Question 1

What is producer surplus? How is it different from consumer surplus?

Accepted Answer

Consumer surplus is the difference betwe

Question 2

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.Which of the following statements is true?

Accepted Answer

A) Alpha should export to Omega, but Omega should not export to Alpha. 
B) Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible. 
C) If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain by specialization and trade. 
D) If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain by specialization and trade. 
E) Since Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible. 
A) Alpha should export to Omega, but Omega should not export to Alpha. 
B) Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible. 
C) If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain by specialization and trade. 
D) If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain by specialization and trade. 
E) Since Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible.

Question 3

Imposing a tariff brings about:

Accepted Answer

A) higher prices and revenues to domestic producers. 
B) lower sales and revenues to foreign producers. 
C) higher prices to domestic consumers. 
D) increased revenues to the government. 
E) all of the above. 
A) higher prices and revenues to domestic producers. 
B) lower sales and revenues to foreign producers. 
C) higher prices to domestic consumers. 
D) increased revenues to the government. 
E) all of the above.

Question 4

Import quotas contribute to higher prices of products imported into the U.S., but tariffs do not.

Accepted Answer

A) True 
 B)False

Question 5

If real interest rates in the United States rise relative to real interest rates in other countries, other things being equal,

Accepted Answer

A) the exchange value of the dollar would decline relative to other currencies. 
B) the exchange value of the dollar would increase relative to other currencies. 
C) there would likely be no effect on the exchange value of the dollar relative to other currencies. 
D) there would be an indeterminate effect on the exchange value of the dollar relative to other currencies. 
A) the exchange value of the dollar would decline relative to other currencies. 
B) the exchange value of the dollar would increase relative to other currencies. 
C) there would likely be no effect on the exchange value of the dollar relative to other currencies. 
D) there would be an indeterminate effect on the exchange value of the dollar relative to other currencies.

Question 6

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

Accepted Answer

A) It will increase the supply of U.S. dollars. 
B) It will decrease the supply of U.S. dollars. 
C) It will increase the demand for U.S. dollars. 
D) It will decrease the demand for U.S. dollars. 
A) It will increase the supply of U.S. dollars. 
B) It will decrease the supply of U.S. dollars. 
C) It will increase the demand for U.S. dollars. 
D) It will decrease the demand for U.S. dollars.

Question 7

It has become largely accepted since the end of the Bretton Woods agreement that:

Accepted Answer

A) the gold standard was superior to anything that has come along since. 
B) governments have no role whatsoever in determining exchange rates. 
C) it is not necessary to fix exchange rates for long periods of time. 
D) floating rates simply have not worked. 
A) the gold standard was superior to anything that has come along since. 
B) governments have no role whatsoever in determining exchange rates. 
C) it is not necessary to fix exchange rates for long periods of time. 
D) floating rates simply have not worked.

Question 8

Which of the following is an incorrect observation?

Accepted Answer

A) Import tariffs benefit domestic producers and the government, but harms domestic consumers. 
B) Gains from trade in terms of world output are reduced by export subsidies. 
C) The overall domestic employment effects of a tariff imposition are likely to be positive. 
D) If the imposition of a tariff leads to retaliatory tariffs by other countries, domestic employment outside the industry gaining the tariff protection would likely suffer. 
A) Import tariffs benefit domestic producers and the government, but harms domestic consumers. 
B) Gains from trade in terms of world output are reduced by export subsidies. 
C) The overall domestic employment effects of a tariff imposition are likely to be positive. 
D) If the imposition of a tariff leads to retaliatory tariffs by other countries, domestic employment outside the industry gaining the tariff protection would likely suffer.

Question 9

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.

Accepted Answer

A) True 
 B)False

Question 10

If the interest rates available on investments in two countries were the same, you would be less likely to invest in assets of the country:

Accepted Answer

A) whose currency was likely to appreciate. 
B) whose currency was likely to depreciate. 
C) whose currency had the greatest exchange value. 
D) none of the above; it would not matter what was likely to happen to a country's currency exchange rate. 
A) whose currency was likely to appreciate. 
B) whose currency was likely to depreciate. 
C) whose currency had the greatest exchange value. 
D) none of the above; it would not matter what was likely to happen to a country's currency exchange rate.

Question 11

The balance on goods and services is the same as the balance on the current account.

Accepted Answer

A) True 
 B)False

Question 12

A student group from your university touring the United Kingdom:

Accepted Answer

A) creates a demand for dollars and a supply of English pounds in the foreign currency market. 
B) creates a demand for English pounds and a supply of dollars in the foreign currency market. 
C) causes the U.S. dollar to appreciate. 
D) causes the English pound to depreciate. 
A) creates a demand for dollars and a supply of English pounds in the foreign currency market. 
B) creates a demand for English pounds and a supply of dollars in the foreign currency market. 
C) causes the U.S. dollar to appreciate. 
D) causes the English pound to depreciate.

Question 13

A tariff can be defined simply as a

Accepted Answer

A) tax on imports. 
B) tax on exports. 
C) legal limit on imports. 
D) legal limit on exports. 
A) tax on imports. 
B) tax on exports. 
C) legal limit on imports. 
D) legal limit on exports.

Question 14

Which of the following is a credit in the U.S.current account?

Accepted Answer

A) A U.S. consumer buys a TV made in Malaysia. 
B) Singapore Airlines buys a jumbo jet made in the United States. 
C) British investors purchase U.S. government bonds. 
D) An American citizen flies to Lithuania on the Lithuanian Airlines. 
A) A U.S. consumer buys a TV made in Malaysia. 
B) Singapore Airlines buys a jumbo jet made in the United States. 
C) British investors purchase U.S. government bonds. 
D) An American citizen flies to Lithuania on the Lithuanian Airlines.

Question 15

Samoa could produce either 3 coconuts or 12 pineapples per worker, while Guam could produce either 5 coconuts or 20 pineapples per worker.In this situation:

Accepted Answer

A) if trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. 
B) Guam will be better off if it exports coconuts and imports pineapples. 
C) both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples. 
D) mutually beneficial trade cannot occur. 
A) if trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. 
B) Guam will be better off if it exports coconuts and imports pineapples. 
C) both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples. 
D) mutually beneficial trade cannot occur.

Question 16

In Bangladesh one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore one person can produce 400 pounds of rice or 200 shirts in one year.Which of the following statements is true?

Accepted Answer

A) Singapore has a comparative advantage in the production of rice. 
B) Singapore has both an absolute and comparative advantage in the production of rice. 
C) Bangladesh has a comparative advantage in the production of rice. 
D) Bangladesh has an absolute advantage in the production of rice. 
A) Singapore has a comparative advantage in the production of rice. 
B) Singapore has both an absolute and comparative advantage in the production of rice. 
C) Bangladesh has a comparative advantage in the production of rice. 
D) Bangladesh has an absolute advantage in the production of rice.

Question 17

A country that is half as productive at producing some goods as another country, but is one quarter as productive at producing others, will not be able to gain from trade.

Accepted Answer

A) True 
 B)False

Question 18

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 apples for Alpha and Omega, respectively, are:

Accepted Answer

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

Question 19

If your aunt in Italy lends you $5,000 to complete your American education, this will be entered on the U.S.balance of payments account as a:

Accepted Answer

A) debit (-). 
B) credit (+). 
C) non-entry, since it will affect Italy's payments but not those of the United States. 
D) devaluation, since the net value of the American capital stock will be reduced by the amount of your debt. 
A) debit (-). 
B) credit (+). 
C) non-entry, since it will affect Italy's payments but not those of the United States. 
D) devaluation, since the net value of the American capital stock will be reduced by the amount of your debt.

Question 20

At any given moment there is one exchange rate:

Accepted Answer

A) for all the world's currencies. 
B) for currencies in the free world. 
C) between every pair of currencies. 
D) established by the Federal Reserve System. 
A) for all the world's currencies. 
B) for currencies in the free world. 
C) between every pair of currencies. 
D) established by the Federal Reserve System.

What is producer surplus? How is it different from consumer surplus?

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.Which of the following statements is true?

Imposing a tariff brings about:

Import quotas contribute to higher prices of products imported into the U.S., but tariffs do not.

If real interest rates in the United States rise relative to real interest rates in other countries, other things being equal,

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

It has become largely accepted since the end of the Bretton Woods agreement that:

Which of the following is an incorrect observation?

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.

If the interest rates available on investments in two countries were the same, you would be less likely to invest in assets of the country:

The balance on goods and services is the same as the balance on the current account.

A student group from your university touring the United Kingdom:

A tariff can be defined simply as a

Which of the following is a credit in the U.S.current account?

Samoa could produce either 3 coconuts or 12 pineapples per worker, while Guam could produce either 5 coconuts or 20 pineapples per worker.In this situation:

In Bangladesh one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore one person can produce 400 pounds of rice or 200 shirts in one year.Which of the following statements is true?

A country that is half as productive at producing some goods as another country, but is one quarter as productive at producing others, will not be able to gain from trade.

If your aunt in Italy lends you $5,000 to complete your American education, this will be entered on the U.S.balance of payments account as a:

At any given moment there is one exchange rate:

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

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Exam 18: International Economics

What is producer surplus? How is it different from consumer surplus?

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.Which of the following statements is true?

Imposing a tariff brings about:

Import quotas contribute to higher prices of products imported into the U.S., but tariffs do not.

If real interest rates in the United States rise relative to real interest rates in other countries, other things being equal,

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?

It has become largely accepted since the end of the Bretton Woods agreement that:

Which of the following is an incorrect observation?

The exchange rate of a currency will increase if the quantity demanded exceeds quantity supplied at the current exchange rate.

If the interest rates available on investments in two countries were the same, you would be less likely to invest in assets of the country:

The balance on goods and services is the same as the balance on the current account.

A student group from your university touring the United Kingdom:

A tariff can be defined simply as a

Which of the following is a credit in the U.S.current account?

Samoa could produce either 3 coconuts or 12 pineapples per worker, while Guam could produce either 5 coconuts or 20 pineapples per worker.In this situation:

In Bangladesh one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore one person can produce 400 pounds of rice or 200 shirts in one year.Which of the following statements is true?

A country that is half as productive at producing some goods as another country, but is one quarter as productive at producing others, will not be able to gain from trade.

If your aunt in Italy lends you $5,000 to complete your American education, this will be entered on the U.S.balance of payments account as a:

At any given moment there is one exchange rate:

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