1) since the 1970s, the merchandise trade account of the u.s. balance of payments has
registered deficit.
a.true
b.false
2) to the extent that subsidies granted to exporting firms reduce the foreign price of
their goods, the subsidizing country’s terms of trade worsen.
a.true
b.false
3) figure 7.3. world oil market
consider figure 7.3. under a profit-maximizing cartel, the quantity of oil produced
equals:
a.40 barrels
b.70 barrels
c.90 barrels
d.110 barrels
4) under a system of fixed exchange rates, international reserves are needed to bridge
the gap between monetary receipts and monetary payments.
a.true
b.false
5) international dumping occurs when foreign buyers are charged higher prices than
domestic buyers for an identical product, after allowing for transportation costs and
tariff duties.
a.true
b.false
6) the keynesian income-adjustment mechanism contends that a trade-surplus nation
tends to realize falling income and falling imports, thus accentuating the trade surplus.
a.true
b.false
7) if the u.s. post-trade consumption point lies along its production possibilities
schedule, the united states achieves a higher level of welfare with trade than without
trade.
a.true
b.false
8) a dynamic welfare gain resulting from the formation of the european union would be:
a.trade diversion
b.trade creation
c.diseconomies of scale
d.economies of scale
9) multinational enterprises:
a.increase the transfer of technology between nations
b.make it harder for nations to foster activities of comparative advantage
c.always enjoy political harmony in nations where their subsidiaries operate
d.require governmental subsidies in order to conduct worldwide operations
10) figure 5.6 domestice supply and demand for wine – us
consider figure 5.6.in the global market for wine, the eu is willing to supply as much
wine as the us demands at $8 per bottle.what will happen to the price of a bottle of wine
in the us if a quota of 15 bottles of wine is imposed?
a.increase to $15
b.increase to $10
c.stay the same at $8
d.decrease to $5
11) regarding the applicability of free trade to cigarettes, it is correct to say:
a.the rules of free trade apply to cigarettes
b.the rules of free trade should not apply to cigarettes
c.a and b are the topic of current debate
d.there are special rules applying to cigarettes world-wide
12) under u.s. commercial policy, which clause permits the modification of a trade
liberalization agreement on a temporary basis if serious injury occurs to domestic
producers as a result of the agreement?
a.adjustment assistance clause
b.escape clause
c.most-favored-nation clause
d.reciprocal-trade clause
13) refer to table 10.3. the goods-and-services balance registered a surplus of $50
billion.
a.true
b.false
14) in the post world war ii era, the japanese government formed industrial policies to
encourage the development of its steel, auto, shipbuilding, and machine tool industries.
a.true
b.false
15) 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, the airbus subsidy leads to a (an) increase/decrease in canadian
consumer surplus of $____, as compared to the consumer surplus that existed in the
absence of a subsidy.
a.increase of $8 million
b.increase of $10 million
c.decrease of $8 million
d.decrease of $10 million
16) an expenditure-increasing policy would consist of an increase in:
a.import tariffs
b.import quotas
c.governmental taxes
d.the money supply
17) u.s. antidumping duties are intended to neutralize exports to the united states at
prices below average total cost or exports to the united states at prices lower than those
charged in the exporter’s home market.
a.true
b.false
18) if mexico applies tariffs to imports of manufactured goods, mexico’s demand for
foreign exchange will rise and the peso will depreciate under a system of floating
exchange rates.
a.true
b.false
19) does exposure to competition with the world leader in a particular industry improve
a firm’s productivity?
20) what is exchange rate overshooting?
21) who were the losers in the u.s. as a result of nafta?
22) what are guest workers?
23) what is a pass-through relationship?
24) was the plaza agreement of 1985 a success?
25) is it possible to add up the preferences of all consumers in an entire nation?
26) how is the equilibrium rate of exchange determined?