FE 716 Test | Course Paper

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1) the most recently successfully completed gatt/wto round or set of multilateral trade

negotiations was the

a. doha development agenda

b. uruguay round

c. tokyo round

d. kennedy round

2) in the following table of production possibilities for a country,

there are __________ opportunity costs when moving to greater production of good x

and __________ when moving to greater production of good y.

a. increasing; decreasing

b. decreasing; constant

c. constant; increasing

d. increasing; increasing

3) if a countrys relative price of x (compared to y) in autarky is greater than the same

relative prices on the world market, then the country has a comparative advantage in

good __________, and it will __________.

a. x; export y and import x

b. x; export x and import y

c. y; export y and import x

d. y; export x and import y

4) in the following graph showing an isoquant and an isocost line, at point x,

mppl/mppk is __________ w/r and the producer has an incentive to use relatively more

__________ in producing the given output.

a. greater than; capital

b. greater than; labor

c. less than; capital

d. less than; labor

5) in the edgeworth box diagram for production,

a. a point off the contract curve (or production efficiency locus) cannot have more

production of one of the goods than can some point on the curve

b. a point off the contract curve (or production efficiency locus) can involve more

production of both goods than can any point on the curve

c. a movement from autarky to trade can be associated with a movement along the

contract curve (or production efficiency locus)

d. the contract curve (or production efficiency locus) will always be the diagonal of the

box

6) when the european community began operation in 1958, how many countries belong

to this union?

a. 6

b. 15

c. 25

d. 27

7) given the following classical-type table showing the number of days of labor input

required to obtain one unit of output of each of the two commodities in each of the two

countries:

the united states has an absolute advantage in the production of __________.

a. bicycles (only)

b. computers (only)

c. both bicycles and computers

d. neither bicycles nor computers

8) which one of the following items would be a debit in a countrys balance-of-payments

account?

a. exports of merchandise

b. an increase in a domestic citizens bank account in a foreign bank

c. increased holdings of domestic bonds by foreigners

d. exports of services

9) recent polling work discussed in the text pertaining to attitudes toward international

trade suggests that americans have __________. another finding is that greater

inequality in a country seems to be positively associated with a greater desire

__________.

a. a more favorable opinion of the overall benefit of international trade than do citizens

of most other countries; to restrict rather than to expand international trade

b. a more favorable opinion of the overall benefit of international trade than do citizens

of most other countries; to expand rather than to restrict international trade

c. a less favorable opinion of the overall benefit of international trade than do citizens

of many other countries; to restrict rather than to expand international trade

d. a less favorable opinion of the overall benefit of international trade than do citizens

of many other countries; to expand rather than to restrict international trade

suppose that the one-year interest rate in the united states is 6% and that the one-year

interest rate in the united kingdom is 3%. in the context of uncovered interest arbitrage and

with other things equal, funds would tend to flow out of the united states and into the

united kingdom

10) a. if the british pound is expected to depreciate by 2% relative to the dollar during the

coming year

b. if the british pound is expected to depreciate by 5% relative to the dollar during the

coming year

c. if the british pound is expected to appreciate by 2% relative to the dollar during the

coming year

d. if the british pound is expected to appreciate by 5% relative to the dollar during the

coming year

11) in a two-country world, if country a is the relatively labor-abundant and country b is

the relatively capital-abundant country by the price definition of factor abundance (and

where w is the wage rate and r is the return to capital), then __________. when the

countries move from autarky to heckscher-ohlin-type trade, the result will be that

__________.

a. (w/r)a < (w/r)b; (w/r)a will rise and (w/r)b will fall

b. (w/r)a < (w/r)b; (w/r)a will fall and (w/r)b will rise

c. (w/r)a > (w/r)b; (w/r)a will rise and (w/r)b will fall

d. (w/r)a > (w/r)b; (w/r)a will fall and (w/r)b will rise

you are given the following information pertaining to large country b with respect to good

w (which is produced at home and also imported), both under free trade and with a $10.00

import tariff in place:

given this information, and assuming that demand and supply curves are straight lines,

what is the gain in producer surplus in country b that occurs because of the imposition of

the tariff?

a. $56

b. $140

c. $348

d. $376

13) given the following information for industry x in country a, and assuming that at

least some of input y is imported, that one unit of y is required for each unit of x, and

that country a is a small country:

the effective rate of protection (erp) for industry x is __________ percent.

a. 9

b. 19

c. 30

d. 40

14) if some of a countrys resources are devoted to the provision of bribes and other

incentives to legislators so as to influence voting behavior on particular policies, these

actions __________; the actions are referred to by economists as __________.

a. lead to enhanced production of goods and services in the country rather than simply

to a redistribution of income; directly productive activity

b. lead to enhanced production of goods and services in the country rather than simply

to a redistribution of income; directly unproductive activity

c. simply lead to a redistribution of income in the country rather than to enhanced

production of goods and services; directly productive activity

d. simply lead to a redistribution of income in the country rather than to enhanced

production of goods and services; directly unproductive activity

15) the macroeconomic interpretation of a trade deficit for a country utilizes which one

of the following expressions (where y = national income, c = consumption, i =

investment, g = government spending on goods and services, x = exports, and m =

imports)?

a. y + (c + i + g) = (x – m)

b. (c + i + g) – y = (x – m)

c. (c + i) – g – y = (m – x)

d. y – (c + i + g) = (x – m)

16) which one of the following items would be classified as a debit in country as

balance-of-payments accounts?

a. the receipt of investment income from abroad by a country a corporation

b. an increase in the size of a bank account held in a country a bank by a country b

citizen

c. consulting services provided by a country a citizen to a country b firm

d. an increase in size of a bank account held in a country b bank by a country a

corporation

17) in the specific-factors model where capital in each sector is fixed but labor can

move freely between the two sectors, the opening of the country to trade will increase

the real return to capital in the __________ sector and will increase the real wage of a

worker who __________.

a. export; consumes mostly the import good

b. export; consumes mostly the export good

c. import-competing; consumes mostly the import good

d. import-competing; consumes mostly the export good

18) according to the department of commerce information given in the textbook, the

country which is the recipient of the largest amount of u.s. foreign direct investment

(fdi) is __________.

a. canada

b. the netherlands

c. saudi arabia

d. the united kingdom

19) in the price-specie-flow doctrine, a deficit country will __________ gold, and this

gold

flow will ultimately lead to __________ in the deficit countrys exports.

a. lose; a decrease

b. lose; an increase

c. gain; a decrease

d. gain; an increase

20) the event that essentially led to the end of the bretton woods system was

a. the devaluation of the british pound in 1967

b. the introduction of the euro in 1999

c. the introduction of special drawing rights (sdrs) in 1970

d. the u.s. governments declaration in 1971 that it would no longer buy and sell gold

from or to foreign central banks in exchange for dollars