Question 1

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

A voluntary export restraint is an agree

Question 2

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Accepted Answer

A) China also has an absolute advantage in producing corn relative to Japan. 
B) China has a lower opportunity cost of producing corn relative to Japan. 
C) Japan has an absolute disadvantage in producing corn relative to China. 
D) Labor costs are higher for corn producers in Japan than in China. 
A) China also has an absolute advantage in producing corn relative to Japan. 
B) China has a lower opportunity cost of producing corn relative to Japan. 
C) Japan has an absolute disadvantage in producing corn relative to China. 
D) Labor costs are higher for corn producers in Japan than in China.

Question 3

Wall Street,in the borough of Manhattan in New York City,is the heart of the U.S.financial system,where banks,brokerage houses,other financial firms,and the New York Stock Exchange are all located.What is the reason for New York City's comparative advantage in the financial market?

Accepted Answer

A) the development of superior information technology 
B) an abundant supply of skilled labor 
C) New York City has one of the largest sea ports in the world. 
D) external economies 
A) the development of superior information technology 
B) an abundant supply of skilled labor 
C) New York City has one of the largest sea ports in the world. 
D) external economies

Question 4

The process of countries becoming more open to foreign trade and investment is known as

Accepted Answer

A) autarky. 
B) foreign exchange. 
C) globalization. 
D) protectionism. 
A) autarky. 
B) foreign exchange. 
C) globalization. 
D) protectionism.

Question 5

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

Accepted Answer

Higher incomes in the United States will

Question 6

Figure 19-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 19-3 illustrates the impact of the quota.
-Refer to Figure 19-3.What is the area that represents the deadweight loss as a result of the quota?

Accepted Answer

A) G + H 
B) G + H + I + J 
C) E + I + J + M 
D) E + M 
A) G + H 
B) G + H + I + J 
C) E + I + J + M 
D) E + M

Question 7

Selling a product at a price below its cost is known as dumping.

Accepted Answer

A) True 
 B)False

Question 8

Figure 19-6  
-Refer to Figure 19-6.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

Accepted Answer

A) Supply would decrease,demand would decrease and the economy moves from B to C to D. 
B) Supply would increase,demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease,demand would increase and the economy moves from A to D to C. 
D) Supply would increase,demand would increase and the economy moves from D to A to B. 
A) Supply would decrease,demand would decrease and the economy moves from B to C to D. 
B) Supply would increase,demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease,demand would increase and the economy moves from A to D to C. 
D) Supply would increase,demand would increase and the economy moves from D to A to B.

Question 9

Figure 19-2   Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff.
-Refer to Figure 19-2.The increase in domestic producer surplus as a result of the tariff is equal to the area

Accepted Answer

A) C. 
B) C + G. 
C) A + C + G. 
D) C + D + G + H + I. 
A) C. 
B) C + G. 
C) A + C + G. 
D) C + D + G + H + I.

Question 10

Figure 19-1   Figure 19-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 19-1.Under autarky,the deadweight loss is

Accepted Answer

A) $0. 
B) $15. 
C) $30. 
D) $40. 
A) $0. 
B) $15. 
C) $30. 
D) $40.

Question 11

Which of the following is not a source of comparative advantage?

Accepted Answer

A) relative abundance of labor and capital 
B) technology 
C) climate and natural resources 
D) a strong foreign currency exchange rate 
A) relative abundance of labor and capital 
B) technology 
C) climate and natural resources 
D) a strong foreign currency exchange rate

Question 12

Figure 19-2   Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff.
-Refer to Figure 19-2.If the tariff was replaced by a quota which limited rice imports to 16 million pounds,the amount of revenue received by rice importers would equal

Accepted Answer

A) $6.4 million. 
B) $9.6 million. 
C) $16 million. 
D) $19.8 million. 
A) $6.4 million. 
B) $9.6 million. 
C) $16 million. 
D) $19.8 million.

Question 13

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Accepted Answer

A) a non-tariff trade barrier. 
B) an export quota. 
C) an import quota. 
D) a voluntary export restraint. 
A) a non-tariff trade barrier. 
B) an export quota. 
C) an import quota. 
D) a voluntary export restraint.

Question 14

An appreciating yen makes Japanese products

Accepted Answer

A) more expensive in foreign markets. 
B) less expensive in foreign markets. 
C) more expensive in the Japanese market. 
D) more expensive in both foreign markets and the Japanese market. 
A) more expensive in foreign markets. 
B) less expensive in foreign markets. 
C) more expensive in the Japanese market. 
D) more expensive in both foreign markets and the Japanese market.

Question 15

Figure 19-1   Figure 19-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

Accepted Answer

A) The price equals $24 and imports equal 20 units. 
B) The price falls to $24 and imports equal 5 units. 
C) The price falls to $18 and imports equal 15 units. 
D) The price equals $18 and imports equals 10 units. 
A) The price equals $24 and imports equal 20 units. 
B) The price falls to $24 and imports equal 5 units. 
C) The price falls to $18 and imports equal 15 units. 
D) The price equals $18 and imports equals 10 units.

Question 16

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

Accepted Answer

A) $1.32 
B) $2.23 
C) $2.75 
D) $2.81 
A) $1.32 
B) $2.23 
C) $2.75 
D) $2.81

Question 17

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro,then

Accepted Answer

A) both the euro and dollar have appreciated. 
B) both the euro and dollar have depreciated. 
C) the euro has appreciated and the dollar has depreciated. 
D) the euro has depreciated and the dollar has appreciated. 
A) both the euro and dollar have appreciated. 
B) both the euro and dollar have depreciated. 
C) the euro has appreciated and the dollar has depreciated. 
D) the euro has depreciated and the dollar has appreciated.

Question 18

Figure 19-1   Figure 19-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 19-1.Under autarky,the consumer surplus is ________ and the producer surplus is ________.

Accepted Answer

A) $195;$105 
B) $300;$285 
C) $260;$40 
D) $555;$105 
A) $195;$105 
B) $300;$285 
C) $260;$40 
D) $555;$105

Question 19

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

Accepted Answer

A) The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded cannot be determined. 
B) The equilibrium exchange rate will decrease,and the equilibrium quantity of dollars traded cannot be determined. 
C) The equilibrium exchange rate cannot be determined,and the equilibrium quantity of dollars traded will increase. 
D) The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded will increase. 
A) The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded cannot be determined. 
B) The equilibrium exchange rate will decrease,and the equilibrium quantity of dollars traded cannot be determined. 
C) The equilibrium exchange rate cannot be determined,and the equilibrium quantity of dollars traded will increase. 
D) The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded will increase.

Question 20

Figure 19-2   Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff.
-Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Accepted Answer

A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B. 
A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B.

Distinguish between a voluntary export restraint and a quota.

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Wall Street,in the borough of Manhattan in New York City,is the heart of the U.S.financial system,where banks,brokerage houses,other financial firms,and the New York Stock Exchange are all located.What is the reason for New York City's comparative advantage in the financial market?

The process of countries becoming more open to foreign trade and investment is known as

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.What is the area that represents the deadweight loss as a result of the quota?

Selling a product at a price below its cost is known as dumping.

Figure 19-6 -Refer to Figure 19-6.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The increase in domestic producer surplus as a result of the tariff is equal to the area

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the deadweight loss is

Which of the following is not a source of comparative advantage?

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

An appreciating yen makes Japanese products

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro,then

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the consumer surplus is and the producer surplus is .

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Exam 19: Comparative Advantage,international Trade,and Exchange Rates

Distinguish between a voluntary export restraint and a quota.

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Wall Street,in the borough of Manhattan in New York City,is the heart of the U.S.financial system,where banks,brokerage houses,other financial firms,and the New York Stock Exchange are all located.What is the reason for New York City's comparative advantage in the financial market?

The process of countries becoming more open to foreign trade and investment is known as

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.What is the area that represents the deadweight loss as a result of the quota?

Selling a product at a price below its cost is known as dumping.

Figure 19-6 -Refer to Figure 19-6.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The increase in domestic producer surplus as a result of the tariff is equal to the area

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the deadweight loss is

Which of the following is not a source of comparative advantage?

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

An appreciating yen makes Japanese products

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro,then

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the consumer surplus is ________ and the producer surplus is ________.

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the consumer surplus is and the producer surplus is .