week 13

opportunity

An entity is said to hold a comparative advantage in a good if it can produce the good at a lower Blank______ cost than others.

Apple's assembly of iPhones in China

An example of off-shoring is

firing its custodians and hiring a contractor to clean offices and classrooms

An example of outsourcing in your university would be

Blank 1: managed

An exchange rate system that specifies a rather wide allowable range within which the exchange rate can move is called a __________ float exchange rate system.

higher than

As a percentage of GDP, foreign purchases of U.S. assets have been Blank______ U.S. purchases of foreign assets in the last several decades. Multiple choice question.

more

As the result of a decision by the Chinese government, the Chinese currency (the yuan) has been, since 2010, Blank______ responsive to market forces.

deceptive to suggest that the goods all come from the country of final assembly

Because goods are typically composed of multiple components with most having different countries of origin, it is Blank______. Multiple choice question.

will decrease

In looking at the net welfare effects of trade barriers, economic theory is unequivocal; these impediments Blank______ society's overall well-being. Multiple choice question.

possibilities frontier.

In single diagram displaying the differently sloped linear PPFs of two countries, a line connecting the intercepts on each axis farthest from the origin is a potential

Blank 1: balance Blank 2: payment

The four basic __________ of ______________ accounting concepts: balance of trade, current account balances, capital account balances, and financial account balances.

rarely

The historical record shows that problems of a diplomatic nature are Blank______ solved through the imposition of trade restrictions.

risen

The importance of trade to virtually every economy has Blank______ over time. Multiple choice question.

A tax on an imported good.

What is a tariff?

contracting with another firm to perform services that were once produced by the firm itself

When a firm engages in outsourcing it is

must be zero.

When all transactions between a country's residents and the rest of the world are included and done so accurately, the balance of payments

The relative real interest rate offered on investments in the two countries. The relative safety of assets available in the two countries. The extent of any trade imbalance between the two countries.

Which of the following are important factors in determining the exchange rate between two currencies?

To preserve national identity. To show disapproval of lax environmental laws. To express disapproval of certain labor practices.

Which of the following are widely (but not universally) considered to be legitimate reasons to restrict trade? (Select all that apply.)

A country requires that imports be labeled so that its citizens know the goods are imports. A country bans genetically modified food products. A country requires that foreign exporters apply the same testing procedures domestic producers use, even when they are less rigorous.

Which of the following constitute examples of nontariff barriers to trade? (Select all that apply.)

Lexus selling luxury cars below their production cost to drive Ford (Lincoln) and GM (Cadillac) out of the luxury car business.

Which of the following is an example of dumping?

An import quota is a restriction on the quantity of goods imported. An import quota is the maximum amount of a particular good that can be imported. An import quota is a limit on the amount of a particular good that can be imported.

Which of the following statements correctly define an import quota?

An import quota is the maximum amount of a particular good that can be imported. An import quota is a limit on the amount of a particular good that can be imported. An import quota is a restriction on the quantity of goods imported.

Which of the following statements correctly define an import quota?

Floating exchange rate system.

Which one of the following exchange rate systems is the most prevalent today?

Fixed exchange rate system.

Which one of the following exchange rate systems was common between World War II and the early 1970s?

Product account balances

Which one of the following is not one of the four basic balance-of-payment accounting concepts: balance of trade, current account balances, capital account balances, and financial account balances.

Managed fixed exchange rate system.

Which one of the following is not one of the three systems (or models) used to set exchange rates?

synchronized.

With few exceptions, changes in the ratios of imports to GDP and exports to GDP are

imports

are the goods and services that we buy frompeople in other countries.

exports

are the goods and services we sell to people in other countries.

deficit.

The current account for the United States in recent years has been consistently in

off-shoring

A type of outsourcing where the firm contracted to engage in the service or produce the good is outside the United States is Blank______.

defense

A country may restrict trade in certain commodities that are potentially crucial to its survival as an independent sovereign state. This is commonly called the national Blank______ argument.

accounting

A country's balance of payments is, first and foremost, a(n) Blank______ system.

outsourcing.

A relatively recent phenomenon whereby domestic producers use foreigners to perform services previously done at home by native workers is known as

tariff.

A tax on an imported good is known as a(n): Multiple choice question.

China

Combining imports together with exports and looking only at individual countries, America's biggest trading partner is currently (2020) Blank______.

import

Consider a pair of supply/demand diagrams sitting side-by-side, with the left hand diagram depicting the domestic market for ale and the right diagram the world ale market. (See Fig 17.4.) If the price in the domestic market is higher than the world price then, with trade, the domestic economy will ______ ale

producer; consumer

Consider a pair of supply/demand diagrams sitting side-by-side, with the left hand diagram depicting the domestic market for coal and the right diagram the world coal market. If the price in the domestic market is lower than the world price then, with trade, a net gain to the domestic economy will be shown by the excess of the rise in Blank______ surplus over the reduction in Blank______ surplus.

consumer; producer

Consider a pair of supply/demand diagrams sitting side-by-side, with the left hand diagram depicting the domestic market for corn and the right diagram the world corn market. If the price in the domestic market is higher than the world price then, with trade, Blank______ surplus will increase by more than the reduction in Blank______ surplus.

lower

Consider a pair of supply/demand diagrams sitting side-by-side, with the left hand diagram depicting the domestic market for steel and the right diagram the world steel market. (See Fig 17.4.) If the domestic economy is exporting steel, then we know that the domestic price prior to trade was Blank______ than the world price.

managed float

Consider a supply and demand diagram depicting the market for a country's currency. If the exchange rate is allowed to vary only within a specified range, i.e. between an upper and lower limit, then the system in place is a Blank______ exchange rate system.

floating

Consider a supply and demand diagram depicting the market for a country's currency. If the price (i.e., the exchange rate) goes wherever shifts in either curve take it, then the system in place is a Blank______ exchange rate system.

floating

Consider a supply and demand diagram depicting the market for a country's currency. If the price (i.e., the exchange rate) goes wherever shifts in either curve take it, then the system in place is a Blank______ exchange rate system. Multiple choice question.

pasta; sugar

Consider the following production data for two countries (Luxor & Memphis) and two goods (Pasta & Sugar); the data are pounds per hour of labor time. Pasta Sugar Luxor 12 8 Memphis 10 4 According to this data, it can be determined that Memphis has a comparative advantage in Blank______ and Luxor has a comparative advantage in Blank______. Multiple choice question.

but beneficial trade will still occur.

Consider the following production data for two countries (Northland & Southland) and two goods (Wine and Gasoline); the data are gallons per hour of labor. Wine Gas Northland 15 9 Southland 12 3 In this case, the "advantages" are not in line,

but beneficial trade will still occur.

Consider the following production data for two countries (Northland & Southland) and two goods (Wine and Gasoline); the data are gallons per hour of labor. In this case, the "advantages" are not in line,

not in line.

Consider the following production data for two countries (Northland & Southland) and two goods (Wine and Gasoline); the data are gallons per hour of labor. In this instance, we say the "advantages" are

Luxor; Luxor

Consider the following table for two countries (Luxor & Memphis) and two goods (Pasta & Sugar); the data are pounds per hour of labor time. Pasta Sugar Luxor 12 8 Memphis 10 4 From this production data we can conclude that Blank______ has the absolute advantage in Pasta and Blank______ has the absolute advantage in Sugar.

three main

Countries seeking to limit imports have Blank______ options to do so. Multiple choice question.

other currencies or gold.

Countries that wish exchange rates to be fixed must stand ready to buy and sell their currencies against

consumption

The claim that trade is mutually beneficial can be shown graphically through the derivation of a Blank______ possibilities frontier.

import-competing

Even though trade is unambiguously mutually beneficial (in the sense that the average person is better off in the long run), individuals (workers and business owners) in the Blank______ industries often suffer short-term losses.

above

For the United States since the mid 1970s, the ratio of imports to GDP has been Blank______ the ratio of exports to GDP.

absent

Government control over the exchange rate in a floating exchange rate system is

diminish

Government imposed restrictions on the exchange of currencies Blank______ the benefits derived from free trade. Multiple choice question.

financial

If U.S.-owned assets abroad increase by more than foreign-owned assets in the United States, a deficit will occur in the Blank______ account portion of the U.S. balance of payments. Multiple choice question.

2.0 tons per barrel.

If a country ships 50 tons of steel to its trade partner and, as payment, receives 25 barrels of oil, then its terms of trade is

15

If a country's terms of trade with its partner is 3.0 and it ships 45 units of its export good, then in return it will receive Blank______ units of its import good.

still occurs.

If the "advantages" for each country are in line so that it has an absolute advantage in the good for which it has a comparative advantage, then mutually beneficial trade

export socks and import shoes.

If the country of Uplandia possess an absolute advantage in both shoes and socks but a comparative only in socks, then to reap the full benefits from trade it should

steeper

In a diagram with cheese on the vertical axis and wine on the horizontal, suppose a country's production possibilities frontier runs from 100 pounds on the vertical axis to 100 casks on the horizontal. If this country has a comparative advantage in wine, then its consumption possibilities frontier will be Blank______ than its production possibilities frontier.

market forces.

In a floating exchange rate system, exchange rates are determined by

demand

In a supply and demand diagram for the British pound, the curve that represents the willingness of those holding dollars to trade them for pounds is the Blank______ curve.

demand

In a supply and demand diagram for the British pound, the curve that represents the willingness of those holding dollars to trade them for pounds is the Blank______ curve. Multiple choice question.

pounds; dollars

In a supply and demand diagram for the British pound, the supply curve represents the willingness of those holding Blank______ to trade them for Blank______. Multiple choice question.

dollars per pound.

In a supply and demand diagram for the British pound, the vertical axis would be labeled as

vertical

In a supply and demand diagram showing a tariff-induced reduction in imports, the magnitude of the tariff is indicated by the Blank______ distance between the pre- and post-tariff supply curves.

opposite

In balance of payments accounting, the balance of the financial account, plus or minus a statistical discrepancy, has the Blank______ sign as the balance of the current account.

foreign exchange.

The conversion of the currency of one country into the currency of another country is referred to as

often

Managed float exchange rate systems Blank______ require government intervention to influence the exchange rate. Multiple choice question.

unacceptably high.

Numerous instances from the U.S. experience with trade restrictions aimed at preserving jobs show that the cost per job saved has been

latter

One difference between a tariff and a quota is that the Blank______ provides no tax revenue to the government seeking to restrict trade.

less uncertainty

Participants in international commerce tend to view fixed exchange rate systems favorably (compared to other systems) because they present Blank______ to traders. Multiple choice question.

nontariff

Restrictions on trade that result from regulatory actions are called Blank______ barriers

appreciate.

Suppose a country's central bank decides to raise interest rates. Under a floating exchange rate system, this action will cause the domestic currency to

weakening

Suppose that Country A experiences a worsening trade imbalance (i.e., a larger deficit) with Country B. In this case, we expect to see Country A's currency undergo a Blank______ relative to B's currency. Multiple choice question.

strengthening

Suppose the assets available in Country A offer a higher real rate of return compared to those available elsewhere. In this case, we expect to see Country A's currency undergo a Blank______ in foreign exchange markets.

$400

Suppose the current account is −$450 and the statistical discrepancy is $50. In this case, the financial account will be Blank______.

price

The Blank______ of one currency based on another country's currency is known as the exchange rate.

falling

The U.S. dollar per euro exchange rate since the end of 2007 (the start of the Great Recession) shows a Blank______ trend line.

comparative

The ability to produce a good at a lower opportunity cost is referred to as a(n) Blank______ advantage.

comparative advantage

The ability to produce a good at a lower opportunity cost of the resources used.

absolute

The ability to produce a good better, faster, or more quickly than a competitor gives on a(n) Blank______ advantage.

absolute advantage

The ability to produce a good better, faster, or more quickly than a competitor.

payments

The accounting system that tracks the movement of money between between countries as it facilitates transactions of various types is called the balance of

infant

The argument that a domestic industry should be given protection from foreign competition until it "gets on its feet" is known as the Blank______-industry argument. Multiple choice question.

quota

The method of restricting imports that puts a numerical limit on the quantity allowed to enter the country is called a

tariff

The most widely practiced method of restricting imports is the placement of a tax upon the imported goods. The formal name for this tax is a

short

The opening of trade brings Blank______-term injury to individuals (workers and business owners) in a country's import-industries. Multiple choice question.

current

Transactions involving goods, services, short-term investment payments/receipts, and transfers are recorded in the Blank______ account. Multiple choice question.