1) under u.s. commercial policy, the escape clause results in:
a.temporary quotas granted to firms injured by import competition
b.tariffs that offset export subsidies granted to foreign producers
c.tax advantages extended to minority-owned exporting firms
d.duties which offset commercial dumping on the part of foreign firms
2) to temporarily offset an appreciation in the dollar’s exchange value, the federal
reserve could ____ the u.s. money supply which would promote a (an) ____ in u.s.
interest rates and a ____ in investment flows to the united states.
a.increase, decrease, decrease
b.increase, increase, decrease
c.decrease, decrease, decrease
d.decrease, increase, decrease
3) currency devaluation and revaluation are considered to be expenditure-changing
policies since they alter a country’s aggregate demand for goods and services.
a.true
b.false
4) if uganda devalues its shilling by 10 percent and burundi devalues its franc by 5
percent, the shilling’s exchange value appreciates 10 percent against the franc.
a.true
b.false
5) which of the following is likely to result in long-run depreciation of the u.s. dollar
relative to the euro?
a.relatively low interest rates in the united states
b.relatively high labor productivity in the united states
c.tariffs levied by the united states on steel imports from europe
d.stronger american preferences for goods produced in europe
6) during the 1980s, the u.s. government imposed sugar import quotas in an attempt to
reduce its costs of maintaining price supports for u.s. sugar growers.
a.true
b.false
7) smaller nations with relatively undiversified economies and large trade sectors tend
to peg their currencies to one of the world’s key currencies.
a.true
b.false
8) if it takes 113.28 yen to buy $1, it takes $.009624 to buy 1 yen.
a.true
b.false
9) which form of economic integration occurs when participating countries abolish
tariffs on trade among themselves, establish a common tariff on imports from
nonmembers, and permit free movement of capital and labor within the organization?
a.free trade area
b.economic union
c.common market
d.monetary union
10) the most important determinants of sanctions include
a.cultural factors including nationalistic attitudes
b.strength of political opposition in the targeting nation
c.the number of nations imposing sanctions
d.all of the above
11) the marshall-lerner condition illustrates
a.the price effects of a nation’s currency depreciation on its trade deficit
b.the price effects of a nation’s currency appreciation on its trade deficit
c.the effect of fixed exchange rate systems on the trade balance
d.none of the above
12) in the united states, the proposed north american free trade agreement was generally
supported by:
a.labor unions
b.electronics firms
c.environmentalists
d.citrus producers
13) assume boeing inc. (of the united states) and airbus industrie (of europe) rival for
monopoly profits in the canadian aircraft market. suppose the two firms face identical
cost and demand conditions, as seen in figure 6.1.
figure 6.1. strategic trade policy: boeing versus airbus
referring to figure 6.1, assume that boeing is the first to enter the canadian market.
without a governmental subsidy, the firm maximizes profits by selling ____ aircraft at a
price of $____, and realizes profits totaling $____.
a.4, $12 million, $16 million
b.4, $16 million, $12 million
c.8, $12 million, $16 million
d.8, $16 million, $12 million
14) complete currency pass-through arises when a 10 percent depreciation in the value
of the dollar causes u.s.:
a.import prices to fall by 10 percent
b.import prices to rise by 10 percent
c.export prices to rise by 10 percent
d.export prices to rise by 20 percent
15) grain shortages in countries that buy large amounts of grain from the united states
would increase the demand for american grain and:
a.reduce the demand for dollars
b.increase the demand for dollars
c.reduce the supply of dollars
d.increase the supply of dollars
16) suppose researchers discover that swiss beer causes cancer when given in large
amounts to british mice. this finding would likely result in a (an):
a.increase in the demand for swiss francs
b.decrease in the demand for swiss francs
c.increase in the supply of swiss francs
d.decrease in the supply of swiss francs
17) international trade is based on the idea that:
a.exports should exceed imports
b.imports should exceed exports
c.resources are more mobile internationally than are goods
d.resources are less mobile internationally than are goods
18) where are foreign currency options traded?
19) what are the disadvantages of forming joint ventures?
20) what is international economic policy coordination?
21) explain how advocates of strategic trade policy differ from the classical free traders
in their treatment of externalities?
22) what are the intent and impact of domestic content requirements?
23) what are the typical ways in which multinational enterprises have diversified their
operations?
24) what are the components of the current account of the balance of payments?