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 product price
b.labor productivity equals the wage rate
c.imports equal exports
d.production equals consumption
3) under the european union’s common agricultural policy, a variable import levy equals
the:
a.amount by which the eu’s support price exceeds the world price
b.amount by which the world price exceeds the eu’s support price
c.support price of the eu
d.world price
4) the offer rate
a.is the price at which the bank is willing to sell a unit of foreign currency
b.is the price that the bank is willing to pay for a unit of foreign currency
c.is synonymous with the spread rate
d.none of the above
5) if the home country’s government grants a subsidy on a domestically produced good,
domestic producers tend to:
a.capture the entire subsidy in the form of higher profits
b.increase their level of production
c.reduce wages paid to domestic workers
d.consider the subsidy as an increase in production cost
6) currency devaluation and revaluation primarily affect the economy’s current account
and have secondary effects on domestic employment and inflation.
a.true
b.false
7) in 1975 the official price of gold was abolished as the unit of account for the
international monetary system. as a result, gold was demonetized as an international
reserve asset.
a.true
b.false
8) the purpose of currency devaluation is to cause the home country’s exchange value to
appreciate, thus reducing a balance of trade surplus.
a.true
b.false
9) a firm’s ____, relative to that of other firms, is generally regarded as the most
important determinant of competitiveness.
a.income level
b.tastes and preferences
c.governmental regulation
d.productivity
10) the gains from international trade increase as:
a.a nation consumes inside of its production possibilities schedule
b.a nation consumes along its production possibilities schedule
c.the international terms of trade rises above the nation’s autarky price
d.the international terms of trade approaches the nation’s autarky price