1) the value to american residents of income earned from overseas investments shows
up in which account in the u.s. balance of payments?
a.current account
b.trade account
c.unilateral transfers account
d.capital account
2) figure 8.1 depicts the supply and demand schedules of calculators for greece, a
‘small” country that is unable to affect the world price. greece’s supply and demand
schedules of calculators are respectively depicted by sg and dg. assume that greece
imports calculators from either germany or france. suppose germany is the world’s
low-cost producer who can supply calculators to greece at $20 per unit, while france
can supply calculators at $30 per unit.
figure 8.1. effects of a customs union
consider figure 8.1. comparing the trade creation and trade diversion effects, the impact
of the greece/france customs union on the welfare of greece is:
a.a $5 increase in economic welfare
b.a $10 increase in economic welfare
c.a $5 decrease in economic welfare
d.no change in economic welfare
3) the imposition of a domestic content requirement by the united states would cause
consumer surplus for americans to:
a.rise
b.fall
c.remain unchanged
d.none of the above
4) open economies have more:
a.competition
b.firm turnover
c.new firms entering the market
d.all of these
5) international joint ventures tend to yield a welfare increasing market-power effect
and a welfare decreasing cost-reduction effect.
a.true
b.false
6) all of the following are obstacles to international economic policy coordination
except:
a.different national objectives and institutions
b.different national political climates
c.different phases in the business cycle
d.different national currencies
7) most multinational corporations have a low ratio of foreign sales to total sales,
usually 5 percent or less.
a.true
b.false
8) the classical economists assumed
a.that the volume of final output is fixed at the full-employment level in the long-run
b.the velocity of money is constant
c.the velocity of money depends on physical, structural, and institutional factors
d.all of the above
9) the wto’s efforts to promote trade liberalization globally:
a.have become easier
b.have become more difficult
c.have remained stable
d.none of these is correct
10) which method has not generally been used by the international commodity
agreements to stabilize commodity prices?
a.production quotas applied to the level of commodity output
b.buffer stock arrangements among producing nations
c.export restrictions applied to international sales of commodities
d.measures to nationalize foreign-owned production operations
11) the figure below depicts the steel market for portugal, a small nation that is unable
to affect the world price. assume that germany and france can supply steel to portugal at
a price of $200 and $300 respectively.
figure 8.2. portugal’s steel market
consider figure 8.2. with free trade, portugal will import 25 tons of steel from germany
at a price of $200 per ton.
a.true
b.false
12) “guest worker” programs generally result in temporary migration of workers from:
a.wealthy nations to wealthy nations
b.wealthy nations to impoverished nations
c.impoverished nations to wealthy nations
d.impoverished nations to impoverished nations
13) with globalization and import competition, u.s. prices have generally:
a.increased
b.decreased
c.remained stable
d.all of these at various times
14) regarding the equation of exchange, the classical economists assumed that final
output was below its maximum level while the velocity of money was volatile.
a.true
b.false