macro ch 6 test
If the Fed were to increase the legal reserve ratio, we would expect
higher interest rates, a contracted GDP, and appreciation of the dollar
Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)
import quota
Depreciation of the dollar will
increase the prices of US imports, but decrease the prices to foreigners of US exports
[Eric] #22. As a result of lower prices in the USA, what will happen to the demand for the U.S. Dollar
increase?
[Eric] #25 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.
increase?
as it relates to international trade, dumping
is the practice of selling goods in a foreign market at less than cost
In the theory of comparative advantage, a good should be produced in that nation where
its cost is least in terms of alternative goods that might otherwise be produced.
tariffs
may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs)
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
[Eric] #32 If GDP and personal incomes are increasing in the United States we would expect the value of the $ to
depreciate?
If a U.S. importer can purchase 10,000 British pounds for $20,000, the rate of exchange is
$2 = 1 British pound in the United States
[Eric] #30 Global competition
(definition + not the exact answer) the services or products provided by competing companies that serve international customers
Free trade based on comparative advantage is economically beneficial because:
-it promotes an efficient allocation of world resources. -it increases competition. -it provides consumers with a wider range of products. ****of all of the above reasons.****
It may be misleading to label a trade deficit as unfavorable or adverse because
A nations consumers benefit from a trade deficit during the period it occurs
[Eric] #27 If interest rates in the USA rise, the value of the US dollar will
Appreciate
[Eric] #7 Refer to the above data. Beta
Beta is more efficient than Alpha both in catching fish and producing chips
(not sure if this is the exact question) which of the following would contribute to a Canadian balance of payments surplus
Canada cuts back on Canadian military personnel stationed in Germany
[Eric] #33 Jane can grow 100 bales of cotton or 50 tons of lumber on her land. Clark can grow 120 bales of cotton or 80 tons of lumber on his land. Who has the absolute advantage in the production of lumber?
Clark?
Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect:
Employment to decrease in the U.S. bicycle industry
On the basis of the above information: ...
Gamma should export tea to Sigma and Sigma should export pots to Gamma.
[Eric] #23. Will U.S. exports to Canada
Increase
[Eric] #24. As a result of the outcome of number 22 above, what will happen to U.S. GDP
Increase
[Eric] #35 If terms of trade were 3 tons of lumber for 1 bale of cotton who would benefit
Jane
[Eric] #34 Who has the comparative advantage in the production of cotton
Jane?
The Smoot-Hawley Act
Passed in 1930 to establish very high tax tariffs, to reduce imports and stimulate the domestic economy. Resulted in retaliatory tariffs by other nations
Which of the following would call for outpayments 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
(not exact answer) North American Free Trade Agreement (NAFTA)
an agreement among the United States, Canada and Mexico designed to remove tariff barriers between the three countries
If a nation's goods exports are $50 billion- while its goods imports are $75 billion- we can conclude with certainty that this nation has a
balance of trade deficit
Countries engaged in international trade specialize in production based on
comparative advantage
Travel by U.S. citizens within Europe creates a
demand for euros and a supply of dollars.
[Eric] #26 If prices in the USA are increasing and there is no action taken by the "FED", interest rates will most likely
rates will most likely same (since FED controls interest rates)
in effect, tariffs on imports are
subsidies for domestic producers
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
was established to resolve disputes arising under world trade rules