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C. ideas from different countries are exchanged.
D. currencies of different countries are bought and sold.
84. Which of the following exchange rates between the dollar and the peso would a Mexican
buyer of American goods most prefer?
A. $0.25 = 1 peso
B. $0.20 = 1 peso
C. $0.15 = 1 peso
D. $0.05 = 1 peso
85. If the U.S. dollar appreciates against the Japanese yen:
A. U.S. goods will be cheaper for Japanese consumers.
B. Japanese goods will be more expensive in the United States.
C. the U.S. dollar will buy fewer Japanese yen.
D. Japanese goods will be cheaper in the United States.
86. The supply of euros on the foreign exchange market slopes:
A. upward because European consumers buy fewer foreign goods when the value of the euro
decreases.
B. upward because European consumers buy more foreign goods when the value of the euro
decreases.
C. downward because European consumers buy fewer foreign goods when the value of the euro
decreases.
D. downward because European consumers buy more foreign goods when the value of the euro
decreases.
87. The demand for euros on foreign exchange markets slopes:
A. upward because foreign consumers buy fewer European goods when the value of the euro
increases.
B. upward because foreign consumers buy more European goods when the value of the euro
increases.
C. downward because foreign consumers buy fewer European goods when the value of the euro
increases.
D. downward because foreign consumers buy more European goods when the value of the euro
increases.
88. Refer to the graph shown.
If the price of shekels is $1.10, the quantity of shekels supplied is:
A. greater than the quantity demanded. This causes the shekel to gain value.
B. less than the quantity demanded. This causes the shekel to gain value.
C. greater than the quantity demanded. This causes the shekel to lose value.
D. less than the quantity demanded. This causes the shekel to lose value.
89. Refer to the graph shown.
If the price of shekels is $0.90, the quantity of shekels supplied is:
A. greater than the quantity demanded. This causes the shekel to gain value.
B. less than the quantity demanded. This causes the shekel to gain value.
C. greater than the quantity demanded. This causes the shekel to lose value.
D. less than the quantity demanded. This causes the shekel to lose value.
90. The discovery of a new source of oil will lead to:
A. increased demand for another currency; appreciation of the currency.
B. increased demand for domestic currency; depreciation of the currency.
C. decreased demand for domestic currency; appreciation of the currency.
D. increased demand for domestic currency; appreciation of the currency.
91. If the United States’ price level is below the world price level, all of the following would be
successful in raising the world price (supply) level except:
A. the dollar appreciating.
B. the U.S. gaining a comparative advantage.
C. wages in the U.S. falling.
D. the value of U.S. assets falling.
92. If the world supply curve is SW0,
A. there is a trade deficit.
B. there is a trade surplus.
C. trade is in balance.
D. there is no trade.
93. If the world supply curve is SW0,
A. domestic quantity supplied is unrelated to domestic quantity demanded.
B. domestic quantity supplied is less than domestic quantity demanded.
C. domestic quantity supplied exceeds domestic quantity demanded.
D. domestic quantity supplied equals domestic quantity demanded.
94. If the world supply curve is SW1,
A. there is a trade deficit.
B. there is a trade surplus.
C. trade is in balance.
D. there is no trade.
95. If the world supply curve is SW1,
A. there is a trade surplus of Q2 – Q1.
B. there is a trade deficit of Q2 – Q1.
C. there is a trade deficit of Q1 – Q2.
D. there is a trade surplus of Q1 – Q2.
96. If the world supply curve is SW1, and the country’s exchange rate depreciates,
A. the trade surplus will move toward balance.
B. the trade surplus will become greater.
C. the trade deficit will move toward balance.
D. the trade deficit will become greater.
97. If the world supply curve is SW0, and the country discovers a significant natural resource that
can be exported, the world supply curve will shift:
A. down and the trade balance will become a deficit.
B. down and the trade balance will become a surplus.
C. up and the trade balance will become a deficit.
D. up and the trade balance will become a surplus.
98. The discovery of a significant new source of oil that can be exported will shift the:
A. supply of a currency to the right and lead to a currency depreciation.
B. supply a currency to the right and lead to a currency appreciation.
C. demand for a currency to the left and lead to a currency depreciation.
D. demand for a currency to the right and lead to a currency appreciation.
99. If a country’s exchange rate depreciates,
A. the world price level rises.
B. the world price level falls.
C. the world price level remains unchanged.
D. Exchange rates have no impact on world prices.
100. If a country’s exchange rate appreciates, the world price level:
A. rises.
B. falls.
C. remains unchanged.
D. could rise or fall.
101. The depreciation of a currency will:
A. balance a trade surplus.
B. have no impact on a country’s comparative advantages.
C. worsen a country’s comparative advantages.
D. improve a country’s comparative advantages.
102. The appreciation of a currency will:
A. balance a trade surplus.
B. have no impact on a country’s comparative advantages.
C. worsen a country’s comparative advantages.
D. improve a country’s comparative advantages.
103. The resource curse is:
A. the curse that countries that have an abundance of resources tend to have lower economic
growth compared to countries with fewer natural resources.
B. the curse that countries that have fewer resources tend to have lower economic growth
compared to countries with abundant natural resources.
C. the curse of many developing countries—they have few natural resources and their
economies cannot grow.
D. an economic theory that has yet to be developed because there are no examples in the real
world.
104. The discovery of a significant new source of oil that can be exported will lead to:
A. depreciation of the currency and a loss of comparative advantage in other sectors.
B. depreciation of the currency and a gain of comparative advantage in other sectors.
C. appreciation of the currency and a loss of comparative advantage in other sectors.
D. appreciation of the currency and a gain of comparative advantage in other sectors.
105. Globalization has increased the demand for the logistical support and marketing sectors but
has led to a decline in the manufacturing industry. The effects of this are the same as those
caused by the:
A. renewable curse.
B. depreciation curse.
C. resource curse.
D. common curse
106. The resource curse is when:
A. a nation only has an inherent comparative advantage for one resource.
B. a nation only has a transferrable comparative advantage for one resource.
C. the discovery of a resource in a nation causes its currency to appreciate and thus causes the
nation to lose comparative advantages in other sectors.
D. a nation has neither an inherent nor a transferrable comparative advantage for any resource.
107. Countries that exported a lot of gas or oil would see their exchange rates go up as a result.
This in turn could make their manufacturing exports uncompetitive and possibly slow economic
growth. This situation can be described as the:
A. renewable curse.
B. depreciation curse.
C. resource curse.
D. common curse.
