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1) when a country joins the international monetary fund, the country is assigned a
quota, or subscription fee. at the present time, this quota is paid
a. entirely in the countrys own currency
b. 25 percent in gold and 75 percent in the country's own currency
c. 25 percent in internationally acceptable currencies ("hard currencies") and 75 percent
in the countrys own currency
d. 75 percent in internationally acceptable currencies ("hard currencies") and 25 percent
in special drawing rights (sdrs)
2) if an individual wished to lock in a future deposit rate of 8 percent in the eurodollar
interest rate options market, she should
a. purchase a call at a strike price of 92
b. purchase a put at a strike price of 108
c. sell a put at a strike price of 8
d. sell a call at a strike price of 92
3) if a countrys ratio of imports to national income rises as the country grows over time,
this implies, other things equal, that the countrys marginal propensity to import is
__________ the countrys average propensity to import and, consequently, that the
countrys income elasticity of demand for imports (yem) is __________.
a. greater than; less than 1.0
b. greater than; greater than 1.0
c. less than; less than 1.0
d. less than; greater than 1.0
4) the average level of tariffs in developing countries, which is __________ the average
level of tariffs in the developed countries, __________ after the conclusion of the
uruguay round of trade negotiations.
a. lower than; did not change
b. lower than; fell
c. higher than; did not change
d. higher than; fell
5) in a situation of imperfect short-term capital mobility between countries, if the bp
curve is flatter than the lm curve for country a, then an internal real sector shock in
country a (such as an autonomous increase in real investment spending) will have a
__________ impact on as national income under fixed exchange rates than under
flexible exchange rates; if the bp curve is steeper than the lm curve for country a, then
that internal real sector shock __________ impact on as income under fixed exchange
rates than under flexible exchange rates.
a. larger; will have a smaller
b. larger; will also have a larger
c. smaller; will also have a smaller
d. smaller; will have a larger
6) if a commodity is classified as labor-intensive at one set of relative factor prices but
capital-intensive at another set of relative factor prices, this situation is known as
a. demand reversal
b. factor-intensity reversal
c. balance-of-payments reversal
d. factor price reversal
7) in attempting to determine whether a developing countrys export price instability is
caused by shifts in world demand for the countrys exports or by shifts in the supply
curve of the countrys exports (along with corresponding shifts in the supply curves of
competing exporters), a general rule is that, other things equal, if the demand curve is
doing the shifting, then price and quantity will move __________; in addition, if the
supply curve is shifting along a given demand curve, then, other things equal, price and
quantity __________.
a. directly with each other (i.e., when price rises, quantity rises, and when price falls,
quantity falls); will move inversely with each other (i.e., when price rises, quantity falls,
and when price falls, quantity rises)
b. directly with each other (i.e., when price rises, quantity rises, and when price falls,
quantity falls); also will move directly with each other
c. inversely with each other (i.e., when price rises, quantity falls, and when price falls,
quantity rises); will move directly with each other (i.e., when price rises, quantity rises,
and when price falls, quantity falls)
d. inversely with each other (i.e., when price rises, quantity falls, and when price falls,
quantity rises); also will move inversely with each other
8)
in the diagram above, where curve 0abc relates the market value of ldc external debt to
the face value of the external debt, the range __________ indicates a situation where
debt relief or forgiveness for ldcs would reduce the market value of commercial banks
holdings of ldc debt but by less than the amount of debt forgiven. in this range, any one
bank __________.
a. ab; would not want to forgive debt unless all other banks did also
b. ab; would be willing to forgive debt even though other banks did not forgive debt
c. bc; would not want to forgive debt unless all other banks did also
d. bc; would be willing to forgive debt even though other banks did not forgive debt
9) given the following payoff matrix for two interdependent firms in duopoly, where the
figure in the lower left of each box shows firm h's profit and the figure in the upper
right of each box shows firm f's profit:
in this situation firm f will __________.
a. always produce
b. never produce
c. produce only if its cost of production is less than $120
d. never produce if its cost of production exceeds $10
10) (this question pertains to material in appendix c.)
suppose that country a has only three categories of traded goods and that as exports and
imports in the three categories are as shown in the table below:
in this situation, country as index of intra-industry trade would have a value of
__________.
a. 0.3
b. 0.4
c. 0.6
d. 0.7
11) in the ordinary analysis of is and lm curves (ignoring the bp curve),
a. expansionary fiscal policy shifts the is curve to the left
b. expansionary monetary policy shifts the lm curve to the left
c. expansionary fiscal and expansionary monetary policy undertaken at the same time
will lead to an increase in the level of equilibrium income
d. expansionary fiscal policy and contractionary monetary policy acting together will
lead to a decline in the equilibrium interest rate
12) if, as is suggested by some recent research, a countrys consumers have a preference
for home goods over foreign goods that is not accounted for in the analysis, then this
__________ will lead to a prediction of trade volume that is __________ than the
actual amount of trade volume of the country.
a. foreign bias; larger
b. foreign bias; smaller
c. home bias; larger
d. home bias; smaller
