1) 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. at the equilibrium price, domestic households attain ____ of
consumer surplus:
a.$4
b.$8
c.$12
d.$16
2) unlike a specific tariff, an ad valorem tariff differentiates between commodities with
different values.
a.true
b.false
3) which of the following is true for the j-curve effect? it:
a.applies to the interest rate effects of currency depreciation
b.applies to the income effects of currency depreciation
c.suggests that demand tends to be most elastic over the long run
d.suggests that demand tends to be least elastic over the long run
4) 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. policies that permit honduran workers to freely migrate to mexico
would likely be resisted by:
a.mexican capital owners
b.native mexican workers
c.mexican capital owners and native mexican workers
d.neither mexican capital owners nor native mexican workers
5) the monetary approach to balance-of-payments adjustments suggests that all
payments deficits are the result of:
a.too high interest rates in the home country
b.too low interest rates in the home country
c.excess money supply over money demand in the home country
d.excess money demand over money supply in the home country
6) a firm suffering idle plant capacity would minimize losses by selling its product
abroad at a lower price than at home, provided that the foreign price more than covers
average variable cost.
a.true
b.false
7) in the short run, the home country of an mne will likely experience an employment
decline when production is shifted overseas.
a.true
b.false
8) which of the following best refers to the outright construction or purchase abroad of
productive facilities, such as manufacturing plants, by domestic residents?
a.direct investment
b.portfolio investment
c.short-term capital investment
d.long-term capital investment
9) a primary goal of international commodity agreements has been the:
a.maximization of members’ revenues via export taxes
b.nationalization of corporations operating in member nations
c.adoption of tariff protection against industrialized nation sellers
d.moderation of commodity price fluctuations when markets are unstable
10) debt reduction
a.refers to any voluntary scheme that lessens the burden on the debtor nation
b.may be accomplished through debt rescheduling
c.may be achieved through debt/equity swaps
d.all of the above
11) in a managed floating exchange-rate system, temporary stabilization of the dollar’s
exchange value requires the federal reserve to adopt a (an) ____ monetary policy when
the dollar is appreciating and a (an) ____ policy when the dollar is depreciating.
a.expansionary, expansionary
b.expansionary, contractionary
c.contractionary, expansionary
d.contractionary, contractionary
12) when granting loans to financially troubled nations, the international monetary fund
requires some degree of conditionality, meaning that the borrowing nation must agree to
implement economic policies as mandated by the imf.
a.true
b.false
13) when manufacturing automobiles, suppose that general motors uses labor and
materials whose costs are denominated in dollars and pounds respectively. if the dollar’s
exchange value appreciates by 15 percent against the pound, the pound-denominated
cost of a gm vehicle rises by 15 percent.
a.true
b.false
14) swap transactions among commercial banks involve the conversion of one currency
to another at one point with an agreement to reconvert it back into the original currency
at some point in the future.
a.true
b.false
15) figure 6.3 represents the iraqi computer market. assume iraq purchases all of its
computers from the united states.
figure 6.3 iraqi computer market and economic sanctions
consider figure 6.3. for the united states, the export quota results in a (an):
a.improvement in its terms of trade with iraq
b.increase in its export revenue
c.increase in domestic computer prices
d.decrease in domestic consumer surplus
16) 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
17) 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
18) an exchange rate is said to ____ when its short-run response to a change in market
fundamentals is greater than its long-run response.
a.overshoot
b.undershoot
c.depreciate
d.appreciate
19) conglomerate integration would occur if general motors inc. of the united states
acquired a controlling interest in a british chemical company.
a.true
b.false