1) according to adam smith, international trade was a “win-win” situation since all
nations could enjoy gains from trade.
a.true
b.false
2) because there is no exchange stabilization fund under floating exchange rates, any
holdings of international reserves serve as working balances rather than to maintain a
given exchange rate for any currency.
a.true
b.false
3) which trade strategy have developing countries used to replace commodity exports
with exports such as processed primary products, semi-manufacturers, and
manufacturers?
a.multilateral contract
b.buffer stock
c.export promotion
d.export quota
4) which of the following is a fallacy of international trade?
a.trade is a zero-sum activity
b.exports increase employment in exporting industries
c.import restrictions increase employment in import-competing industries
d.tariffs and quotas reduce trade volume
5) empirical studies conclude that u.s. environmental policies are a more important
determinant of trade performance than capital, raw materials, labor skills, and wages.
a.true
b.false
6) figure 11.3 the market for the euro
refer to figure 11.3. if the supply curve is represented by s0, the equilibrium exchange
rate is
a.$1.20
b.$1.00
c.$0.80
d.$0.60
7) the redistribution effect is the transfer of producer surplus to domestic consumers of
the import-competing product.
a.true
b.false
8) which financial instrument provides a buyer the right to purchase or sell a fixed
amount of currency at a prearranged price, within a few days to a couple of years?
a.letter of credit
b.foreign currency option
c.cable transfer
d.bill of exchange
9) figure 4.4 market for gasoline in a small nation
figure 4.4 represents the market for gasoline in a small nation.the free trade world price
of gasoline is $3.50.suppose this small nation imposes a tariff on gasoline of $.50 per
gallon.the change in producer surplus would be
a.$15
b.$12.5
c.$47.50
d.$57.50
10) which type of tariff is not used by the american government?
a.import tariff
b.export tariff
c.specific tariff
d.ad valorem tariff
11) free traders maintain that an open economy is advantageous in that it provides all of
the following except:
a.increased competition for world producers
b.a wider selection of products for consumers
c.the utilization of the most efficient production methods
d.relatively high wage levels for all domestic workers
12) referring to table 11.3, the cross exchange rate between the euro and swiss franc is
approximately:
a..68 euros per franc
b..68 francs per euro
c..64 euros per franc
d..64 francs per euro
13) 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
14) figure 7.4 global market for tin
consider the global market for tin represented by figure 7.4.initially equilibrium is at
point a with a market price of $3.50 per pound and 50,000 pounds.in ordr to keep tin
price relatively stable an international tin agreement has set a price floor of $3.27 and a
ceiling of $4.02.as the demand for tin increases to d1 how will the buffer-stock manager
need to respond?
a.buy 10,000 pounds of tin
b.buy 20,000 pounds of tin
c.sell 10,000 pounds of tin
d.sell 20,000 pounds of tin
15) if you were considering hiring a forecasting firm to predict future spot rates of the
yen, you would hope that the firm could predict better what would be implied by the
yen’s forward rate.
a.true
b.false
16) from 2000-2010, which nation lost thousands of jobs to china, whose average
wages were half of those of this country?
a.japan
b.canada
c.germany
d.mexico
17) given favorable elasticity conditions, a depreciation of the lira tends to result in:
a.lower prices of imported products for italy
b.higher prices of imported products for italy
c.a larger trade deficit for italy
d.a smaller trade surplus for italy