Question 1

If U.S. buyers purchased $500 billion of foreign goods and foreign buyers purchased $400 billion of U.S. goods, the U.S. balance of trade would be:

Accepted Answer

A)   -$100 billion.
B)   $100 billion.
C)   $400 billion.
D)   none of the above.E) C) and D)
F) None of the above

Question 2

A shift of the U.S. demand curve for Mexican pesos to the left and a decrease in the pesos price per dollar would likely result from:

Accepted Answer

A)   an increase in the U.S. inflation rate relative to the rate in Mexico.
B)   a change in U.S. consumers' tastes away from Mexican products and toward products made in South Korea, India, and Taiwan.
C)   U.S. buyers perceiving that domestically-produced products are of a lower quality than products made in Mexico.
D)   all of the above.E) All of the above
F) A) and B)

Question 3

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 D)
F) B) and D)

Question 4

Exhibit 21-6  Dollars per British pound  In Exhibit 21-6, when the exchange rate is 3 dollars per pound,

Accepted Answer

A)   there is an excess supply of 110 pounds.
B)   there is an excess demand of 110 pounds.
C)   there is an excess supply of 110 dollars.
D)   there is an excess demand of 110 dollars.
E)   the market is in equilibrium.F) B) and C)
G) C) and D)

Question 5

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 currency.F) B) and E)
G) None of the above

Question 6

A tariff is a tax on ____ goods that is designed to ____.

Accepted Answer

A)   exported; protect domestic industries
B)   exported; hurt foreign industries
C)   imported; made domestic consumers pay more
D)   imported; protect domestic industries
E)   domestic; discourage importsF) A) and E)
G) B) and C)

Question 7

An unfavorable balance of trade occurs when:

Accepted Answer

A)   exports equal imports.
B)   the balance of payments balances.
C)   the current and capital account in the BOP are equal.
D)   the value of the exports of goods exceeds the value of the imports of goods.
E)   the value of the exports of goods is less than the value of the imports of goods .F) A) and B)
G) C) and E)

Question 8

A tariff differs from a quota in that a tariff is:

Accepted Answer

A)   levied on imports, whereas a quota is imposed on exports.
B)   levied on exports, whereas a quota is imposed on imports.
C)   a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported.
D)   a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.E) C) and D)
F) A) and C)

Question 9

A depreciation of one's currency means that:

Accepted Answer

A)   the country's exports will become more expensive.
B)   the country's imports will become more expensive.
C)   the country's imports will become less expensive.
D)   it now requires less of this currency in exchange for one unit of another currency.
E)   it now requires more units of other currencies in exchange for one unit of this currency.F) A) and C)
G) C) and D)

Question 10

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) B) and E)
G) A) and B)

Question 11

The principal objective of the is to:

Accepted Answer

A)   reduce the level of all tariffs.
B)   establish fair prices for all goods traded internationally.
C)   prevent the trading of services across nations' borders.
D)   encourage countries to establish quotas.E) B) and C)
F) B) and D)

Question 12

A depreciation in the value of the U.S. dollar would:

Accepted Answer

A)   encourage foreigners to travel on American owned airlines.
B)   make U.S. goods more expensive to foreign consumers.
C)   decrease the number of dollars it takes to buy a Swiss franc.
D)   make it more expensive for U.S. citizens to travel abroad.E) C) and D)
F) A) and B)

Question 13

If nation A has a comparative advantage over nation B in the production of a product, this implies:

Accepted Answer

A)   it requires fewer resources in A to produce the good than in B.
B)   the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B.
C)   that nation B could not benefit by engaging in trade with A.
D)   that nation A should acquire this product by trading with B.
E)   that nation A could not benefit by engaging in trade with B.F) A) and B)
G) C) and D)

Question 14

Exhibit 21-5  International currency markets  Exhibit 21-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph 5(A)  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) C) and D)
G) All of the above

Question 15

Exhibit 21-6  Dollars per British pound  In Exhibit 21-6, when the exchange rate is 1 dollar per pound,

Accepted Answer

A)   the market is in equilibrium.
B)   there is a surplus of 30 pounds.
C)   there is a surplus of 60 pounds.
D)   there is a shortage of 30 pounds.
E)   there is a shortage of 60 pounds.F) A) and B)
G) None of the above

Question 16

If one country can produce a good with fewer resources than another country, this is called:

Accepted Answer

A)   specialization.
B)   geographic advantage.
C)   comparative advantage.
D)   absolute advantage.
E)   free trade.F) C) and D)
G) B) and E)

Question 17

If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1, then:

Accepted Answer

A)   the dollar has depreciated in value.
B)   U.S.-made goods will become less expensive to Japanese citizens.
C)   the dollar has appreciated in value.
D)   Japanese-made goods will become more expensive to U.S. citizens.
E)   there will be an increase in the demand for dollars in the foreign exchange market.F) C) and D)
G) B) and D)

Question 18

A limit on the quantity of a good that may be imported in a given time period is called:

Accepted Answer

A)   an embargo.
B)   a tariff.
C)   a quota.
D)   dumping.E) All of the above
F) B) and D)

Question 19

What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?

Accepted Answer

Trade barriers include the use of embarg...

Question 20

The primary purpose of WTO is to:

Accepted Answer

A)   protect the United States from cheap foreign labor.
B)   foster trade among nations.
C)   promote the dumping of foreign products.
D)   increase worldwide tariffs.
E)   form a union of European nations.F) C) and E)
G) None of the above

Exam 21: International Trade and Finance

Opening trade between two nations would:

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The principal objective of the is to:

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A tariff differs from a quota in that a tariff is:

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An unfavorable balance of trade occurs when:

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

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A depreciation in the value of the U.S. dollar would:

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A shift of the U.S. demand curve for Mexican pesos to the left and a decrease in the pesos price per dollar would likely result from:

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If U.S. buyers purchased $500 billion of foreign goods and foreign buyers purchased $400 billion of U.S. goods, the U.S. balance of trade would be:

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Exhibit 21-6 Dollars per British pound In Exhibit 21-6, when the exchange rate is 3 dollars per pound,

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A tariff is a tax on ____ goods that is designed to ____.

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Exhibit 21-5 International currency markets Exhibit 21-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph 5(A) is determined by:

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What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?

Correct AnswerverifiedTrade barriers include the use of embarg...View AnswerShow Answer

If the dollar appreciates:

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If one country can produce a good with fewer resources than another country, this is called:

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The primary purpose of WTO is to:

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A limit on the quantity of a good that may be imported in a given time period is called:

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Exhibit 21-6 Dollars per British pound In Exhibit 21-6, when the exchange rate is 1 dollar per pound,

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If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1, then:

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A depreciation of one's currency means that:

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If nation A has a comparative advantage over nation B in the production of a product, this implies:

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A tariff is a tax on goods that is designed to .

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Trade barriers include the use of embarg...
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