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 is unable influence the south korean (world) price. assume the south korean price to
be $60 per calculator.
figure 6.2. effects of an export subsidy
consider figure 6.2. with free trade, mexican consumers purchase ____ calculators,
mexican firms produce ____ calculators, and ____ calculators are imported.
a.10, 4, 6
b.10, 6, 4
c.10, 8, 2
d.10, 2, 8
3) a subsidy granted to import-competing producers reduces overall domestic welfare
by the same amount as would a tariff or quota that restricts imports by the same
amount.
a.true
b.false
4) figure 15.2market for the british pound
refer to figure 15.2. suppose that the united states increases its imports from england.
under a floating exchange rate system, the new equilibrium exchange rate would be:
a.$0.40 per pound
b.$0.60 per pound
c.$0.80 per pound
d.$1.00 per pound
5) the smoot-hawley tariff act of 1930 has generally been associated with:
a.falling tariffs
b.increases in the volume of trade
c.intensifying the worldwide depression
d.efforts to liberalize nontariff trade barriers
6) 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. with sony company and american company behaving as
competitors, the equilibrium price and output respectively equal:
a.$4 and 2 units
b.$4 and 4 units
c.$6 and 2 units
d.$6 and 4 units
7) if a ‘small” country levies a tariff on an imported good, its overall welfare increases if
the monetary value of the tariff’s consumption effect plus protective effect is less than
the monetary value of the terms-of-trade effect.
a.true
b.false
8) reducing a current account deficit requires a country to:
a.increase the government’s deficit and increase private investment relative to saving
b.increase the government’s deficit and decrease private investment relative to saving
c.decrease the government’s deficit increase private investment relative to saving
d.decrease the government’s deficit and decrease private investment relative to saving
9) concerning the influence that transportation costs have on the location of industry,
which of the following industries has generally attempted to locate production facilities
close to resource supplies?
a.autos
b.steel
c.soft drinks
d.valuable electronics goods
10) 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 supply
televisions to mexico at a price of $100 per set.
figure 5.5. mexico’s television market
consider figure 5.5. the government of mexico collects 50 percent of the export quota’s
revenue effect, or $600, in the form of tax revenue.
a.true
b.false
11) assuming increasing cost conditions, trade between two countries would not be
likely if they have:
a.identical demand conditions but different supply conditions
b.identical supply conditions but different demand conditions
c.different supply conditions and different demand conditions
d.identical demand conditions and identical supply conditions
12) refer to table 11.2. the equilibrium exchange rate equals:
a.$1.20 per pound
b.$1.40 per pound
c.$1.60 per pound
d.$1.80 per pound
13) because export subsidies tend to result in domestic exporters charging lower prices
on their goods sold overseas, the home country’s:
a.export revenues will decrease
b.export revenues will rise
c.terms of trade will worsen
d.terms of trade will improve
14) which business device involves the creation of a new business by two or more
companies, often for a limited period of time?
a.multinational enterprise
b.international joint venture
c.horizontal merger
d.vertical merger
15) a joint venture along two large competing companies tends to yield a market-power
effect, which results in a reduction in consumer surplus, that is not offset by a
corresponding gain to producers.
a.true
b.false
16) the monetary approach emphasizes the effects of currency depreciation on the
purchasing power of money, and the resulting impact on domestic expenditure levels.
a.true
b.false
17) the most recent round of multilateral trade negotiations is the:
a.kennedy round
b.tokyo round
c.doha round
d.geneva round
18) figure 9.2 represents the u.s. 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 u.s. workers. the demand schedule of labor is denoted by
d0.
figure 9.2. u.s. labor market
consider figure 9.2, at labor market equilibrium, _____ workers are hired at a wage rate
of $____ per hour, while total wages equal ____.
a.2, $12, $24
b.2, $12, $36
c.3, $9, $27
d.3, $9, $36
19) increased foreign competition tends to increase profits of domestic
import-competing companies.
a.true
b.false