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88. Suppose the U.S. price elasticity of demand for imports equals 1.2 and the foreign elasticity of demand for U.S.
exports equals 1.5. According to the Marshall-Lerner condition, an appreciation of the dollar’s exchange value would
worsen the U.S. balance of trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
89. Empirical research suggests that most countries’ price elasticities of demand for imports and exports are very inelastic,
suggesting that currency depreciation would result in a worsening of a country’s balance of trade.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
90. The J-curve effect implies that in the short run a currency depreciation will result in a balance of trade surplus for the
home country. As time passes, however, the home country’s balance of trade will move toward deficit.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
J-Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
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Page 36
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
91. Suppose the dollar appreciates 10 percent against the Swiss franc. According to the J-curve effect, the U.S. balance of
trade will initially worsen, but then improve as time passes.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
J-Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
92. The J-curve effect implies that the price elasticity of demand for imports and exports is more elastic in the short run
than in the long run.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
J-Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
93. The extent to which changing currency values result in changing prices of imports and exports is known as the J-curve
effect.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Copyright Cengage Learning. Powered by Cognero.
Page 37
TOPICS:
J-Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
94. Complete currency pass through suggests that if the dollar’s exchange value depreciates by 10 percent, imports will
become 10 percent more expensive to Americans while U.S. exports will become 10 percent cheaper to foreigners.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
95. Partial currency pass-through implies that if the dollar’s exchange value appreciates by 10 percent, imports would
become, say, 6 percent more expensive to Americans while U.S. exports would become, say, 8 percent cheaper to
foreigners.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
96. Suppose the U.S. economy is operating at full capacity and the dollar’s exchange value depreciates. According to the
absorption approach, the United States would have to accept reductions in domestic spending if the U.S. trade balance is
to improve as a result of the depreciation.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
97. How do demand elasticities influence a country’s trade position when exchange rates change?
ANSWER:
According to the elasticities approach, currency depreciation leads to the greatest
improvement in a country’s trade position when demand elasticities are high. This is because
the response of trade volumes to exchange-rate changes is highest when demand is elastic.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
98. How is the absorption approach used for analyzing the effects of currency devaluation?
ANSWER:
The absorption approach provides insights about the changes in the trade balance by
considering the impact of devaluation on the spending behavior of the domestic economy and
the influence of domestic spending on the trade balance.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
99. What is a pass-through relationship?
ANSWER:
The extent to which exchange-rate changes lead to changes in import prices and export prices
is known as the pass-through relationship. Complete (partial) pass-through occurs when a
change in the exchange rate brings about a proportionate (less than proportionate) change in
export prices and import prices. Empirical evidence suggests that pass-through tends to be
partial rather than complete.
POINTS:
1
DIFFICULTY:
Moderate
time path of devaluation
QUESTION TYPE:
Essay
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
100. How do movements in exchange rates affect domestic costs, in the presence of foreign sourcing?
ANSWER:
Manufacturers often obtain inputs from abroad whose costs are denominated in terms of a
foreign currency. As foreign-currency-denominated costs become a larger portion of a
producer’s total costs, an appreciation of the domestic currency leads to a smaller increase in
the foreign-currency cost of the firm’s output and a larger decrease in the domestic cost of the
firm’s output, compared to the cost changes that occur when all input costs are denominated in
the domestic currency. The opposite applies for currency depreciation.
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Essay
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Cost Cutting Strategies of Manufacturers in Response to Currency Appreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:26 PM
DATE MODIFIED:
6/22/2016 3:26 PM
101. According to the ______, following a currency devaluation, the balance of trade worsens for a while before
improving.
a.
b.
c.
d.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
J–Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 8:08 AM
DATE MODIFIED:
7/5/2016 8:10 AM
102. The ______ refers to the extent to which changing currency values result in changes in import and export prices.
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b.
Marshall-Lerner effect
c.
J-curve effect
d.
pass-through effect
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 8:10 AM
DATE MODIFIED:
7/5/2016 8:23 AM
103. Assume that a country is operating at full employment. According to the absorption approach, the only way that
currency depreciation can improve the balance of trade is for the country to implement
a.
expansionary fiscal policy to increase domestic spending
b.
expansionary monetary policy to increase domestic spending
c.
contractionary fiscal policy or monetary policy to cut domestic spending
d.
import tariffs and quotas that increase spending on domestically produced goods
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/6/2016 10:48 PM
DATE MODIFIED:
7/6/2016 10:50 PM
104. Empirical evidence regarding the effects of currency devaluation on the balance of trade indicates that
a.
complete exchange-rate pass-through generally occurs
b.
partial exchange-rate pass-through generally occurs
c.
currency devaluations always improve the trade balance in the short run
d.
currency devaluations always worsen the trade balance in the long run
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Copyright Cengage Learning. Powered by Cognero.
Page 41
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 10:50 PM
DATE MODIFIED:
7/6/2016 10:52 PM
105. Assume that a country operates at less than full employment and has excess productive capacity. According to the
absorption approach, the currency devaluation (depreciation) tends to
a.
expand domestic output and improve the balance of trade
b.
expand domestic output and worsen the balance of trade
c.
contract domestic output and improve the balance of trade
d.
contract domestic output and worsen the balance of trade
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/6/2016 10:52 PM
DATE MODIFIED:
7/6/2016 10:54 PM
106. According to the absorption approach, currency devaluation (depreciation) best leads to an improvement in the
balance of trade when a country
a.
operates at full employment with no excess production capacity
b.
operates at unemployment with excess production capacity
c.
realizes high rates of inflation
d.
realizes high rates of deflation
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 10:54 PM
DATE MODIFIED:
7/6/2016 10:56 PM
107. Concerning currency devaluation (depreciation), the elasticities approach and the absorption approach are theories
that deal with
a.
exports and imports of goods and services
b.
the domestic supply and demand of money
c.
capital inflows and capital outflows
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d.
rates of inflation and rates of deflation
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 10:56 PM
DATE MODIFIED:
7/6/2016 10:58 PM
108. The ______ is a theory of the balance of payments that shows how home-country spending on home-country goods
changes relative to home-country output
a.
monetary approach to currency deprecation
b.
elasticities approach to currency depreciation
c.
portfolio approach to currency depreciation
d.
absorption approach to currency depreciation
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 10:58 PM
DATE MODIFIED:
7/6/2016 11:00 PM
109. According to the Marshall-Lerner condition, a currency devaluation will be successful in improving a country’s
balance of trade (exports minus imports) if the
a.
sum of the elasticities of supply is more than 1
b.
sum of the elasticities of supply is less than 1
c.
sum of the elasticities of demand is more than 1
d.
sum of the elasticities of demand is less than 1
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
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KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/6/2016 11:01 PM
DATE MODIFIED:
7/6/2016 11:03 PM
110. Suppose a country devalues its currency. If the country’s demand for imports is ______, the price increase resulting
from the devaluation results in a relatively small decrease in the volume of imports, causing to total import expenditures
to increase.
a.
perfectly elastic
b.
relatively elastic
c.
unit elastic
d.
relatively inelastic
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/6/2016 11:03 PM
DATE MODIFIED:
7/6/2016 11:05 PM
111. Suppose a country devalues its currency. If the country’s demand for imports is ______, the price increase resulting
from the devaluation results in a relatively large decrease in the volume of imports, causing to total import expenditures to
decrease.
a.
perfectly inelastic
b.
relatively inelastic
c.
unit elastic
d.
relatively elastic
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
7/6/2016 11:05 PM
DATE MODIFIED:
7/6/2016 11:07 PM
112. According to the J-curve effect, following a currency devaluation, the balance of trade improves before it worsens.
a.
True
b.
False
ANSWER:
False
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Page 44
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
J–Curve Effect: Time Path of Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 11:08 PM
DATE MODIFIED:
7/6/2016 11:09 PM
113. The pass-through effect refers to extent that import prices and export prices adjust to currency devaluation.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/6/2016 11:09 PM
DATE MODIFIED:
7/6/2016 11:11 PM
114. The shorter the pass-through period, the sooner the impact of devaluation on export prices and import prices.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
7/6/2016 11:11 PM
DATE MODIFIED:
7/6/2016 11:12 PM
115. Assume that a country operates at full employment. According to the absorption approach, the only way that
currency depreciation can improve the country’s trade balance is for the country to reduce domestic spending (absorption),
thus freeing resources needed to produce additional export goods and import substitutes.
a.
True
b.
False
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Page 45
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/6/2016 11:13 PM
DATE MODIFIED:
7/6/2016 11:14 PM
116. Assume that a country realizes unemployment and excess production capacity. According to the absorption
approach, currency devaluation tends to decrease domestic output and worsen the balance of trade.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
7/6/2016 11:14 PM
DATE MODIFIED:
7/6/2016 11:16 PM
117. According to the absorption approach, currency devaluation best improves a country’s balance of trade if the country
operates at full employment with no excess production capacity.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The Absorption Approach to Currency Depreciation
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 11:19 PM
DATE MODIFIED:
7/6/2016 11:20 PM
118. The dominant use of dollars in invoicing U.S. trade helps explain the partial pass-through of changes in the dollar’s
exchange rate to U.S. import prices.
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a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/6/2016 11:20 PM
DATE MODIFIED:
7/6/2016 11:21 PM
119. The desire of foreign producers to preserve market share for goods sold in the United States helps contribute to
complete exchange-rate pass-through following a depreciation of the dollar.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Markets, market failure, a – DISC: Markets, market failure, and
externalities
TOPICS:
Exchange Rate Pass-Through
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/6/2016 11:22 PM
DATE MODIFIED:
7/6/2016 11:23 PM
120. To the extent that labor unions attain higher wages during periods of currency depreciation, the resulting wage
inflation reduces the improving competitiveness of a country’s business firms caused by depreciation
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
United States – PA – DISC: The role of money
TOPICS:
Effects of Exchange Rate Changes on Costs and Prices
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/6/2016 11:24 PM
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Page 47
DATE MODIFIED:
7/6/2016 11:25 PM
121. Suppose a country devalues its currency. If the country’s demand for imports is inelastic, the price increase resulting
from the devaluation results in a relatively small decrease in the volume of imports, causing to total import expenditures
to increase.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
7/6/2016 11:26 PM
DATE MODIFIED:
7/6/2016 11:27 PM
122. Suppose a country devalues its currency. If the country’s demand for imports is elastic, the price increase resulting
from the devaluation results in a relatively small decrease in the volume of imports, causing to total import expenditures
to increase.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Will Currency Depreciation Reduce a Trade Deficit? The Elasticity Approach
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
7/6/2016 11:27 PM
DATE MODIFIED:
7/6/2016 11:29 PM