Macro Unit 6 Test

14. As it relates to international trade, dumping:

is the practice of selling goods in a foreign market at less than cost.

15. If a U.S. importer can purchase 10,000 pounds for $20,000, the rate of exchange is:

$2 = 1 British pound in the United States

It may be misleading to label a trade deficit as unfavorable or adverse because:

A nation's consumers benefit from a trade deficit during the period it occurs

Countries engaged in international trade specialize in production based on:

A) comparative advantage.

8. Tariffs:

A) may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).

North American Free Trade Agreement (NAFTA)

Agreement signed by the United States, Canada, and Mexico in 1992 to form the largest free trade zone in the world. This made it easier for companies in those three countries to move goods and supplies across North America's borders

5. In the theory of comparative advantage, a good should be produced in that nation where:

B) Its cost is least in terms of alternative goods that might otherwise be produced.

If a nation's goods exports are $55 billion, while its goods imports are $75 billion, we can conclude with certainty that this nation has a:

Balance of trade deficit

3. On the basis of the above information:

C) Gamma should export tea to Sigma and Sigma should export pots to Gamma.

9. Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):

C) Import Quota

10. 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.

6. 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 the above reasons.

D) all of the above reasons

11. In effect tariffs on imports are:

D) subsidies for domestic producers.

If the USA exports more, the U.S. Price level will ?, if the economy is in the intermediate range of the Aggregate Supply Curve or on the Short Aggregate Supply Curve.

Decrease

16. Travel by U.S. citizens within Europe creates a:

Demand for euros and a supply of dollars.

If GDP and personal incomes are increasing in the United States we would expect the value of the $ to

Depreciate

The Smoot-Hawley Act:

Enacted in 1930 by the U.S. Congress, this act created a wall of tariff barriers against imports into the United States.

12. Which of the following transactions would be recorded as a positive entry in Canada's current account?

Export of goods

If the Fed were to increase the legal reserve requirement, we would expect:

Higher interest rates, a contracted GDP, and appreciation of the dollar.

As a result of lower prices in the USA, what will happen to the demand for the U.S. Dollar

Increase

As a result of the outcome of number 22 above, what will happen to U.S. GDP

Increase

If prices in the USA are increasing and there is no action taken by the "FED", interest rates will most likely

Increase

Will U.S. exports to Canada

Increase

Depreciation of the dollar will:

Increase Exports and national GDP

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B:

Mutually advantageous specialization and trade between A and B may still be possible.

Global competition:

The existence of competing organizations that serve international customers. Access to global customers has increased through enhanced communications, improved shipping channels, reduction of barriers, and centralized finance authorities.

17. Which of the following would call for out payments from the United States?

US purchases assets abroad

Which of the following would contribute to a United States balance of payments deficit?

United States tourists travel in large numbers to Europe

If interest rates rise in the USA, will the value of the U.S. Dollar

appreciate

13. Which of the following arguments comes closest to constituting a legitimate exception to the case for free trade?

the infant-industry argument

The (WTO) World Trade Organization

the only international body dealing with the rules of trade between nations