Archives: Quiz

1) expenditure-changing policies modify the direction of aggregate demand, shifting it between domestic output and imports. a.true b.false 2) refer to table 14.1. assuming that toyota obtains all inputs from japanese suppliers and that the yen/dollar exchange rate is 200 […]

1) the world trade organization was established by the ____ of multilateral trade negotiations: a.kennedy round b.tokyo round c.uruguay round d.clinton round 2) following world war ii, the u.s.: a.became less open b.negotiated reductions in trade barriers with other countries […]

1) europe’s jumbo-jet manufacturer, airbus, has justified receiving governmental subsidies on the grounds that the subsidies prevent the united states from becoming a monopoly in the jumbo-jet market. a.true b.false 2) figure 6.3 represents the iraqi computer market. assume iraq […]

1) the mercantilists contended that because one nation’s gains from trade come the expense of its trading partners, not all nations could simultaneously realize gains from trade. a.true b.false 2) although tariffs on imported steel may lead to job gains […]

1) which of the following is a fallacy of international trade? a.trade is a zero-sum activity b.exports increase employment in exporting industries c.import restrictions increase employment in import-competing industries d.tariffs and quotas reduce trade volume 2) a main disadvantage of […]

1) exchange rates are determined by the unregulated forces of supply and demand for foreign currencies as long as central banks do not intervene in the foreign exchange markets. a.true b.false 2) figure 13.4. canadian economy under a fixed exchange […]

1) in the forward market, the exchange rate is agreed on at the time of the currency contract, but payment is not made until the future delivery of the currency actually takes place. a.true b.false 2) consider table 11.1. if […]

1) figure 9.1 illustrates the market conditions facing sony company and american company initially operating as competitors in the domestic ball bearing market. each firm realizes constant long-run costs, mc0=ac0. figure 9.1. international joint venture consider figure 9.1. at the […]

1) concerning exchange rate forecasting, fundamental analysis involves consideration of a variety of macroeconomic variables and policies that tend to affect currency values. a.true b.false 2) assume that ford motor company obtains some of its inputs in mexico (foreign sourcing). […]

1) a depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is: a.constant b.inelastic c.elastic d.unitary elastic 2) the use of indifference curves helps us determine the point: a.along the terms-of-trade line […]

1) most developing countries have pollution-control laws and enforcement policies that are more stringent than those of the major industrial countries. a.true b.false 2) the canadian dollar would depreciate on the foreign exchange market if: a.canadian consumer tastes change in […]

1) suppose the president lowers tariffs on radios as the result of negotiations under the trade agreements program. radio producers in the united states can appeal under the: a.escape clause if rising imports substantially injure the u.s. radio industry b.escape […]

1) figure 5.5 illustrates the television market for mexico, assumed to be a small country that is unable to affect the world price. smexico is the domestic supply schedule and dmexico is the domestic demand schedule. suppose that japan can […]

1) a tariff can be thought of as a tax on imported goods. a.true b.false 2) boeing aircraft company was able to cover its production costs of the first “jumbo jet” in the 1970s because boeing could market it to […]

1) the imposition of pollution-control regulations on domestic steel manufacturers leads to decreases in production costs and an improvement in the steel manufacturers’ competitiveness. a.true b.false 2) according to the general agreement on tariffs and trade and its successor, the […]

1) although an import tariff provides the domestic government additional tax revenue, it benefits domestic consumers at the expense of domestic producers. a.true b.false 2) the diagram below illustrates the international tin market. assume that the producing and consuming countries […]

1) trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union. a.true b.false 2) a nation whose imports constitute a very small portion of the […]

1) the figure below illustrates the supply and demand schedules of swiss francs under a system of floating exchange rates. figure 12.2. the market for swiss francs refer to figure 12.2. if the rate of inflation in the united states […]

1) to keep the yen’s exchange value from appreciating against the dollar, japan’s exchange stabilization fund would buy yen for dollars on the foreign exchange market. a.true b.false 2) international trade benefits: a.all workers b.most workers c.many workers d.none of […]

1) which of the following constitute(s) the largest component of the world’s international reserves? a.gold b.special drawing rights c.imf drawings d.foreign currencies 2) both economic theory and empirical studies support the notion that foreign direct investment is conducted in anticipation […]

1) given fixed exchange rates, assume mexico initiates contractionary monetary and fiscal policies to combat inflation. these policies will also: a.reduce a balance-of-payments surplus b.reduce a balance-of-payments deficit c.increases both imports and exports d.decrease both imports and exports 2) constant […]

1) most foreign direct investment in the united states occurs in: a.public utilities b.communications c.manufacturing d.mining and smelting 2) the world trade organization brings into the multilateral trading system manufactured goods and agricultural products, but not trade in services, intellectual […]

1) economic interdependence occurs through a.trade b.labor migratin c.capital flows d.all of these 2) 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 […]

1) figure 5.5 illustrates the television market for mexico, assumed to be a small country that is unable to affect the world price. smexico is the domestic supply schedule and dmexico is the domestic demand schedule. suppose that japan can […]

1) among the benefits that a regional trading arrangement can provide are all of these except: a.economies of large scale production b.specialization fostering c.attracting foreign investment d.a shorter production time 2) since 1974, the major industrial countries have operated under […]

1) figure 11.1 illustrates the supply and demand schedules for the swiss franc. assume that exchange rates are flexible. figure 11.1. supply and demand schedules of francs refer to figure 11.1. at the equilibrium exchange rate of ____ per franc, […]

1) given an open economy with high capital mobility, all of the following statements are true except: a.fiscal policy is strengthened under fixed exchange rates b.monetary policy is weakened under fixed exchange rates c.monetary policy is strengthened under floating exchange […]

1) to help developing nations strengthen their international competitiveness, many industrial nations have granted nonreciprocal tariff reductions to developing nations under the: a.international commodity agreements program b.multilateral contract program c.generalized system of preferences program d.export-led growth program 2) by the […]

1) the diagram below represents the exchange market position of the united states in trade with the united kingdom. starting at the equilibrium exchange rate of $3 per pound, suppose the demand for pounds rises from d0 to d1. figure […]

1) to reduce a current account deficit, a country should either decrease the budget deficit of its government or reduce investment spending relative to saving. a.true b.false 2) figure 12.3market for british pounds consider figure 12.3.the market is initially governed […]

1) when a nation realizes external balance a.it can have a current account deficit b.it can have a current account surplus c.it has neither a current account deficit nor a current account surplus d.both a and b 2) opening the […]

1) developing countries with more than one major trading partner often peg their currencies to a group or basket of those trading partner currencies. a.true b.false 2) the high point of u.s. protection culminated with the passage of the: a.smoot-hawley […]

1) according to the product-life-cycle theory, the first stage of a product’s trade cycle is when it is introduced to the home market. a.true b.false 2) if canada experiences constant opportunity costs, its supply schedule of steel will be: a.downward-sloping […]

1) the trade model of the swedish economists heckscher and ohlin maintains that: a.absolute advantage determines the distribution of the gains from trade b.comparative advantage determines the distribution of the gains from trade c.the division of labor is limited by […]

1) in an open trading system, a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost. a.true b.false 2) increased foreign competition tends to: a.intensify inflationary […]

1) according to the theory of intra-industry trade, many manufactured goods undergo a trade cycle in which the home country initially is an exporter and eventually becomes an importer of a product. a.true b.false 2) the exchange of borrowing country […]

1) in 1973, the reform of the international monetary system resulted in the change from: a.adjustable pegged rates to managed floating rates b.managed floating rates to adjustable pegged rates c.crawling pegged rates to freely floating rates d.freely floating rates to […]

1) consider table 4.1. prior to the tariff, the total price of domestically-produced vcrs is: a.$150 b.$200 c.$225 d.$250 2) trade creation tends to more than offset trade diversion for a home country forming a customs union with partner countries […]

1) the u.s. “trade-remedy laws” could establish all of the following except: a.import tariffs to protect u.s. firms seriously injured by foreign competition b.countervailing duties which neutralize foreign export subsidies c.antidumping duties which protect u.s. firms from imports sold at […]

1) figure 13.1. u.s. capital and financial account refer to figure 13.1. downward movements along u.s. capital and financial account schedule ca0 would be caused by: a.u.s. interest rates rising relative to foreign interest rates b.u.s. interest rates falling relative […]

1) refer to table 2.2. according to the principle of comparative advantage: a.south korea should export steel b.south korea should export steel and vcrs c.japan should export steel d.japan should export steel and vcrs 2) ____ is the ability of […]

1) figure 13.1. u.s. capital and financial account refer to figure 13.1. upward movements along u.s. capital and financial account schedule ca0 would be caused by: a.u.s. interest rates rising relative to foreign interest rates b.u.s. interest rates falling relative […]

1) figure 6.4japanese market for jetliners consider the japanese market for jetliners as depicted in figure 6.5.suppose lone producer of jetliners in the world is boeing and boeing faces a constant marginal cost of $20 million per jetliner but now […]

1) a country having stronger preferences for imports than its trading partners have for its exports finds its demand for foreign exchange rising more rapidly than its supply of foreign exchange. a.true b.false 2) which of the following is a […]

1) for the united states, suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent. for japan, suppose the annual interest rate on government securities equals 10 percent while the annual […]

1) 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.if the us imposes a […]

1) that u.s. importers purchase bananas from brazil constitutes a debit transaction on the u.s. balance of payments. a.true b.false 2) countervailing duties may be imposed: a.in response to a foreign export subsidy b.in response to a foreign antidumping tariff […]

1) figure 5.1 illustrates the steel market for mexico, assumed to be a ‘small” country that is unable to affect the world price. suppose the world price of steel is given and constant at $200 per ton. now suppose the […]

1) open economies have more: a.competition b.firm turnover c.new firms entering the market d.all of these 2) increased foreign competition tends to: a.intensify inflationary pressures at home b.induce falling output per worker-hour for domestic workers c.place constraints on the wages […]

1) in certain industries, japanese employers do not lay off workers. therefore, they sometimes have excess supplies of goods that they cannot sell on the home market without lowering prices. to hold down losses, they sell goods in overseas markets […]