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 dollars, in the production of automobiles. if the dollar’s exchange value
appreciates by 10 percent against the yen, the yen-denominated cost of a gm vehicle
falls by 10 percent.
a.true
b.false
3) according to the absorption approach (b = y – a), currency devaluation improves a
nation’s trade balance if:
a.y increases and a increases
b.y decreases and a decreases
c.y increases and/or a decreases
d.y decreases and/or a increases
4) in 1980 the united states announced an embargo on grain exports to the soviet union
in response to the soviet armed invasion of afghanistan. the embargo was mainly
resisted by:
a.u.s. grain consumers and producers of bread
b.u.s. farmers and grain companies
c.grain producers in foreign countries
d.grain consumers in foreign countries
5) which of the following is not a characteristic of the eurodollar market? it:
a.is mainly located in the united kingdom and continental europe
b.operates as a financial intermediary, bringing together lenders and borrowers
c.deals in interest-bearing time deposits and loans to governments
d.grew in response to the deregulation of interest rate ceilings on u.s. savings accounts
6) important trading partners of the united states include canada, mexico, japan, and
china.
a.true
b.false
7) in the short run, exchange rates respond to market forces such as:
a.inflation rates
b.expectations of future exchange rates
c.investment profitability
d.government trade policy
8) the gains from having an optimum currency include
a.price differentiation
b.lower competition
c.lower transaction costs
d.both b and c
9) the value of the foreign trade multiplier equals the reciprocal of the sum of the
marginal propensities to:
a.save plus import
b.import plus invest
c.consume plus export
d.save plus import
10) that identical goods should cost the same in all nations, assuming it is costless to
ship goods between nations and there are no barriers to trade, is a reflection of the:
a.monetary approach to exchange-rate determination
b.law of one price
c.fundamentalist approach to exchange-rate determination
d.exchange-rate-overshooting principle
11) east asian economies started enacting export-push strategies
a.by late 1950s and 1960s
b.immediately after world war ii
c.in the late 1980s
d.in the early 2000s