Exam 4 Review

The best example of a capital-intensive good is:

D. Chemicals

From an economic perspective, studies of the costs of trade barriers show that they:

D. Far exceed their benefits for society

Between 1934 and 1971, the U.S. government bought and sold gold (with other governments) at the price per ounce of:

A. $35

Refer to the above graph, which shows the supply and demand for British pounds. D1 and S1 represent the initial demand and supply curves. What will be the new equilibrium as indicated in the graph if there is an increase in consumer spending by the British for American products and a decrease in consumer spending by Americans for British products?

A. A

The International Monetary Fund was created under the:

A. Bretton Woods Agreement of 1944

The current account section in a nation's balance of payments includes:

A. Its goods exports and imports, and its services exports and imports.

In the real world, specialization is rarely complete because:

A. nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.

The financial account balance is a nation's"

A. net investment income minus its net transfers.

An excise tax on an imported good that helps shield domestic producers of the good is called a:

A. protective tariff.

In terms of absolute dollar volume, the top 3 leaders in world exports are:

D. Germany, the United States, and China.

Refer to the above table. What will be the rate of exchange for one euro?

B. $0.90

Refer to the above table. If European governments decided to fix the price of a euro at $0.80, they would have to sell:

B. 114 euros

Refer to the above table. If the U.S. government decides to fix or peg the price of the euro at $1.00, it would have to buy:

B. 160 euros

Refer to the above table. At equilibrium, how many euros will be purchased in the market?

B. 300

The United States' most important trading partner quantitatively is:

B. Canada

Refer to the above graph, which shows the supply and demand for British pounds. D1 and S1 represent the initial demand and supply curves. What will be the new equilibrium as indicated in the graph if the domestic price level rises rapidly in the United States and remains constant in Britain?

B. J

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

B. Protection against dumping

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the:

B. World Trade Organization (WTO)

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade?

B. an increase in the tariffs charged on many goods

Countries engaged in international trade specialize in production based on:

B. comparative advantage

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States and the world price is $4.00 a bushel. Assuming no transportation costs, the United States will:

B. export wheat

In the U.S. balance of payments, foreign purchases of assets in the United States are a:

B. foreign currency inflow.

The gain from international trade is:

B. more goods than would be attainable through domestic production alone.

If a nation has a comparative advantage in the production of X, this means the nation:

B. must give up less of other goods than other nations in producing a unit of X.

Refer to the above table. At equilibrium what will be the euro rate of exchange for one U.S. dollar?

C. 1.11 euros

Refer to the above graph, which shows the supply and demand for British pounds. D1 and lS2 represent the initial demand and supply curves. What will be the new equilibrium as indicated in the graph if there is a large decrease in the number of foreign tourists visiting Britain because of the threat of terrorism?

C. B

A major goal of the World Trade Organization is to:

C. Expand international trade among nations

A major aim of the International Monetary Fund (IMF) is to:

C. Increase international liquidity in foreign exchange markets

The effect of devaluations of the dollar in the early 1970s was to:

C. Lower the price of U.S. exports

When the distribution of resources and technology changes among nations:

C. The relative efficiency of producing products changes

Which is an example of a nontariff barrier (NTB)?

C. box-by-box inspection requirements for imported fruit

Evidence of a chronic balancer of payments deficit is:

C. diminishing reserves of foreign currencies.

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect:

C. employment to decrease in the U.S. bicycle industry.

Suppose the domestic price(no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will:

C. import copper.

An excise tax on an imported good that is not produced domestically is called a:

C. revenue tariff.

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n):

C. voluntary export restriction.

A market basket of goods costs $260 in the United States and 200 pounds in the United Kingdom. The "purchasing power parity rate" is 1 pound = $1.50. According to purchasing power parity theory, the market basket of goods in the United states should cost:

D. $300

The trade deficit on goods in 2007 was:

D. $714 billion

United States exports as a percent of total world exports is:

D. 10.3 percent of world exports

United States exports of goods and services in 2010 (on a national income account basis) are about:

D. 13 percent of U.S. GDP.

The United States ended its policy of converting the dollar into gold at $35 per ounce for other governments in:

D. 1971

Which is a likely result of imposing tariffs to increase domestic employment?

D. An increase in the possibility of retaliatory tariffs

Refer to the above graph showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi. When the world price for this product is $2.00, Zancuzi will:

D. Have a domestic surplus of 200 units

Which statement is true?

D. Specialization is complete among nations when opportunity costs fall as any given nation produces more of a particular product

Studies show that:

D. costs of trade barriers exceed their benefits, creating an efficiency loss for society.

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n):

D. import quota

Free trade based on comparative advantage is economically beneficial because: A. it promotes an efficient allocation of world resources. B. it increases competition. C. it provides consumers with a wider range of products.

D. of all of these reasons