AP Marco International Trade
If the exchange rate between the U.S. dollar and the Japanese yen is $1 = 200 yen, then the dollar price of yen is:* A) $.005. B) $.05. C) $.50. D) $5.
a
In the real world, specialization is rarely complete because:* a) nations normally experience increasing opportunity costs in b) producing more of the product in which they are specializing. production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. c) one nation's imports are necessarily another nation's exports. d) international law prohibits monopolies.
a
Tariffs:* a) may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). b) are also called import quotas. c) are excise taxes on goods exported abroad. d) are per unit subsidies designed to promote exports.
a
When a nation experiences a trade deficit,* a) imports are greater than exports b) the current account is in surplus c) the capital and financial account is balanced d) the value of the country's currency must be appreciating e) exports are greater than imports
a
.The gain from international trade is:* a) increased employment in the domestic export sector. b) more goods than would be attainable through domestic production alone. c) tariff revenue. d) increased employment in the domestic import sector.
b
Countries engaged in international trade specialize in production based on:* a) relative levels of GDP. b) comparative advantage. c) relative exchange rates. d) relative inflation rates.
b
In the U.S. balance of payments, foreign purchases of assets in the United States are a:* a) foreign currency outflow. b) foreign currency inflow. c) current account item. d) debit, or outpayment
b
In the theory of comparative advantage, a good should be produced in that nation where:* a) the production possibilities line lies further to the right than the trading possibilities line. b) its cost is least in terms of alternative goods that might otherwise be produced. c) its absolute cost in terms of real resources used is least. d) its absolute money cost of production is least.
b
The terms of trade reflect the:* a) rate at which gold exchanges internationally for any domestic currency. b) ratio at which nations will exchange two goods. c) fact that the gains from trade will be equally divided. d) cost conditions embodied in a single country's production possibilities curve.
b
Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):* a) protective tariff. b) export subsidy. c) import quota. d) voluntary export restriction.
c
If French citizens increase investment in U.S. bonds,* a) the supply of euros in the foreign exchange market would fall b) the international value of the U.S. dollar would fall c) the euro would depreciate in foreign exchange markets d) French demand for U.S. dollars would decrease e) U.S. imports would decrease
c
The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:* a) the production possibilities curve of any two nations are identical. b) a nation's production possibilities and trading possibilities lines coincide. c) a nation's trading possibilities line lies to the right of its production possibilities line. d) a nation's production possibilities line lies to the right of its trading possibilities line.
c
Which is an example of a nontariff barrier (NTB)?* a) an export subsidy b) an excise tax on the physical volume of imported goods c) box-by-box inspection requirements for imported fruit d) an excise tax on the dollar value of imported goods
c
Differences in production efficiencies among nations in producing a particular good result from:* 2/2 a) different endowments of fertile soil. b) different amounts of skilled labor. c) different levels of technological knowledge. d) all of the above
d
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) all of the above reasons.
d
Purchases of land in the United States by people from Canada create a:* a) supply of U.S. dollars and a demand for Canadian dollars. b) both a supply of U.S. dollars and a demand for U.S. dollars. c) demand for Canadian dollars and a demand for U.S. dollars d) demand for U.S. dollars and a supply of Canadian dollars.
d
Studies show that:* a) it is impossible to estimate the benefits of trade barriers. b) costs and benefits of trade barriers are about equal. c) benefits of trade barriers exceed their costs in developing nations. d) costs of trade barriers exceed their benefits, creating an efficiency loss for society.
d
The law of increasing opportunity costs:* a) applies to land-intensive commodities, but not to labor-intensive or capital-intensive commodities. b) results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. c) refutes the principle of comparative advantage. d) may limit the extent to which a nation specializes in producing a particular product.
d
U.S. import transactions create:* a) a foreign demand for dollars and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. b) a foreign demand for dollars and the satisfaction of this demand increases the supplies of foreign monies held by U.S. banks. c) a U.S. demand for foreign monies and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. d) a U.S. demand for foreign monies and the satisfaction of this demand increases the supplies of dollars held by foreign banks.
d
