Question 1

Exhibit 15-1 Production possibilities curves  In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of wheat is equal to:

Accepted Answer

A)  3 units of corn.
B)  1\3 unit of corn.
C)  1\3 unit of wheat.
D)  15 units of corn.
E)  30 units of corn.F) A) and B)
G) A) and C)

Question 2

Opening trade between two nations would:

Accepted Answer

A)  shift their production possibilities curves outward.
B)  shift their production possibilities curves inward.
C)  leave the production possibilities unchanged and increase their consumption possibilities.
D)  leave the production possibilities unchanged and decreased their consumption possibilities.E) A) and C)
F) None of the above

Question 3

A restriction on the quantity of a good that can be imported into a country is a(n) :

Accepted Answer

A)  tariff.
B)  quota.
C)  embargo.
D)  restricted exchange rate.E) A) and B)
F) None of the above

Question 4

Suppose there are two countries, X and Y. If the exchange rate, as measured in X's currency, is currently 9, what do citizens of the nation of Y see when they read their newspapers?

Accepted Answer

A)  The exchange rate for X's currency is 9.
B)  The exchange rate for X's currency is more than 9.
C)  The exchange rate for X's currency is 3.
D)  The exchange rate for X's currency is 0.11.
E)  Knowing one exchange rate does not mean we can tell the other exchange rate.F) B) and E)
G) A) and E)

Question 5

Exhibit 15-5 International currency markets  Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The demand curve in graph 15-5(B) is determined by:

Accepted Answer

A)  U.S. citizens attempting to purchase Japanese-made goods.
B)  Japanese attempting to purchase U.S.-made goods.
C)  U.S. businesses attempting to sell to the Japanese.
D)  Japanese businesses attempting to sell to the U.S.
E)  the U.S. government attempting to unload dollars to the international market.F) B) and C)
G) B) and D)

Question 6

Which of the following is excluded in the current account?

Accepted Answer

A)  Goods exports.
B)  Goods imports.
C)  Capital inflow and outflow.
D)  Net unilateral transfers.E) B) and D)
F) A) and C)

Question 7

When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called:

Accepted Answer

A)  fixed.
B)  arbitrage.
C)  floating.
D)  unilateral.
E)  balance of payments.F) All of the above
G) A) and E)

Question 8

When a nation totally bans trade with another country, it is imposing a(n) :

Accepted Answer

A)  tariff.
B)  embargo.
C)  quota.
D)  none of these.E) A) and B)
F) A) and D)

Question 9

Which of the following is an infant-industry argument in favor of restrictions on foreign trade?

Accepted Answer

A)  Foreign producers must be stopped from selling their products in this country below cost of production.
B)  Domestic workers must be protected from the lower wages paid in foreign countries.
C)  The nation's security demands we ensure an adequate domestic supply capacity of certain products.
D)  Do unto others as they do unto you.
E)  Industries in the early stages of development must be protected from more mature producers.F) A) and E)
G) B) and D)

Question 10

The theory of comparative advantage suggests that nations should produce a good if they:

Accepted Answer

A)  have the lowest opportunity cost.
B)  have the lowest wages.
C)  have the most resources.
D)  can produce more of the good than any other nation.E) C) and D)
F) A) and C)

Question 11

Purchases of foreign assets by U.S. residents are tabulated in the U.S. balance of payments as a:

Accepted Answer

A)  capital inflow.
B)  capital outflow.
C)  current account outflow.
D)  unilateral transfer.E) B) and C)
F) A) and C)

Question 12

The demand curve for Japanese yen is downward sloping because when the exchange rate (measured in dollars per yen) falls,

Accepted Answer

A)  Japanese goods become relatively cheaper so foreigners buy more of them and need more yen to do so.
B)  foreigners need more dollars to buy one yen so they can now afford more Japanese goods.
C)  the yen demand curve shifts to the right as foreigners try to buy more Japanese goods.
D)  the dollar becomes weaker and this reduces the strength of both economies.
E)  everyone wants fewer yen because they have lost some of their underlying value.F) A) and B)
G) C) and D)

Question 13

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

A)  A decrease in domestic interest rates
B)  An increase in foreign interest rates
C)  Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices
D)  Stable domestic prices while the nation's trading partners are experiencing 10 percent inflationE) A) and D)
F) A) and B)

Question 14

The term "balance of trade" refers to a nation's:

Accepted Answer

A)  goods exports minus imports.
B)  current account balance.
C)  capital account balance.
D)  net balance of all international transactions.E) A) and D)
F) All of the above

Question 15

Protectionist policies such as tariffs and quotas are beneficial to the nation imposing those trade barriers.

Accepted Answer

A) True 
 B)False

Question 16

If the dollar appreciates:

Accepted Answer

A)  imports to the United States become more expensive for foreigners
B)  exports from the United States become more expensive for foreigners
C)  imports become more expensive for U.S. citizens.
D)  exports from the United States become cheaper
E)  the dollar will exchange for fewer units of a foreign currencyF) A) and B)
G) B) and E)

Question 17

A lawyer once said, "I could paint my house and fix my plumbing if I just had some technical training and good tools. But, I would rather hire a painter and a plumber." When it comes to fixing a leaking sink, the plumber:

Accepted Answer

A)  d and e.
B)  charges more per hour than the lawyer does.
C)  charges less per hour than the lawyer does.
D)  is more efficient.
E)  has a comparative advantage.F) All of the above
G) B) and E)

Question 18

The term "balance of trade" refers to the:

Accepted Answer

A)  importing and exporting of goods.
B)  importing and exporting of goods and services.
C)  current account trade balance.
D)  capital outflows minus inflows.E) A) and B)
F) A) and C)

Question 19

If the U.S. dollar appreciates relative to the British pound, then we pay fewer dollars for a pound.

Accepted Answer

A) True 
 B)False

Question 20

Absolute advantage occurs when one nation can produce a good ____ its trading partners.

Accepted Answer

A)  in larger quantities than
B)  faster than
C)  that is desired by
D)  more efficiently than
E)  only consumed byF) A) and C)
G) A) and D)

Exam 18: International Trade and Finance

Protectionist policies such as tariffs and quotas are beneficial to the nation imposing those trade barriers.

Correct Answer
verified

Suppose there are two countries, X and Y. If the exchange rate, as measured in X's currency, is currently 9, what do citizens of the nation of Y see when they read their newspapers?

Correct Answer
verified

Opening trade between two nations would:

Correct Answer
verified

Absolute advantage occurs when one nation can produce a good ____ its trading partners.

Correct Answer
verified

A lawyer once said, "I could paint my house and fix my plumbing if I just had some technical training and good tools. But, I would rather hire a painter and a plumber." When it comes to fixing a leaking sink, the plumber:

Correct Answer
verified

If the U.S. dollar appreciates relative to the British pound, then we pay fewer dollars for a pound.

Correct Answer
verified

When a nation totally bans trade with another country, it is imposing a(n) :

Correct Answer
verified

If the dollar appreciates:

Correct Answer
verified

The term "balance of trade" refers to the:

Correct Answer
verified

Which of the following is excluded in the current account?

Correct Answer
verified

Purchases of foreign assets by U.S. residents are tabulated in the U.S. balance of payments as a:

Correct Answer
verified

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Correct Answer
verified

A restriction on the quantity of a good that can be imported into a country is a(n) :

Correct Answer
verified

The demand curve for Japanese yen is downward sloping because when the exchange rate (measured in dollars per yen) falls,

Correct Answer
verified

When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called:

Correct Answer
verified

The term "balance of trade" refers to a nation's:

Correct Answer
verified

The theory of comparative advantage suggests that nations should produce a good if they:

Correct Answer
verified

Which of the following is an infant-industry argument in favor of restrictions on foreign trade?

Correct Answer
verified

Exhibit 15-5 International currency markets Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The demand curve in graph 15-5(B) is determined by:

Correct Answer
verified

Correct Answer
verified

Exam 18: International Trade and Finance

Protectionist policies such as tariffs and quotas are beneficial to the nation imposing those trade barriers.

Correct AnswerverifiedShow Answer

Suppose there are two countries, X and Y. If the exchange rate, as measured in X's currency, is currently 9, what do citizens of the nation of Y see when they read their newspapers?

Correct AnswerverifiedShow Answer

Opening trade between two nations would:

Correct AnswerverifiedShow Answer

Absolute advantage occurs when one nation can produce a good ____ its trading partners.

Correct AnswerverifiedShow Answer

A lawyer once said, "I could paint my house and fix my plumbing if I just had some technical training and good tools. But, I would rather hire a painter and a plumber." When it comes to fixing a leaking sink, the plumber:

Correct AnswerverifiedShow Answer

If the U.S. dollar appreciates relative to the British pound, then we pay fewer dollars for a pound.

Correct AnswerverifiedShow Answer

When a nation totally bans trade with another country, it is imposing a(n) :

Correct AnswerverifiedShow Answer

If the dollar appreciates:

Correct AnswerverifiedShow Answer

The term "balance of trade" refers to the:

Correct AnswerverifiedShow Answer

Which of the following is excluded in the current account?

Correct AnswerverifiedShow Answer

Purchases of foreign assets by U.S. residents are tabulated in the U.S. balance of payments as a:

Correct AnswerverifiedShow Answer

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Correct AnswerverifiedShow Answer

A restriction on the quantity of a good that can be imported into a country is a(n) :

Correct AnswerverifiedShow Answer

The demand curve for Japanese yen is downward sloping because when the exchange rate (measured in dollars per yen) falls,

Correct AnswerverifiedShow Answer

When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called:

Correct AnswerverifiedShow Answer

The term "balance of trade" refers to a nation's:

Correct AnswerverifiedShow Answer

The theory of comparative advantage suggests that nations should produce a good if they:

Correct AnswerverifiedShow Answer

Which of the following is an infant-industry argument in favor of restrictions on foreign trade?

Correct AnswerverifiedShow Answer

Exhibit 15-5 International currency markets Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The demand curve in graph 15-5(B) is determined by:

Correct AnswerverifiedShow Answer

Exhibit 15-1 Production possibilities curves In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of wheat is equal to:

Correct AnswerverifiedShow Answer

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