Exam 18: International Economics

What will happen to the supply of dollars, the demand for dollars, and the equilibrium exchange rate of the dollar in each of the following cases? a.Americans buy more European goods. b.Europeans invest in U.S. stock market. c.European tourists flock to United States. d.Europeans buy U.S. government bonds. e.American tourists flock to Europe.

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound, imports of British goods into the U.S.tend to:

Exhibit 18-A -Refer to Exhibit 18-A.For Nation Z, the capital account balance for the year 2006 equals:

Figure 18-C -Refer to Figure 18-C.After the tariff, this country

Ceteris paribus, if the dollar appreciated in relation to a foreign currency, would the U.S.sell more goods or fewer goods to consumers in that foreign country? Why?

Which of the following will create a demand for or a supply of currencies?

A reduction in the tariff on imported steel would most likely benefit

Figure 18-C -Refer to Figure 18-C.After the tariff, domestic consumers

One of the disadvantages of a fixed exchange rate system is:

What are the commonly used arguments for the use of tariffs?

A decrease in foreign demand for U.S.exports will ____ the demand for U.S.dollars and cause the U.S.dollar to ____ in value.

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

When a country allows trade and becomes an exporter of goods, producers gain more than consumers lose.

An import quota or tariff on French wine that raises the prices for wine will probably

Import tariffs generally ____ the output of domestic producers of the affected products and also ____ the output of domestic exporters.

In 2009 the U.S.current account balance was zero.

Import tariffs in the United States are likely to reduce U.S.exports, both because of the resulting decrease in foreign earnings of dollars from exports to the United States and because of the likelihood of increases in other countries' import restrictions against U.S.goods.

Steve and Lee have been shipwrecked on a deserted island in the Hawaiian chain.Their economic activity consists of either gathering pineapples or fishing.We know Steve can catch four fish in one hour or harvest two baskets of pineapples.In the same time Lee can reel in two fish or harvest two baskets of pineapples.If they each spend four hours a day fishing and four hours a day harvesting pineapples, how many of each will Steve produce? How many will Lee produce? What will their total production be? If Steve and Lee don't trade with each other, who is better off? Why? Assume Lee and Steve both operate on straight-line production possibilities curves.What is Steve's opportunity cost of producing a basket of pineapples? Of a producing a fish? What is Lee's opportunity cost of producing a basket of pineapples? Of a producing a fish? If Steve and Lee traded, who has the comparative advantage in fish? Pineapples? If Lee and Steve specialize in and trade the good in which they have a comparative advantage, how much of each good will be produced in an eight hour day? What are the gains from trade?

If the interest rate in two countries were the same, you would prefer to invest in assets of the country:

If European incomes rose, European tariffs on U.S.goods increased, or their tastes for American goods increased, Europeans would demand ____ U.S.goods, leading them to ____ their supply of Euros to obtain the added dollars necessary to make those purchases.