1) all of the following are debit items in the balance of payments, except:
a.capital outflows
b.merchandise exports
c.private gifts to foreigners
d.foreign aid granted to other nations
2) if a nation has an open economy, it means that the nation allows private ownership of
capital.
a.true
b.false
3) according to the j-curve concept, which of the following is false–that the effects of a
currency depreciation on the balance of payments are:
a.transmitted primarily via the income adjusted mechanism
b.likely to be adverse or negative in the short run
c.in the long run positive, given favorable elasticity conditions
d.influenced by offsetting devaluations made by other countries
4) given a system of floating exchange rates, if canada’s labor productivity rises relative
to the labor productivity of its trading partners:
a.canadian imports will fall and the dollar will appreciate
b.canadian imports will fall and the dollar will depreciate
c.canadian imports will rise and the dollar will appreciate
d.canadian imports will rise and the dollar will depreciate
5) assume 1990 to be the base year. if by the end of 2004 a country’s export price index
rose from 100 to 130 while its import price index rose from 100 to 115, its terms of
trade would equal 113.
a.true
b.false
6) the exchange-rate system that best characterizes the present international monetary
arrangement used by industrialized countries is:
a.freely fluctuating exchange rates
b.adjustable pegged exchange rates
c.managed floating exchange rates
d.pegged or fixed exchange rates
7) a major difference between the spot market and the forward market is that the spot
market deals with:
a.the immediate delivery of currencies
b.the merchandise trade account
c.currencies traded for future delivery
d.hedging of international currency risks
8) according to the “big mac” index, if a big mac costs $2.28 in the united states and 48
baht in thailand (equivalent to $1.91), the baht is an undervalued currency.
a.true
b.false
9) unlike the tokyo round of multilateral trade negotiations, the uruguay round
addressed the issues of intellectual property protection, trade barriers in services, and
agricultural subsidies.
a.true
b.false
10) during the post world war ii era, the united states has adopted explicit industrial
policies similar to those of france and japan.
a.true
b.false