Question 1

If as a result of NAFTA the demand for American exports rises, it would tend to increase the exchange value of the U.S.dollar as a result.

Accepted Answer

A) True 
 B)False

Question 2

The record of all international financial transactions in which a nation has engaged over a year is known as the:

Accepted Answer

A) current account. 
B) capital account. 
C) balance of payments. 
D) the unilateral transfers balance. 
A) current account. 
B) capital account. 
C) balance of payments. 
D) the unilateral transfers balance.

Question 3

Relative to a no-international-trade initial situation, if the United States exported wine, the U.S.domestic price of wine:

Accepted Answer

A) would rise, but domestic output would fall. 
B) would fall, but domestic output would rise. 
C) would rise, and domestic output would rise. 
D) would fall, and domestic output would fall. 
A) would rise, but domestic output would fall. 
B) would fall, but domestic output would rise. 
C) would rise, and domestic output would rise. 
D) would fall, and domestic output would fall.

Question 4

What factors will shift the supply and demand for currency?

Accepted Answer

Any changes in tastes, income

Question 5

Prior to 1973, the world operated on a system of fixed exchange rates called the Bretton Woods system.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would cause a decrease in the exchange value of the U.S.dollar?

Accepted Answer

A) A decrease in the amount of foreign debt purchased by U.S. citizens 
B) An increase in U.S. exports 
C) An increase in U.S. imports 
D) Increased demand by foreigners to buy U.S. government securities 
A) A decrease in the amount of foreign debt purchased by U.S. citizens 
B) An increase in U.S. exports 
C) An increase in U.S. imports 
D) Increased demand by foreigners to buy U.S. government securities

Question 7

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for Euros.

Accepted Answer

A) decrease; increase. 
B) not change; increase. 
C) increase; increase. 
D) increase; decrease. 
E) not change; decrease. 
A) decrease; increase. 
B) not change; increase. 
C) increase; increase. 
D) increase; decrease. 
E) not change; decrease.

Question 8

If incomes decrease in the United States, Americans will buy more goods, including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for Euros.

Accepted Answer

A) True 
 B)False

Question 9

What matters most in determining the efficient distribution of production over the world is

Accepted Answer

A) absolute advantage. 
B) efficiency. 
C) the stock of resources. 
D) comparative advantage. 
A) absolute advantage. 
B) efficiency. 
C) the stock of resources. 
D) comparative advantage.

Question 10

Which of the following is not a result we would expect to result from a tariff on leather shoes?

Accepted Answer

A) The price of leather shoes in the U.S. would increase. 
B) The amount of shoes imported into the U.S. would decline. 
C) Fewer pairs of shoes would be sold in the U.S. 
D) Domestic producers would sell fewer shoes at the higher prices. 
A) The price of leather shoes in the U.S. would increase. 
B) The amount of shoes imported into the U.S. would decline. 
C) Fewer pairs of shoes would be sold in the U.S. 
D) Domestic producers would sell fewer shoes at the higher prices.

Question 11

Which of the following would most likely cause a nation's currency to depreciate?

Accepted Answer

A) an increase in domestic real interest rates 
B) an increase in exports coupled with a decline in imports 
C) an increase in the nation's inflation rate 
D) a balance of trade surplus 
A) an increase in domestic real interest rates 
B) an increase in exports coupled with a decline in imports 
C) an increase in the nation's inflation rate 
D) a balance of trade surplus

Question 12

If the Federal Reserve was to buy U.S.dollars on the foreign exchange market, a likely result will be:

Accepted Answer

A) a rightward shift in the dollar supply curve. 
B) at least a temporary decline in the exchange value of the U.S. dollar. 
C) at least a temporary increase in the exchange value of the U.S. dollar. 
D) none of these answers are true. 
A) a rightward shift in the dollar supply curve. 
B) at least a temporary decline in the exchange value of the U.S. dollar. 
C) at least a temporary increase in the exchange value of the U.S. dollar. 
D) none of these answers are true.

Question 13

A tariff differs from a quota in that a tariff is

Accepted Answer

A) levied on imports, whereas a quota is imposed on exports. 
B) levied on exports, whereas a quota is imposed on imports. 
C) a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. 
A) levied on imports, whereas a quota is imposed on exports. 
B) levied on exports, whereas a quota is imposed on imports. 
C) a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

Question 14

The exchange rate is the price of one currency in terms of a second currency.

Accepted Answer

A) True 
 B)False

Question 15

According to international trade theory, a country should:

Accepted Answer

A) import goods in which it has an absolute advantage. 
B) specialize in the production of the good in which it has an absolute disadvantage. 
C) export goods in which it has an comparative disadvantage. 
D) export goods when it has either a comparative or absolute disadvantage in producing them. 
E) specialize in the production of the good in which they have a comparative advantage. 
A) import goods in which it has an absolute advantage. 
B) specialize in the production of the good in which it has an absolute disadvantage. 
C) export goods in which it has an comparative disadvantage. 
D) export goods when it has either a comparative or absolute disadvantage in producing them. 
E) specialize in the production of the good in which they have a comparative advantage.

Question 16

Figure 18-A  
-Refer to Figure 18-A.The country should

Accepted Answer

A) export wheat, Q1 to Q3 
B) export wheat, Q1 to Q2 
C) import wheat, Q1 to Q2 
D) import wheat, Q1 to Q3 
A) export wheat, Q1 to Q3 
B) export wheat, Q1 to Q2 
C) import wheat, Q1 to Q2 
D) import wheat, Q1 to Q3

Question 17

Which of the following is false with reference to subsidies?

Accepted Answer

A) They reduce the cost of production. 
B) They transfer the income from tax payers to the exporters. 
C) They mean the nation is exporting products in which it does not have comparative advantage. 
D) They can lead to inefficiencies. 
A) They reduce the cost of production. 
B) They transfer the income from tax payers to the exporters. 
C) They mean the nation is exporting products in which it does not have comparative advantage. 
D) They can lead to inefficiencies.

Question 18

Because central banks intervene in currency markets, the term ____ has been used to describe the system.

Accepted Answer

A) organized 
B) planned 
C) dirty float 
D) flexible 
E) controlled 
A) organized 
B) planned 
C) dirty float 
D) flexible 
E) controlled

Question 19

If the United States could produce 4 tons of potatoes or 2 tons 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 20

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. computer equipment to a Canadian buyer 
D) the purchase of a Mexican shoe factory by a U.S. investor 
A) the spending of U.S. tourists in France 
B) the purchase of Japanese automobiles by American consumers 
C) the sale of U.S. computer equipment to a Canadian buyer 
D) the purchase of a Mexican shoe factory by a U.S. investor

If as a result of NAFTA the demand for American exports rises, it would tend to increase the exchange value of the U.S.dollar as a result.

The record of all international financial transactions in which a nation has engaged over a year is known as the:

Relative to a no-international-trade initial situation, if the United States exported wine, the U.S.domestic price of wine:

What factors will shift the supply and demand for currency?

Prior to 1973, the world operated on a system of fixed exchange rates called the Bretton Woods system.

Which of the following would cause a decrease in the exchange value of the U.S.dollar?

Reduced U.S.tastes for European goods would the supply of euros and the demand for Euros.

If incomes decrease in the United States, Americans will buy more goods, including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for Euros.

What matters most in determining the efficient distribution of production over the world is

Which of the following is not a result we would expect to result from a tariff on leather shoes?

Which of the following would most likely cause a nation's currency to depreciate?

If the Federal Reserve was to buy U.S.dollars on the foreign exchange market, a likely result will be:

A tariff differs from a quota in that a tariff is

The exchange rate is the price of one currency in terms of a second currency.

According to international trade theory, a country should:

Figure 18-A -Refer to Figure 18-A.The country should

Which of the following is false with reference to subsidies?

Because central banks intervene in currency markets, the term ____ has been used to describe the system.

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

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

If as a result of NAFTA the demand for American exports rises, it would tend to increase the exchange value of the U.S.dollar as a result.

The record of all international financial transactions in which a nation has engaged over a year is known as the:

Relative to a no-international-trade initial situation, if the United States exported wine, the U.S.domestic price of wine:

What factors will shift the supply and demand for currency?

Prior to 1973, the world operated on a system of fixed exchange rates called the Bretton Woods system.

Which of the following would cause a decrease in the exchange value of the U.S.dollar?

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for Euros.

If incomes decrease in the United States, Americans will buy more goods, including foreign goods.This increase in demand for foreign goods will cause an increase in the demand for Euros.

What matters most in determining the efficient distribution of production over the world is

Which of the following is not a result we would expect to result from a tariff on leather shoes?

Which of the following would most likely cause a nation's currency to depreciate?

If the Federal Reserve was to buy U.S.dollars on the foreign exchange market, a likely result will be:

A tariff differs from a quota in that a tariff is

The exchange rate is the price of one currency in terms of a second currency.

According to international trade theory, a country should:

Figure 18-A -Refer to Figure 18-A.The country should

Which of the following is false with reference to subsidies?

Because central banks intervene in currency markets, the term ____ has been used to describe the system.

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

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

Reduced U.S.tastes for European goods would the supply of euros and the demand for Euros.