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1) the uruguay round of trade negotiations lowered: a.trade sanctions levied against south africa b.trade sanctions levied against the soviet union c.tariffs, but not nontariff trade barriers d.tariffs as well as nontariff trade barriers 2) the operations of an mne […]

1) refer to table 2.2. according to the principle of comparative advantage: a.south korea should export steel b.south korea should export steel and vcrs c.japan should export steel d.japan should export steel and vcrs 2) ____ is the ability of […]

1) consider table 4.1. prior to the tariff, the total price of domestically-produced vcrs is: a.$150 b.$200 c.$225 d.$250 2) trade creation tends to more than offset trade diversion for a home country forming a customs union with partner countries […]

1) assume that the united states imports chemicals from germany. trade theory predicts that if the german government grants an export subsidy to its chemical firms, the overall welfare of the united states will increase. a.true b.false 2) referring to […]

1) an increase in import restrictions by the u.s. government tends to promote a merchandise-trade surplus. a.true b.false 2) following world war ii, the u.s.: a.became less open b.negotiated reductions in trade barriers with other countries c.passed a number of […]

1) assume the united states is a large consumer of steel that is able to influence the world price. its demand and supply schedules are respectively denoted by du.s. and su.s. in figure 4.2. the overall (united states plus world) […]

1) if the marginal propensity to save equals 0.2 and the marginal propensity to import equals 0.3, an autonomous decrease in investment spending of $1 million leads to a $2 million decrease in domestic income and a $600,000 decrease in […]

1) given an open economy with high capital mobility, all of the following statements are true except: a.fiscal policy is strengthened under fixed exchange rates b.monetary policy is weakened under fixed exchange rates c.monetary policy is strengthened under floating exchange […]

1) when manufacturing computer software, suppose that microsoft inc. uses labor and materials whose costs are denominated in dollars and francs respectively. if the dollar’s exchange value depreciates 10 percent against the franc, the franc-denominated cost of the firm’s software […]

1) according to the factor-endowment theory, a nation will import that good for which a large amount of the relatively abundant resource is used. a.true b.false 2) assume that general motors employs labor and materials, whose costs are denominated in […]

1) among the benefits that a regional trading arrangement can provide are all of these except: a.economies of large scale production b.specialization fostering c.attracting foreign investment d.a shorter production time 2) since 1974, the major industrial countries have operated under […]

1) most foreign direct investment in the united states occurs in: a.public utilities b.communications c.manufacturing d.mining and smelting 2) the world trade organization brings into the multilateral trading system manufactured goods and agricultural products, but not trade in services, intellectual […]

1) according to the principle of absolute advantage, international trade is beneficial to the world if one nation has an absolute cost advantage in the production of one good while the other nation has an absolute cost advantage in the […]

1) a debt buyback is a debt-reduction technique in which a government of a debtor nation buys loans from commercial banks at a discount. a.true b.false 2) figure 9.1 illustrates the market conditions facing sony company and american company initially […]

1) the only members of the general agreement on tariffs and trade and its successor, the world trade organization, are developing countries rather than developed countries. a.true b.false 2) assume the united states adopts a tariff quota on steel in […]

1) to keep the yen’s exchange value from appreciating against the dollar, japan’s exchange stabilization fund would buy yen for dollars on the foreign exchange market. a.true b.false 2) international trade benefits: a.all workers b.most workers c.many workers d.none of […]

1) the general agreement on tariffs and trade was founded in 1995 as a successor to the world trade organization. a.true b.false 2) given an initial equilibrium in the money market and foreign exchange market, suppose the federal reserve increases […]

1. A primary reason why nations conduct international trade is because: a. Some nations prefer to produce one thing while others produce other things b. Resources are not equally distributed among all trading nations c. Trade enhances opportunities to accumulate […]

1. On the balance-of-payments statements, merchandise imports are classified in the: a. Current account b. Capital account c. Unilateral transfer account d. Official settlements account 2. The balance of international indebtedness is a record of a country’s international: a. Investment […]

48. The balance of payments includes international transactions of households and businesses, but not government. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States – BPROG: Reflective Thinking – BPROG: Analysis STATE STANDARDS: United States […]

58. Referring to Table 11.3, the yen cost of purchasing 100 British pounds is roughly: a. 18,000 yen b. 19,000 yen c. 20,000 yen d. 21,000 yen Table 11.4. Forward Exchange Rates U.S. Dollar Equivalent Wednesday Tuesday Switzerland (Franc) .6598 […]

1. Assume you are an American exporter and expect to receive 50 pounds sterling at the end of 60 days. You can remove the risk of loss due to a devaluation of the pound sterling by: a. Selling sterling in […]

d. U.S. and British inflation rates and anticipated changes in the exchange rate 67. In the long run, exchange rates are primarily determined by: a. Agreements among governments of the world’s industrial countries b. Relative interest rates in developing countries […]

1. The relationship between the exchange rate and the prices of tradable goods is known as the: a. Purchasing-power-parity theory b. Asset-markets theory c. Monetary theory d. Balance-of-payments theory 2. If the exchange rate between Swiss francs and British pounds […]

c. Would require active intervention by the government d. Both a and b 54. The classical gold standard a. Existed from early 1800’s to early 1900’s b. Did not allow for imports and exports of gold c. Led to the […]

1. Which of the following does not represent an automatic adjustment in balance-of-payments disequilibrium? Variations in: a. Domestic income b. Foreign prices c. Domestic prices d. Foreign par values 2. The balance-of-payments adjustment mechanism developed during the 1700s by the […]

51. Refer to Table 14.1. Assume that Toyota Inc. imports steel from U.S. suppliers, whose costs are denominated in dollars, while all other inputs are obtained from Japanese suppliers whose costs are denominated in yen. If the yen’s exchange value […]

1. According to the absorption approach, the economic circumstances that best warrant a currency devaluation is where the domestic economy faces: a. Unemployment coupled with a payments deficit b. Unemployment coupled with a payments surplus c. Full employment coupled with […]

53. Refer to Table 15.1. If monetary authorities fix the exchange rate at $0.10 per franc, there would be a: a. Shortage of 200 francs b. Shortage of 400 francs c. Surplus of 200 francs d. Surplus of 400 francs […]

1. The exchange-rate system that best characterizes the present international monetary arrangement used by industrialized countries is: a. Freely fluctuating exchange rates b. Adjustable pegged exchange rates c. Managed floating exchange rates d. Pegged or fixed exchange rates 2. Which […]

1. A nation experiences internal balance if it achieves: a. Full employment b. Price stability c. Full employment and price stability d. Unemployment and price instability 2. A nation experiences external balance if it achieves: a. No net changes in […]

39. Assume a system of floating exchange rates. In response to relatively high interest rates abroad, suppose domestic investors place their funds in foreign capital markets. The result would be a. a depreciation of the domestic currency and a rise […]

48. An advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States […]

1. Which of the following assets makes use of the basket valuation technique? a. Swap agreements b. Oil facility c. Buffer stock facility d. Special drawing rights 2. Swap agreements are generally conducted by the: a. Federal Reserve with foreign […]

b. Are less productive than their large trading partners c. Have demand preferences and income levels lower than their large trading partners d. Enjoy terms of trade lying near the opportunity costs of their large trading partners 65. A terms-of-trade […]

115. If Japan loses competitiveness in computers, Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers. a. True b. False 116. With […]

1. The mercantilists would have objected to: a. Export promotion policies initiated by the government b. The use of tariffs or quotas to restrict imports c. Trade policies designed to accumulate gold and other precious metals d. International trade based […]

b. False 55. The Heckscher-Ohlin theory asserts that relative differences in labor productivity underlie comparative advantage. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States – BPROG: Reflective Thinking – BPROG: Analysis STATE STANDARDS: United […]

1. Which of the following suggests that a nation will export the commodity in the production of which a great deal of its relatively abundant and cheap factor is used? a. The Linder theory b. The product life cycle theory […]

62. The offshore assembly provision in the U.S. a. Provides favorable treatment to U.S. trading partners b. Discriminates against primary product importers c. Provides favorable treatment to products assembled abroad from U.S. manufactured components d. Hurts the U.S. consumer ANSWER: […]

1. The imposition of tariffs on imports results in deadweight welfare losses for the home economy. These losses consist of the: a. Protective effect plus consumption effect b. Redistribution effect plus revenue effect c. Revenue effect plus protective effect d. […]

97. A subsidy granted to import-competing producers is intended to lead to increased domestic production and decreased imports for the home country. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States – BPROG: Reflective Thinking […]

58. Consider Figure 5.4. Suppose the rest of the world supplies calculators to Venezuela at a price of $4 each. With free trade, Venezuelan imports total: a. 8 calculators b. 16 calculators c. 20 calculators d. 24 calculators 59. Consider […]

1. The imposition of a tariff on imported steel for the home country results in: a. Improving terms of trade and rising volume of trade b. Higher steel prices and falling steel consumption c. Lower profits for domestic steel companies […]

1. The World Trade Organization was established by the ____ of multilateral trade negotiations: a. Kennedy Round b. Tokyo Round c. Uruguay Round d. Clinton Round 2. Under U.S. commercial policy, the escape clause results in: a. Temporary quotas granted […]

94. Economic theory suggests that if France is a net importer of automobiles, whose production is subsidized by the Korean government, the overall welfare of France decreases because of the Korean subsidy. a. True b. False ANSWER: False POINTS: 1 […]

60. The most important determinants of sanctions include a. Cultural factors including nationalistic attitudes b. Strength of political opposition in the targeting nation c. The number of nations imposing sanctions d. All of the above ANSWER: d POINTS: 1 DIFFICULTY: […]

48. The characteristics that have underlaid the economic success of the “high-performing Asian Economies” have included all of the following except: a. High rates of domestic investment b. Diseconomies of scale occurring at low output levels c. Large endowments of […]

1. Which of the following is not a major factor that encourages developing nations to form international commodity agreements? a. Inelastic commodity supply schedules b. Inelastic commodity demand schedules c. Export markets that tend to be unstable d. Secular increases […]

1. The European Union is primarily intended to permit: a. Countries to adopt scientific tariffs on imports b. An agricultural commodity cartel within the group c. The adoption of export tariffs for revenue purposes d. Free movement of resources and […]

KEYWORDS: BLOOM’S: Knowledge 64. The task of creating an economic union is: a. difficult b. relatively easy c. similar to creating a customs union d. None of the above 65. Suppose that Canada has domestic firms that could supply its […]

1. An effort to diversify into nonrelated markets is most likely to be undertaken when firms undergo: a. Horizontal integration b. Vertical integration c. Conglomerate integration d. None of the above 2. The source (home) location of most of the […]

a. Runaway jobs b. Technology transfers abroad c. Tax evasion d. All of the above 47. Joint ventures may lead to a. Welfare increases b. Welfare decreases c. No changes in welfare d. All of the above ANSWER: d POINTS: […]

1) according to the theory of intra-industry trade, many manufactured goods undergo a trade cycle in which the home country initially is an exporter and eventually becomes an importer of a product. a.true b.false 2) the exchange of borrowing country […]

1) a depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is: a.constant b.inelastic c.elastic d.unitary elastic 2) the use of indifference curves helps us determine the point: a.along the terms-of-trade line […]

1) exchange rate determination in the short run is underlied by which of the following assumptions: a.tariffs and quotas affect trade patterns only in the short run b.prices of goods and services affect trade patterns only in the short run […]

1) which approach to balance-of-payments adjustment suggests that balance-of-payments surpluses are the result of excess money demand in the home country? a.absorption approach b.elasticities approach c.monetary approach d.purchasing-power-parity approach 2) when a nation achieves autarky equilibrium: a.input price equals final […]

1) figure 9.1 illustrates the market conditions facing sony company and american company initially operating as competitors in the domestic ball bearing market. each firm realizes constant long-run costs, mc0=ac0. figure 9.1. international joint venture consider figure 9.1. assume venture […]

1) expenditure-changing policies modify the direction of aggregate demand, shifting it between domestic output and imports. a.true b.false 2) refer to table 14.1. assuming that toyota obtains all inputs from japanese suppliers and that the yen/dollar exchange rate is 200 […]

1) according to the reciprocal trade agreements act of 1934, the president could lower tariffs by up to 10 percent of the existing level without congressional approval. a.true b.false 2) a foreign currency option is an agreement between a holder […]

1) that u.s. importers purchase bananas from brazil constitutes a debit transaction on the u.s. balance of payments. a.true b.false 2) countervailing duties may be imposed: a.in response to a foreign export subsidy b.in response to a foreign antidumping tariff […]

1) a primary reason that explains the appreciation in the value of the u.s. dollar in the 1980s is: a.large trade surpluses for the united states b.relatively high inflation rates in the united states c.lack of investor confidence in the […]

1) assume the united states is a large consumer of steel that is able to influence the world price. its demand and supply schedules are respectively denoted by du.s. and su.s. in figure 4.2. the overall (united states plus world) […]

1) as a way of helping u.s. business firms trade in the world market on a more equal terms with their organized foreign competitors, the u.s. government permits them to form export trade associations and export trading companies. a.true b.false […]

1) assume the united states is a large consumer of steel that is able to influence the world price. its demand and supply schedules are respectively denoted by du.s. and su.s. in figure 4.2. the overall (united states plus world) […]

1) to reduce a current account deficit, a country should either decrease the budget deficit of its government or reduce investment spending relative to saving. a.true b.false 2) figure 12.3market for british pounds consider figure 12.3.the market is initially governed […]

1) which of the following assets was (were) created in 1970 to provide additional international liquidity, in the belief that increasing world trade requires more liquidity for larger expected payments imbalances? a.eurodollar market b.special drawing rights c.reciprocal currency arrangements d.general […]

1) exchange rates are determined by the unregulated forces of supply and demand for foreign currencies as long as central banks do not intervene in the foreign exchange markets. a.true b.false 2) figure 13.4. canadian economy under a fixed exchange […]

1) to protect its farmers from foreign competition, the european union has utilized variable import levies and export subsidies. a.true b.false 2) under free trade, sweden enjoys all of the gains from trade with holland if sweden: a.trades at holland’s […]

1) the united states was less open to international trade between: a.1890 and 1910 b.1930 and 1950 c.1890 and 1950 d.1950 and 2013 2) in response to the international debt problem, the united states set up a special fund in […]

1) in the forward market, the exchange rate is agreed on at the time of the currency contract, but payment is not made until the future delivery of the currency actually takes place. a.true b.false 2) consider table 11.1. if […]

1) the figure below depicts the steel market for portugal, a small nation that is unable to affect the world price. assume that germany and france can supply steel to portugal at a price of $200 and $300 respectively. figure […]

1) given an open economy with high capital mobility and floating exchange rates, suppose an expansionary fiscal policy is implemented to combat recession. the initial and secondary effects of the policy a.cause aggregate demand to increase, thus strengthening the policy’s […]

1) figure 5.5 illustrates the television market for mexico, assumed to be a small country that is unable to affect the world price. smexico is the domestic supply schedule and dmexico is the domestic demand schedule. suppose that japan can […]

1) the opec nations during the 1970s manifested their market power by utilizing: a.export tariffs levied for revenue purposes b.export tariffs levied for protective purposes c.import tariffs levied for protective purposes d.import tariffs levied for revenue purposes 2) long-run determinants […]

1) in 1973, the reform of the international monetary system resulted in the change from: a.adjustable pegged rates to managed floating rates b.managed floating rates to adjustable pegged rates c.crawling pegged rates to freely floating rates d.freely floating rates to […]

1) figure 13.3. u.s. capital and financial account under a fixed exchange rate system refer to figure 13.3. decreases in u.s. interest rates relative to foreign interest rates would shift u.s. capital and financial account schedule ca0 downward toward ca1, […]

1) given a two-country world, suppose japan revalues the yen by 15 percent and south korea revalues the won by 12 percent. this results in: a.an appreciation in the value of both currencies b.a depreciation in the value of both […]

1) figure 2.2 illustrates trade data for canada. the figure assumes that canada attains international trade equilibrium at point c. figure 2.2. canadian trade possibilities according to figure 2.2, exports for canada total: a.16 refrigerators b.8 refrigerators c.12 refrigerators d.16 […]

1) given fixed exchange rates, assume mexico initiates contractionary monetary and fiscal policies to combat inflation. these policies will also: a.reduce a balance-of-payments surplus b.reduce a balance-of-payments deficit c.increases both imports and exports d.decrease both imports and exports 2) constant […]

1) the trade model of the swedish economists heckscher and ohlin maintains that: a.absolute advantage determines the distribution of the gains from trade b.comparative advantage determines the distribution of the gains from trade c.the division of labor is limited by […]

1) suppose the president lowers tariffs on radios as the result of negotiations under the trade agreements program. radio producers in the united states can appeal under the: a.escape clause if rising imports substantially injure the u.s. radio industry b.escape […]

1) to help developing nations strengthen their international competitiveness, many industrial nations have granted nonreciprocal tariff reductions to developing nations under the: a.international commodity agreements program b.multilateral contract program c.generalized system of preferences program d.export-led growth program 2) by the […]

1) most of the world’s population now lives in countries that are: a.integrated into world markets b.becoming integrated into world markets c.near poverty d.a and b 2) small countries tend to have higher measures of openness than larger countries because: […]

1) international trade is based on the idea that: a.exports should exceed imports b.imports should exceed exports c.resources are more mobile internationally than are goods d.resources are less mobile internationally than are goods 2) a voluntary export agreement a.typically applies […]

1) the nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions. a.true b.false 2) sporadic (distress) dumping would occur if domestic orange producers dispose of an excess quantity of oranges, […]

1) producing goods for export produces: a.jobs b.income c.tariffs d.a and b 2) suppose that steel from japan faces a 20 percent tariff in france and a 25 percent tariff in italy, while france and italy maintain free trade between […]

1) according to the purchasing-power-parity theory, the u.s. dollar maintains its purchasing-power parity if it depreciates by an amount equal to the excess of: a.u.s. interest rates over foreign interest rates b.foreign interest rates over u.s. interest rates c.u.s. inflation […]

1) concerning international lending risk of commercial banks, ____ refers to the probability that part/all of the interest/principal of a loan will not be repaid. a.country risk b.credit risk c.currency risk d.presidential risk 2) referring to table 2.2, the opportunity […]

1) which organization of nations permits free trade among its members in industrial goods, while each member maintains freedom in its trade policies toward non-member countries? a.european union b.benelux c.council for mutual economic assistance d.north american free trade association 2) […]

1) by the 1990s, china had departed from a capitalistic economy and shifted to a soviet-type economy encompassing small-scale, labor-intensive industry. a.true b.false 2) which of the following is not a major factor that encourages developing nations to form international […]

1) in explaining international trade, the product life cycle theory focuses on a.tastes and preferences b.the role of technological innovation c.per-capita income levels of nations d.both b and c 2) the largest amount of trade with the united states in […]

1) there is virtually universal agreement among economists that foreign direct investment in the united states has reduced the economic welfare of the average u.s. citizen. a.true b.false 2) appreciation of the dollar’s exchange value worsens the international competitiveness of […]

1) an advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium. a.true b.false 2) foreign-exchange brokers help commercial banks carry out foreign exchange trading and […]

1) according to the product-life-cycle theory, the first stage of a product’s trade cycle is when it is introduced to the home market. a.true b.false 2) if canada experiences constant opportunity costs, its supply schedule of steel will be: a.downward-sloping […]

1) if a tariff and an import quota lead to equivalent increases in the domestic price of steel, then: a.the quota results in efficiency reductions but the tariff does not b.the tariff results in efficiency reductions but the quota does […]

1) for the united states, suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent. for japan, suppose the annual interest rate on government securities equals 10 percent while the annual […]

1) figure 5.5 illustrates the television market for mexico, assumed to be a small country that is unable to affect the world price. smexico is the domestic supply schedule and dmexico is the domestic demand schedule. suppose that japan can […]

1) if a country realizes a current-account deficit in its balance of payments, it becomes a net supplier of funds to the rest of the world. a.true b.false 2) important trading partners of the united states include canada, mexico, japan, […]

1) figure 5.6 domestice supply and demand for wine – us consider figure 5.6.in the global market for wine, the eu is willing to supply as much wine as the us demands at $8 per bottle.if the us imposes a […]

1) concerning exchange rate forecasting, fundamental analysis involves consideration of a variety of macroeconomic variables and policies that tend to affect currency values. a.true b.false 2) assume that ford motor company obtains some of its inputs in mexico (foreign sourcing). […]

1) if the united states government sells military hardware to saudi arabia, the transaction would be recorded on the u.s. balance of payments as a: a.current account debit b.current account credit c.capital account debit d.capital account credit 2) the main […]

1) the imposition of pollution-control regulations on domestic steel manufacturers leads to decreases in production costs and an improvement in the steel manufacturers’ competitiveness. a.true b.false 2) according to the general agreement on tariffs and trade and its successor, the […]

1) according to u.s. trade law, the escape clause provides relief to u.s. firms due to unfair foreign competition. a.true b.false 2) suppose the united states levies an interest equalization tax, which taxes americans on dividend and interest income from […]

1) the demand in the united states for yen will increase if, other things remaining equal: a.labor costs rise in japan b.income rises in japan c.prices rise in japan d.interest rates rise in japan 2) suppose that japan maintains a […]

1) the figure below illustrates the supply and demand schedules of swiss francs under a system of floating exchange rates. figure 12.2. the market for swiss francs refer to figure 12.2. if the rate of inflation in the united states […]

1) in certain industries, japanese employers do not lay off workers. therefore, they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. to hold down losses, they sell goods in overseas markets […]

1) foreign ownership of u.s. financial assets a.has decreased since the 1960’s b.has increased since the 1960’s c.has made the u.s. a net borrower since the late 1980’s d.both a and c 2) on the u.s. balance-of-payments statement, the following […]

1) american labor unions have recently maintained that u.s. multinational enterprises have been: a.exporting american jobs by investing overseas b.exporting american jobs by keeping investment in the united states c.importing cheap foreign workers by shifting u.s. investment overseas d.importing cheap […]

1) economic interdependence occurs through a.trade b.labor migratin c.capital flows d.all of these 2) assume boeing inc. (of the united states) and airbus industrie (of europe) rival for monopoly profits in the canadian aircraft market. suppose the two firms face […]

1) under the gold standard, a deficit nation facing a gold outflow and a decrease in its money supply would also experience a: a.rise in its interest rate and a short-term financial inflow b.rise in its interest rate and a […]

1) the u.s. “trade-remedy laws” could establish all of the following except: a.import tariffs to protect u.s. firms seriously injured by foreign competition b.countervailing duties which neutralize foreign export subsidies c.antidumping duties which protect u.s. firms from imports sold at […]

1) according to ricardian theory, comparative advantage depends on relative differences in labor productivity. a.true b.false 2) in the post-world war ii era, nontariff trade barriers have decreased in importance relative to tariff barriers. a.true b.false Answer: false 3) the […]

1) suppose that the tariff on imported steel is 40 percent, the tariff on imported iron ore is 20 percent, and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains. the […]

1) developing countries have sometimes feared open immigration policies of developed countries on the grounds that highly educated and skilled people may emigrate to the developed countries, thus limiting the growth potential of the developing countries. a.true b.false 2) a […]

1) the mercantilists contended that because one nation’s gains from trade come the expense of its trading partners, not all nations could simultaneously realize gains from trade. a.true b.false 2) although tariffs on imported steel may lead to job gains […]

1) when a nation realizes external balance a.it can have a current account deficit b.it can have a current account surplus c.it has neither a current account deficit nor a current account surplus d.both a and b 2) opening the […]

1) in an open trading system, a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost. a.true b.false 2) increased foreign competition tends to: a.intensify inflationary […]

1) to be considered a good candidate for an export cartel, a commodity should: a.be a manufactured good b.be a primary product c.have a low price elasticity of supply d.have a high price elasticity of demand 2) all of the […]

1) figure 13.1. u.s. capital and financial account refer to figure 13.1. upward movements along u.s. capital and financial account schedule ca0 would be caused by: a.u.s. interest rates rising relative to foreign interest rates b.u.s. interest rates falling relative […]

1) the diagram below represents the exchange market position of the united states in trade with the united kingdom. starting at the equilibrium exchange rate of $3 per pound, suppose the demand for pounds rises from d0 to d1. figure […]

1) figure 6.4japanese market for jetliners consider the japanese market for jetliners as depicted in figure 6.5.suppose lone producer of jetliners in the world is boeing and boeing faces a constant marginal cost of $20 million per jetliner but now […]

1) in an open trading system, a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost. a.true b.false 2) the implementation of the european union has: […]

1) the world trade organization was established by the ____ of multilateral trade negotiations: a.kennedy round b.tokyo round c.uruguay round d.clinton round 2) following world war ii, the u.s.: a.became less open b.negotiated reductions in trade barriers with other countries […]

1) to justify the subsidies it has received from european governments, the airbus company has used all of the following arguments except: a.its subsidies have prevented u.s. aircraft firms from holding a world-wide monopoly b.u.s. aircraft firms have benefited from […]

1) the extent to which changing currency values result in changing prices of imports and exports is known as the j-curve effect. a.true b.false 2) figure 6.2 illustrates the calculator market for mexico, assumed to be a small nation that […]

1) when mexico became a part of nafta, along with canada and the united states, it: a.eliminated tariffs against canada and the united states but maintained them against nonmembers b.eliminated tariffs against canada, the united states, and all nonmember countries […]

1) the figure below illustrates the supply and demand schedules of swiss francs under a system of floating exchange rates. figure 12.2. the market for swiss francs refer to figure 12.2. as the profitability of assets in switzerland rises relative […]

1) over the long run, foreign exchange rates are determined by transfers of bank deposits that respond to differences in real interest rates and to shifting expectations of future exchange rates. a.true b.false 2) figure 5.4 illustrates the calculator market […]

1) open economies have more: a.competition b.firm turnover c.new firms entering the market d.all of these 2) increased foreign competition tends to: a.intensify inflationary pressures at home b.induce falling output per worker-hour for domestic workers c.place constraints on the wages […]

1) figure 13.1. u.s. capital and financial account refer to figure 13.1. downward movements along u.s. capital and financial account schedule ca0 would be caused by: a.u.s. interest rates rising relative to foreign interest rates b.u.s. interest rates falling relative […]

1) concerning industrial policy, the united states has nationalized its major industries in an attempt to promote global champions. a.true b.false 2) a nation that gains from trade will find its consumption point being located: a.inside its production possibilities curve […]

1) a main purpose of the international monetary fund is to make loans of foreign currencies to member countries which are experiencing current-account surpluses. a.true b.false 2) referring to table 13.1, if canada’s income rises by $200 billion, imports would […]

1) as an economy opens up to international trade, domestic prices: a.become lower b.become more aligned with international prices c.stabilize d.none of the above; what will happen cannot be predicted 2) the first wave of globalization was brought to an […]

1) figure 13.4. canadian economy under a fixed exchange rate system refer to figure 13.4. starting at equilibrium income $100 billion, where (s – i)0 intersects (x – m)0, an autonomous decrease in canadian exports of $10 billion leads to […]

1) which of the following constitute(s) the largest component of the world’s international reserves? a.gold b.special drawing rights c.imf drawings d.foreign currencies 2) both economic theory and empirical studies support the notion that foreign direct investment is conducted in anticipation […]

1) a tariff can be thought of as a tax on imported goods. a.true b.false 2) boeing aircraft company was able to cover its production costs of the first “jumbo jet” in the 1970s because boeing could market it to […]

1) europe’s jumbo-jet manufacturer, airbus, has justified receiving governmental subsidies on the grounds that the subsidies prevent the united states from becoming a monopoly in the jumbo-jet market. a.true b.false 2) figure 6.3 represents the iraqi computer market. assume iraq […]

1) trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union. a.true b.false 2) a nation whose imports constitute a very small portion of the […]

1) a decrease in the import tariff will result in: a.an increase in imports but a decrease in domestic production b.a decrease in imports but an increase in domestic production c.an increase in price but a decrease in quantity purchased […]

1) import quotas tend to lead to all of the following except: a.domestic producers of the imported good being harmed b.domestic consumers of the imported good being harmed c.prices increasing in the importing country d.prices falling in the exporting country […]

1) the demand for international reserves tend to increase with the level of world income and trade activity. a.true b.false 2) figure 5.3 illustrates the apple market for sweden, assumed to be a ‘small” country that is unable to affect […]

1) figure 13.3. u.s. capital and financial account under a fixed exchange rate system refer to figure 13.3. if the political and economic stability of foreign countries worsens relative to that of the united states, the u.s. capital and financial […]

1) if the u.s. government pursued a “knowledge-based growth policy,” it would subsidize particular firms to help them compete in the world economy. a.true b.false 2) according to staffan linder, trade between two countries tends to be most pronounced when […]

1) the largest amount of trade with the united states in recent years has been conducted by: a.canada b.germany c.chile d.united kingdom 2) an objective of the dollarization of the mexican economy would be to: a.shield its economy from hyperinflation, […]

1) a depreciation of the dollar refers to: a.a fall in the dollar price of foreign currency b.an increase in the dollar price of foreign currency c.a loss of foreign-exchange reserves for the u.s. d.an intervention in the international money […]

1) figure 11.1 illustrates the supply and demand schedules for the swiss franc. assume that exchange rates are flexible. figure 11.1. supply and demand schedules of francs refer to figure 11.1. at the equilibrium exchange rate of ____ per franc, […]

1) figure 9.1 illustrates the market conditions facing sony company and american company initially operating as competitors in the domestic ball bearing market. each firm realizes constant long-run costs, mc0=ac0. figure 9.1. international joint venture consider figure 9.1. at the […]

1) which of the following is a fallacy of international trade? a.trade is a zero-sum activity b.exports increase employment in exporting industries c.import restrictions increase employment in import-competing industries d.tariffs and quotas reduce trade volume 2) a main disadvantage of […]

1) the marginal rate of transformation equals the absolute slope of a country’s production possibilities schedule. a.true b.false 2) figure 5.2 illustrates the revenue and cost conditions of abc inc. which sells calculators in canada and france. figure 5.2. international […]

1) according to adam smith, international trade was a “win-win” situation since all nations could enjoy gains from trade. a.true b.false 2) because there is no exchange stabilization fund under floating exchange rates, any holdings of international reserves serve as […]

1) to protect domestic producers from foreign competition, the u.s. government levies both import tariffs and export tariffs. a.true b.false 2) according to the fast-track provision of u.s. trade law, once the president has completed trade negotiations, their outcome is […]

1) all of the following are debit items in the balance of payments, except: a.capital outflows b.merchandise exports c.private gifts to foreigners d.foreign aid granted to other nations 2) if a nation has an open economy, it means that the […]

1) the common agricultural policy of the european union has: a.increased american farm exports to the eu b.decreased american farm exports to the eu c.lowered the price of american farm exports to the eu d.not affected the price of american […]

1) a goal of the international monetary fund is to make short-term loans to member nations so as to allow them to correct balance of payments disequilibriums without resorting to measures that would destroy national prosperity. a.true b.false 2) in […]

1) a country having stronger preferences for imports than its trading partners have for its exports finds its demand for foreign exchange rising more rapidly than its supply of foreign exchange. a.true b.false 2) which of the following is a […]

the imposition of a tariff on imported steel for the home country results in:1) a.improving terms of trade and rising volume of trade b.higher steel prices and falling steel consumption c.lower profits for domestic steel companies d.higher unemployment for domestic […]

1) copyrights, trademarks, and patents are used to protect the intellectual property of a nation from foreign imitators. a.true b.false 2) world welfare under a customs union a.increases due to a trade creation effect b.decreases due to a trade diversion […]

1) most foreign exchange trading occurs between banks and: a.national governments b.other banks c.corporations d.household investors 2) bilateral agreements between central banks, which provide for an exchange of currencies to help finance temporary balance-of-payments disequilibriums, are referred to as: a.imf […]

1) figure 5.1 illustrates the steel market for mexico, assumed to be a ‘small” country that is unable to affect the world price. suppose the world price of steel is given and constant at $200 per ton. now suppose the […]

1) although an import tariff provides the domestic government additional tax revenue, it benefits domestic consumers at the expense of domestic producers. a.true b.false 2) the diagram below illustrates the international tin market. assume that the producing and consuming countries […]

1) figure 5.6 domestice supply and demand for wine – us consider figure 5.6.in the global market for wine, the eu is willing to supply as much wine as the us demands at $8 per bottle.if the us imposes a […]

1) according to the j-curve effect, currency appreciation: a.decreases a trade surplus b.increases a trade surplus c.decreases a trade surplus before increasing a trade surplus d.increases a trade surplus before decreasing a trade surplus 2) according to the product life […]

1) under u.s. commercial policy, the escape clause results in: a.temporary quotas granted to firms injured by import competition b.tariffs that offset export subsidies granted to foreign producers c.tax advantages extended to minority-owned exporting firms d.duties which offset commercial dumping […]

1) according to the mercantilists, a nation’s welfare would improve if it maintained a surplus of exports over imports. a.true b.false 2) the theory of multinational enterprise is totally inconsistent with the principle of comparative advantage. a.true b.false Answer: false […]

1) industrial processes that add weight or bulk to a commodity are likely to be located near the resource market to minimize transportation costs. a.true b.false 2) although the uruguay round of multilateral trade negotiations succeeded in reducing nontariff trade […]

1) since the 1970s, the merchandise trade account of the u.s. balance of payments has registered deficit. a.true b.false 2) to the extent that subsidies granted to exporting firms reduce the foreign price of their goods, the subsidizing country’s terms […]

1) to help insulate their economies from inflation, currency depreciation, and capital flight, developing countries have implemented: a.regional trading blocs b.currency boards c.central banks d.regional fiscal policies 2) the movement to free international trade is most likely to generate short-term […]

1) if i purchase a stereo from south korea, i obtain the stereo and south korea obtains the dollars. but if i purchase a stereo produced in the united states, i obtain the stereo and the dollars remain in america. […]

1) figure 4.4 market for gasoline in a small nation figure 4.4 represents the market for gasoline in a small nation.the free trade world price of gasoline is $3.50.suppose this small nation imposes a tariff on gasoline of $.50 per […]

1) the value to american residents of income earned from overseas investments shows up in which account in the u.s. balance of payments? a.current account b.trade account c.unilateral transfers account d.capital account 2) figure 8.1 depicts the supply and demand […]

1) prolonged defense of a price ceiling tends to increase the supply of a commodity held by a buffer stock manager, thus putting downward pressure on price. a.true b.false 2) if a country consistently realizes a current-account surplus in its […]

1) developing countries with more than one major trading partner often peg their currencies to a group or basket of those trading partner currencies. a.true b.false 2) the high point of u.s. protection culminated with the passage of the: a.smoot-hawley […]

1) suppose that a swiss watch that costs 400 francs in switzerland costs $200 in the united states. the exchange rate between the franc and the dollar is: a.2 francs per dollar b.1 franc per dollar c.$2 per franc d.$3 […]

1) most developing countries have pollution-control laws and enforcement policies that are more stringent than those of the major industrial countries. a.true b.false 2) the canadian dollar would depreciate on the foreign exchange market if: a.canadian consumer tastes change in […]