econ test 6

You hold currency from a foreign country. If that country has a higher rate of inflation than the United States, then over time the foreign currency will buy

fewer goods in that country and buy fewer dollars.

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Equal revenue is always raised for the domestic government.

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible?

More Danish-produced chips are sold in Denmark.

A U.S. company uses U.K. pounds it already owned to purchase bonds issued by a company in the U.K. Which of these countries has an increase in net capital outflow?

Neither the U.S. nor the U.K.

Which of the following is not a commonly-advanced argument for trade restrictions?

The efficiency argument

The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that

a. if Wheatland were to allow trade, it would import corn.

An open economy's GDP can be expressed by

b. Y = C + I + G + NX.

When a country that imports a particular good imposes an import quota on that good,

consumer surplus decreases and total surplus decreases in the market for that good.

If saving is greater than domestic investment, then there is a trade

d. surplus and Y > C + I + G.

Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

producers of steel and consumers of incense

If the Mexican nominal exchange rate (foreign currency per peso) does not change, but prices rise faster in Mexico than in all other countries, then the Mexican real exchange rate

rises.

The "unfair-competition" argument might be cited by an American who believes that

the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.

When Jamie, a U.S. citizen, purchases a wool jacket made in Ireland, the purchase is

the U.S. import and an Irish export.