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 economy to international trade tends to lessen inflationary pressures at
home.
a.true
b.false
3) figure 9.3 figure 9.3 represents the mexican labor market. assume that labor and
capital are the only factors of production. also assume the initial supply schedule of
labor is denoted by s0 and consists entirely of native mexican workers. the demand
schedule of labor is denoted by dmexico.
consider figure 9.3, at labor market equilibrium with supply s0, _____ workers are
hired at a wage rate of $____ per hour, while total wages equal ____.
a.6, 7 pesos, 24 pesos
b.6, 6 pesos, 36 pesos
c.7, 7 pesos, 49 pesos
d.7, 6 pesos, 42 pesos
4) the theory of reciprocal demand best applies when two countries are of equal
economic size, so that the demand conditions of each nation have a noticeable impact
on market prices.
a.true
b.false
5) according to the u.s. buy american act, federal government agencies cannot purchase
materials and products from u.s. suppliers if their prices are higher than those of foreign
competitors.
a.true
b.false
6) by increasing relative u.s. production costs, a dollar depreciation tends to increase
u.s. export prices in foreign-currency terms, which results in an increase in the quantity
of u.s. goods exported abroad.
a.true
b.false
7) economists have generally found that economic growth rates have a close relation to:
a.openness to trade
b.education
c.communications infrastructure
d.all of these
8) assume that ford motor company obtains all of its inputs in the united states and all
of its costs are denominated in dollars. a depreciation of the dollar’s exchange value:
a.enhances its international competitiveness
b.worsens its international competitiveness
c.does not affect its international competitiveness
d.none of the above
9) which of the following is a long-run theory, emphasizing changes in the trading
position of a nation over a number of years?
a.theory of factor endowments
b.comparative advantage theory
c.theory of the product cycle
d.overlapping demand theory
10) the special drawing right is a currency basket of five major industrial country
currencies.
a.true
b.false
11) 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 united states decreases tariffs on imports from switzerland,
there would occur a decrease in the demand for francs and a decrease in the dollar price
of the franc.
a.true
b.false
12) assume that the united states and canada engage in trade. if the international terms
of trade coincides with the canadian cost ratio, the united states realizes all of the gains
from trade with canada.
a.true
b.false
13) figure 15.1 shows the market for the swiss franc. in the figure, the initial demand
for marks and supply of marks are depicted by d0 and s0 respectively.
figure 15.1. the market for the swiss franc
refer to figure 15.1. suppose that the united states increases its imports from
switzerland, resulting in a rise in the demand for francs from d0 to d1. under a floating
exchange rate system, the new equilibrium exchange rate would be:
a.$0.40 per franc
b.$0.50 per franc
c.$0.60 per franc
d.$0.70 per franc
14) during the last century, the relative importance of international trade for the u.s. has:
a.significantly increased
b.slightly increased
c.significantly decreased
d.slightly decreased
15) under a system of managed-floating exchange rates with heavy exchange rate
intervention:
a.fiscal policy is successful in promoting internal balance, while monetary policy is
unsuccessful
b.monetary policy is successful in promoting internal balance, while fiscal policy is
unsuccessful
c.both fiscal policy and monetary policy are successful in promoting internal balance
d.neither fiscal policy nor monetary policy are successful in promoting internal balance
16) if two nations of approximately the same size and with similar taste patterns
participate in international trade, the gains from trade tend to be shared about equally
between them.
a.true
b.false