less than its goods imports, then it experiences a:

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

If a small country is protecting its industry that might mean that:

If Australia has a capital account surplus, this indicates:

If country A lowers its tariffs even if country B doesn't, then:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country should specialise in producing cars?

If it costs the DuPont Chemical Company more to make the chemical flaxinate in the United States than it does to make it in Taiwan, the Taiwanese must have:

The purchase of Australian assets by foreigners is a:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country has a comparative advantage in producing wheat?

By continually running current account deficits, Australia:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

Filters

Australia largely exports _ and imports _.