Question 1

The supply and demand mechanism will bring an international market into equilibrium

Accepted Answer

A) at a price below the domestic price in an exporting country. 
B) where domestic supplies are less than domestic demand in an exporting country. 
C) with an exporting nation's price higher than the importing nation's price. 
D) when the quantity of exports supplied by the exporters beyond their domestic consumption is equal to the quantity of imports demanded by the importers. 
A) at a price below the domestic price in an exporting country. 
B) where domestic supplies are less than domestic demand in an exporting country. 
C) with an exporting nation's price higher than the importing nation's price. 
D) when the quantity of exports supplied by the exporters beyond their domestic consumption is equal to the quantity of imports demanded by the importers.

Question 2

If it can be shown that a tariff on steel imports will increase employment in the steel industry, we can be sure that the effect of the tariff on U.S.employment will also be positive.

Accepted Answer

A) True 
 B)False

Question 3

If the United States could produce 1/2 ton of potatoes or 1 ton of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing wheat is ____ and the country with the absolute advantage in producing potatoes is ____.

Accepted Answer

A) the United States; the United States 
B) the United States; Ireland 
C) Ireland; the United States 
D) Ireland; Ireland 
A) the United States; the United States 
B) the United States; Ireland 
C) Ireland; the United States 
D) Ireland; Ireland

Question 4

Exhibit 18-A  
-Refer to Exhibit 18-A.For Nation Z, the statistical discrepancy for the year 2006 equals:

Accepted Answer

A) -$7 billion. 
B) -$8 billion. 
C) $90 billion. 
D) $7 billion. 
E) $8 billion. 
A) -$7 billion. 
B) -$8 billion. 
C) $90 billion. 
D) $7 billion. 
E) $8 billion.

Question 5

Assume that Germany can produce 10 million bottles of beer or 4 million bottles of vodka.Further assume that Russia can produce 7 million bottles of beer or 3 million bottles of vodka.As a result, which of the following is true with regard to absolute and comparative advantage?

Accepted Answer

A) Germany has the absolute advantage in beer and the comparative advantage in beer. 
B) Germany has the absolute advantage in beer and the comparative advantage in vodka. 
C) Russia has the absolute advantage in beer and the comparative advantage in beer. 
D) Russia has the absolute advantage in beer and the comparative advantage in vodka. 
A) Germany has the absolute advantage in beer and the comparative advantage in beer. 
B) Germany has the absolute advantage in beer and the comparative advantage in vodka. 
C) Russia has the absolute advantage in beer and the comparative advantage in beer. 
D) Russia has the absolute advantage in beer and the comparative advantage in vodka.

Question 6

Exchange rates determined by the laws of supply and demand are called:

Accepted Answer

A) equilibrium exchange rates. 
B) fixed exchange rates. 
C) dirty exchange rates. 
D) floating exchange rates. 
A) equilibrium exchange rates. 
B) fixed exchange rates. 
C) dirty exchange rates. 
D) floating exchange rates.

Question 7

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a ____ exists at the current exchange rate that will put ____ pressure on the exchange value of a dollar.

Accepted Answer

A) surplus of dollars; downward 
B) surplus of dollars; upward 
C) shortage of dollars; downward 
D) shortage of dollars; upward 
A) surplus of dollars; downward 
B) surplus of dollars; upward 
C) shortage of dollars; downward 
D) shortage of dollars; upward

Question 8

Which of the following is not a result of a U.S.tariff on foreign autos?

Accepted Answer

A) increase the price of imported autos 
B) increase the price of domestic autos 
C) decrease the quantity of foreign autos purchased by U.S. consumers 
D) decrease the quantity of domestic autos purchased by U.S. consumers 
E) Both B and D above would not be results. 
A) increase the price of imported autos 
B) increase the price of domestic autos 
C) decrease the quantity of foreign autos purchased by U.S. consumers 
D) decrease the quantity of domestic autos purchased by U.S. consumers 
E) Both B and D above would not be results.

Question 9

Which of the following observations is true of subsidies?

Accepted Answer

A) They act as barriers to trade. 
B) They reduce the amounts of actual labor, raw material, and capital costs of production. 
C) They are capable of distorting trade patterns. 
D) They reduce inefficiencies. 
A) They act as barriers to trade. 
B) They reduce the amounts of actual labor, raw material, and capital costs of production. 
C) They are capable of distorting trade patterns. 
D) They reduce inefficiencies.

Question 10

Suppose that the dollar value rises from 100 to 125 yen.As a result,

Accepted Answer

A) exports to Japan will likely increase. 
B) Japanese tourists will more likely visit the United States. 
C) U.S. businesses will be less likely to use Japanese shipping lines to transport their products. 
D) U.S. consumers will more likely buy Japanese-made automobiles. 
A) exports to Japan will likely increase. 
B) Japanese tourists will more likely visit the United States. 
C) U.S. businesses will be less likely to use Japanese shipping lines to transport their products. 
D) U.S. consumers will more likely buy Japanese-made automobiles.

Question 11

Trade occurs when a country has an absolute advantage and not just a comparative advantage over another country.

Accepted Answer

A) True 
 B)False

Question 12

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, the price of U.S.goods to British importers will:

Accepted Answer

A) rise. 
B) fall. 
C) stay the same. 
D) change in an indeterminate direction. 
A) rise. 
B) fall. 
C) stay the same. 
D) change in an indeterminate direction.

Question 13

Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 24 units of food per year or 12 units of clothing.Which of the following is true?

Accepted Answer

A) Iceland has both a comparative and absolute advantage in producing food. 
B) Iceland has a comparative advantage, but not an absolute advantage in producing food. 
C) Lavaland has both a comparative and absolute advantage in producing clothing. 
D) Lavaland has a comparative advantage, but not an absolute advantage in producing clothing. 
E) None of the above are true. 
A) Iceland has both a comparative and absolute advantage in producing food. 
B) Iceland has a comparative advantage, but not an absolute advantage in producing food. 
C) Lavaland has both a comparative and absolute advantage in producing clothing. 
D) Lavaland has a comparative advantage, but not an absolute advantage in producing clothing. 
E) None of the above are true.

Question 14

Which of the following would increase the demand for U.S.dollars in the foreign exchange market?

Accepted Answer

A) the spending of U.S. tourists in France 
B) the purchase of Japanese automobiles by American consumers 
C) the sale of U.S. automobiles to French consumers 
D) provision of bilateral trade agreements 
A) the spending of U.S. tourists in France 
B) the purchase of Japanese automobiles by American consumers 
C) the sale of U.S. automobiles to French consumers 
D) provision of bilateral trade agreements

Question 15

When a country allows trade and becomes an importer of goods everyone benefits.

Accepted Answer

A) True 
 B)False

Question 16

Assume that the U.S.can produce either 10 million cell phones or 20 million picture frames and that Canada can produce either 2 million cell phones or 6 million picture frames.Based on this information, which of the following is true?

Accepted Answer

A) Both countries could benefit if the U.S. traded cell phones to Canada for picture frames. 
B) Both countries could benefit if the U.S. traded picture frames to Canada for cell phones. 
C) Canada could gain from trade but the U.S. could not. 
D) The U.S. could gain from trade but Canada could not. 
A) Both countries could benefit if the U.S. traded cell phones to Canada for picture frames. 
B) Both countries could benefit if the U.S. traded picture frames to Canada for cell phones. 
C) Canada could gain from trade but the U.S. could not. 
D) The U.S. could gain from trade but Canada could not.

Question 17

Fact Pattern 18-A
Refer to the following data:
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.
-Refer to Fact Pattern 18-A.The opportunity costs of producing 1 ton of oranges for Alpha and Omega, respectively, are:

Accepted Answer

A) 0.25 tons of apples; 0.5 tons of apples. 
B) 9 tons of apples; 4 tons of apples. 
C) 2 tons of apples; 4 tons of apples. 
D) 4 tons of apples; 2 tons of apples. 
E) 0.5 tons of apples; 0.25 tons of apples. 
A) 0.25 tons of apples; 0.5 tons of apples. 
B) 9 tons of apples; 4 tons of apples. 
C) 2 tons of apples; 4 tons of apples. 
D) 4 tons of apples; 2 tons of apples. 
E) 0.5 tons of apples; 0.25 tons of apples.

Question 18

The balance of trade records information about:

Accepted Answer

A) purchases of U.S. merchandise exports by foreigners. 
B) purchases of foreign financial assets by Americans. 
C) American purchases of foreign services while traveling abroad. 
D) errors and omissions. 
E) foreign investments in U.S. bonds, stocks, and other items 
A) purchases of U.S. merchandise exports by foreigners. 
B) purchases of foreign financial assets by Americans. 
C) American purchases of foreign services while traveling abroad. 
D) errors and omissions. 
E) foreign investments in U.S. bonds, stocks, and other items

Question 19

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

Accepted Answer

A) 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 demand of foreigners for the nation's exports. 
B) typically generates tax revenue while a quota does not. 
C) can easily be rescinded but a quota cannot. 
D) will reduce imports but a quota generally will not. 
A) 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 demand of foreigners for the nation's exports. 
B) typically generates tax revenue while a quota does not. 
C) can easily be rescinded but a quota cannot. 
D) will reduce imports but a quota generally will not.

Question 20

A country has an absolute advantage over another if it can produce a good with fewer resources.

Accepted Answer

A) True 
 B)False

The supply and demand mechanism will bring an international market into equilibrium

If it can be shown that a tariff on steel imports will increase employment in the steel industry, we can be sure that the effect of the tariff on U.S.employment will also be positive.

Exhibit 18-A -Refer to Exhibit 18-A.For Nation Z, the statistical discrepancy for the year 2006 equals:

Assume that Germany can produce 10 million bottles of beer or 4 million bottles of vodka.Further assume that Russia can produce 7 million bottles of beer or 3 million bottles of vodka.As a result, which of the following is true with regard to absolute and comparative advantage?

Exchange rates determined by the laws of supply and demand are called:

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a exists at the current exchange rate that will put pressure on the exchange value of a dollar.

Which of the following is not a result of a U.S.tariff on foreign autos?

Which of the following observations is true of subsidies?

Suppose that the dollar value rises from 100 to 125 yen.As a result,

Trade occurs when a country has an absolute advantage and not just a comparative advantage over another country.

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, the price of U.S.goods to British importers will:

Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 24 units of food per year or 12 units of clothing.Which of the following is true?

Which of the following would increase the demand for U.S.dollars in the foreign exchange market?

When a country allows trade and becomes an importer of goods everyone benefits.

Assume that the U.S.can produce either 10 million cell phones or 20 million picture frames and that Canada can produce either 2 million cell phones or 6 million picture frames.Based on this information, which of the following is true?

The balance of trade records information about:

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

A country has an absolute advantage over another if it can produce a good with fewer resources.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

Filters

Exam 18: International Economics

The supply and demand mechanism will bring an international market into equilibrium

If it can be shown that a tariff on steel imports will increase employment in the steel industry, we can be sure that the effect of the tariff on U.S.employment will also be positive.

Exhibit 18-A -Refer to Exhibit 18-A.For Nation Z, the statistical discrepancy for the year 2006 equals:

Assume that Germany can produce 10 million bottles of beer or 4 million bottles of vodka.Further assume that Russia can produce 7 million bottles of beer or 3 million bottles of vodka.As a result, which of the following is true with regard to absolute and comparative advantage?

Exchange rates determined by the laws of supply and demand are called:

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a ____ exists at the current exchange rate that will put ____ pressure on the exchange value of a dollar.

Which of the following is not a result of a U.S.tariff on foreign autos?

Which of the following observations is true of subsidies?

Suppose that the dollar value rises from 100 to 125 yen.As a result,

Trade occurs when a country has an absolute advantage and not just a comparative advantage over another country.

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, the price of U.S.goods to British importers will:

Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 24 units of food per year or 12 units of clothing.Which of the following is true?

Which of the following would increase the demand for U.S.dollars in the foreign exchange market?

When a country allows trade and becomes an importer of goods everyone benefits.

Assume that the U.S.can produce either 10 million cell phones or 20 million picture frames and that Canada can produce either 2 million cell phones or 6 million picture frames.Based on this information, which of the following is true?

The balance of trade records information about:

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

A country has an absolute advantage over another if it can produce a good with fewer resources.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

Filters

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a exists at the current exchange rate that will put pressure on the exchange value of a dollar.