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 falls by 10 percent.
a.true
b.false
2) foreign direct investment typically occurs when
a.the earnings of the parent company are invested in plant expansion overseas
b.the parent company transfers jobs overseas
c.the parent company closes its foreign production plants
d.the parent company purchases bonds of foreign governments
3) a sudden shift from import tariffs to free trade may induce short-term unemployment
in:
a.import-competing industries
b.industries that are only exporters
c.industries that sell domestically as well as export
d.industries that neither import nor export
4) small countries tend to have higher measures of openness than larger countries
because:
a.their productivity is higher
b.they are more reliant on international trade
c.they are less reliant on international trade
d.they are more diverse
5) under the offshore assembly provision of u.s. tariff policy, u.s. import duties apply
only to the value added in the foreign assembly process, provided that u.s.-made
components are used by overseas companies in their assembly operations.
a.true
b.false
6) international trade in goods and services is sometimes used as a substitute for all of
the following except:
a.international movements of capital
b.international movements of labor
c.domestic production of the same goods and services
d.domestic production of different goods and services
7) debt (-) items in the balance of payments correspond to anything that:
a.involves receipts from foreigners
b.involves payments to foreigners
c.increases the domestic money supply
d.decreases the demand for foreign exchange
8) human rights activists contend that this organization supports governments that
permit sweatshops:
a.the international organization for standardization
b.the international monetary fund
c.the world health organization
d.all of these
9) if argentina has a comparative advantage over brazil in beef relative to coffee,
argentina will specialize in beef production.
a.true
b.false
10) classical trade theory emphasized which of the following as an underlying
explanation of the basis for trade?
a.productivities of labor inputs
b.tastes and preferences among nations
c.changes in technologies over time
d.quantities of economic resources
11) 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 human capital
d.high levels of labor productivity