Chapter 9 Applications: International Trade
Exchange rates are particularly important because:
they link the price levels of various nations to one another
If a country had a trade deficit of $10 billion and then its exports rose by $10 billion, its net exports would now be
$0
Refer to the above diagram. The equilibrium dollar price of euro is:
$1.60
Which of the following concepts provides the basic rationale for international trade?
Comparative advantage
Paul, a Canadian citizen, purchases oranges grown in Florida. This purchase is an example of
a U.S. export and a Canadian import
When Jamie, a U.S. citizen, purchases a wool jacket made in Ireland, the purchase is
a U.S. import and an Irish export.
A nation's true gain from international trade is:
an overall increase in output obtained through specialization and exchange
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
producer surplus increases and total surplus decreases in the market for that good
The price of sugar that prevails in international markets is called the
world price of sugar
Bill, a U.S. citizen, pays a Spanish architect to design a metal casting factory. Which country's exports increase?
Spain's
For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should
export copper, since that country has a comparative advantage in copper
A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries. It has
exports of $2 billion and a trade deficit of $1 billion
Net exports of a country are the value of
goods and services exported minus the value of goods and services imported
Since 1970, United States exports and imports have:
grown both absolutely and as a percentage of GDP
Depreciation of the dollar will:
increase the prices of U.S. imports, but decrease the prices of U.S. exports
Refer to the above diagram. If U.S. consumers increase their travel to Euro Zone nations, we would expect:
the demand for euros to increase, and the euro to appreciate