Pol 124 A Reading Quizzes 2-19

The cost of floating exchange rates is so small that European governments have had no problem in sacrificing domestic autonomy to stabilize exchange rates. A. True B. False

B. False

In a country where farm workers and textile and apparel factory workers cooperate to oppose free trade, we can assume that: A. The country is likely to be land-scarce relative to its trade partners B. The country is likely to be scarce in low-skilled labor relative to its trade partners C. The country is likely to be capital-scarce relative to its trade partners D. It is likely difficult to re-purpose textile and apparel production machines to other purposes E. It is likely difficult for workers to train for new industries

Answer: B.

The Bill That United the Senate is best described as an example of ... A. the factor model. B. strategic trade policy C. infant industry protection D. the society-centered approach to trade policy

Answer: B.

The fact that Cuba's economy began to expand soon after the Soviet Union collapsed is mentioned in the TED talk as evidence that trade is good for economic growth: A. True B. False

Answer: B. The answer was FALSE because the Cuban economy declined (not expanded) after the Soviet Union collapsed. Remember his joke, "After the Soviet Union collapsed, there was no longer any investment and trading between the two countries, as you can clearly see, Cuba's economy absolutely FIDEL DOWN."

Some features of Bangladesh's economic performance in the past 20 years include ... A. an increasingly open economy, with lower tariff barriers than the South Asian average B. exports as a share of GDP has declined in the past ten years C. Bangladesh is less attractive to multinational corporations than Vietnam D. Bangladesh is less attractive to multinational corporations than Vietnam E. continued reliance on production of low-value garments such as T-shirts, trousers, sweaters, and shirts F. continued reliance on production of low-value garments such as T-shirts, trousers, sweaters, and shirts G. continued reliance on production of low-value garments such as T-shirts, trousers, sweaters, and shirts

Answer: B, C, E, G.

Private capital markets are unlikely to finance infant industries if ... (check all that apply): A. The firm is expected to become efficient in the future primarily due to economies of scale B. The firm is not expected to become efficient in the future C. The firm is expected to become efficient in the future due primarily to economies of experience D. The private capital market is efficient E. The private capital market is inefficient

Answer: B, C, E.

Which of the following are examples of locational advantages? (Check all that apply) A. Large consumer markets that are expected to grow rapidly B. Lower cost of the factors of production used intensively in the production of a specific product C. Vertical integration so that firms can internalize their transactions for intermediate goods D. Presence of natural-resource deposits E. Large pools of savings that can be tapped for capital-intensive investments

A. Large consumer markets that are expected to grow rapidly B. Lower cost of the factors of production used intensively in the production of a specific product D. Presence of natural-resource deposits

Which of the following are true of overvalued exchange rates? A. They make imports less expensive for domestic buyers B. They make exports more expensive for foreign buyers C. They make exports more expensive for foreign buyers D. They make exports less expensive for foreign buyers E. They make imports more expensive for domestic buyers

Answer: A, B, C.

Structural adjustment policies included three of the following: A. Higher producer prices in agriculture B. Infant industry protection C. Trade liberalization D. Overvalued exchange rates E. Deregulation and privatization

Answer: A, C, E.

While ISI was creating imbalances in most developing countries by the early 1980s, several East Asian economies experienced dramatic economic success by implementing policies including three of the following: A. Export-oriented industrialization B. Laissez-faire policies C. Wholesale import liberalization D. easy import substitution industrialization E.Stable macroeconomic environments

Answer: A, D, E.

If Argentina needs 4 workers to make a car and 8 workers to make a boat, and Brazil needs 10 workers to make a car and 10 workers to make a boat, and the countries do NOT trade, then the opportunity cost of a boat is: A. 2 cars in Argentina and 1 car in Brazil B. ½ car in Argentina and 1 car in Brazil C. 9/7 of a car in both Argentina and Brazil D. 9/7 of a car in both Argentina and Brazil E. 1/2 car in both Argentina and Brazil

Answer: A.

It is unclear whether inclusive institutions, such as democracy, leads to economic development or if economic development causes democratization: A. True B. False

Answer: A.True

Which of the following are "strong states", according to the definition used by Oatley? (check all that apply): A. United States B. France C. Japan

Answer: B, C.

In a country where the textile firm owners and textile industry labor unions cooperate to oppose free trade in the textile sector and apparel sector, one can assume that: A. The country is likely to be land-scarce relative to its trade partners B. It is likely difficult to re-purpose textile production machines to other purposes C. The country is likely to be capital-scarce relative to its trade partners D. The country is likely to be scarce in low-skilled labor relative to its trade partners E. It is likely difficult for workers to train for new industries

Answer: B, D, E.

According to The Economist article, A. nearly all American workers displaced by Chinese imports found another job. This supports the Factor Model. B. many American workers displaced by Chinese imports did not find another job. This supports the Sector Model. C. nearly all American workers displaced by Chinese imports found another job. This supports the Sector Model. D. many American workers displaced by Chinese imports did not find another job. This supports the Factor Model.

Answer: B.

Which of the following statements are true of the winners and losers from the US sugar policy? (Check all that Apply) A. American consumers benefit from cheaper candy prices B. Sugar beet farmers in Minnesota are protected from foreign competition C. American jobs in candy factories are protected from foreign competition D. Brazil sugar exporters are major winners from the US sugar policies E. Workers in sugar farms in Florida are protected from foreign competition

Answer: B. and E.

A country's trade policy ideal point usually follow the rule of: A. Protecting comparatively advantaged sectors and protecting comparatively disadvantaged sectors B. Liberalizing comparatively advantaged sectors and liberalizing comparatively disadvantaged sectors C. Liberalizing comparatively advantaged sectors and protecting comparatively disadvantaged sectors D. Protecting comparatively advantaged sectors and liberalizing comparatively disadvantaged sectors

Answer: C.

Brazil was able to get the United States to compensate them for unfair cotton subsidies by: A. Threatening to raise tariffs on US products such as cotton, software, and pharmaceuticals; appeals to the WTO were unhelpful because the US ignored WTO decisions B. Making political donations to US legislators C. Appealing to the WTO, and threatening to raise tariffs on US products such as software and pharmaceuticals D. Appealing to the WTO, and the WTO fined the United States E. Appealing to the WTO, and raising tariffs on US cotton

Answer: C.

The winners of ISI policies generally included (check all that apply - pay attention to the reasoning): A. Farmers, because they earned more from agricultural exports B. Farmers, because they gained access to cheaper, locally made manufactured goods C. Urban workers, because they gained access to cheaper, locally made manufactured goods D. Urban workers, because they earned more from increased job opportunities in the manufacturing sector E. Factory owners in comparative disadvantaged sectors

Answer: D, E.

A Hegemon is a country that: A. produces a disproportionately small share of the world's output because it trails in the development of new technologies B. are usually unwilling to contribute their fair share of the costs of the development of new technologies C. produces a disproportionately small share of the world's output but leads in the development of new technologies D. produces a disproportionately large share of the world's output and leads in the development of new technologies E. produces a disproportionately large share of the world's output but trails in the development of new technologies

Answer: D.

Policies to promote the development of infant industries are known as: A. Economic policy B. Protectionist policy C. Development policy D. Industrial policy E. Trade Policy

Answer: D.

In the first century of US history, the North was pro-free trade and the South was protectionist: A. True B. False

Answer: False

Match the term to its meaning, or the argument associated with that term, based on Where Does the Buck Stop? 1. public spending yields both the primary boost from the direct spending, plus "beneficial repercussions" the "fiscal multiplier" 2. public spending, financed through borrowing, does not boost overall economic activity, because the supply of savings in the economy available for borrowing is fixed "Treasury view" 3. people like to have some cash on hand if possible, in case of emergency "liquidity preference" 4. fiscal stimulus leads taxpayers to save income earned as a result of stimulus in order to have it on hand for when taxes are raised so the government can repay its debt "rational expectations" A. "rational expectations" B. "liquidity preference" C. "Treasury view" D. the "fiscal multiplier"

1. D- the "fiscal multiplier" 2. C- "Treasury view" 3. B- "liquidity preference" 4. D- the "fiscal multiplier"

In the past decade, the country with which the United States has had its largest bilateral trade deficit was A. China B. Mexico C. Canada D. Japan E. Germany

A. China

According to The Economist article, (Check all that apply) A. Chinese-owned firms pay American workers less than American-owned firms for similar work, on average. B. When Americans move between two American-owned firms, their wages change little. C. When American workers lose a job from an American firm and get a job with a foreign-owned firm, their wages are generally lower than they were at the American firm. D. When Americans move from one American-owned firm to another, their wages generally increase E. When American workers move from an American-owned firm to a foreign-owned firm, their wages generally go up

A. Chinese-owned firms pay American workers less than American-owned firms for similar work, on average. B. When Americans move between two American-owned firms, their wages change little. E. When American workers move from an American-owned firm to a foreign-owned firm, their wages generally go up

What did Argentina's Convertibility Law do? A. Fixed the Argentinian peso to the dollar B. Abandoned the peg to the dollar C. Imposed restrictions on foreign payments D. Allowed for capital controls to stabilize the exchange rate E. Abandoned the peg to gold

A. Fixed the Argentinian peso to the dollar

According to "The pandemic has widened the wealth gap," the Fed's willingness to keep interest rates low longer helped reduce income inequality. A. True B. False

A. True

According to the TED Talk - foreigners, not robots, took our jobs: A. True B. False

Answer: B.

According to The Economist article, "The yuan has been one of the world's most stable major currencies," how would you characterize China's exchange rate policy? A. Fixed B. Floating C. Managed float D. Fixed but adjustable

C. Managed float

The ability to borrow large volumes at low interest rates creates conditions that typically generate A. cash hoarding in advanced industrial countries trade bubbles B. manufacturing unemployment in advanced industrial countries C. asset bubbles D. tax bubbles

C. asset bubbles

If Country A has a floating exchange rate system, which of the following would lead to a stronger Country A currency (if no other changes happen in the economy)? A. Fewer tourists visit Country A B. Country A imports more goods C. More citizens of Country A send their money to be deposited in foreign banks D. Country A exports more goods E. Foreign depositors withdraw money from Country A's banks

D. Country A exports more goods

According to The Economist's Big Mac Index article, A. Vietnam appears to have either a fixed exchange rate or a managed float that undervalues the Dong. B. Vietnam appears to have either a fixed exchange rate or a managed float that overvalues the Dong. C. Vietnam appears to have a floating exchange rate

A. Vietnam appears to have either a fixed exchange rate or a managed float that undervalues the Dong.

With the failure of fascism in the 1940s and Marxism-Leninism in the 1980s, Francis Fukuyama declared that Western liberalism (i.e., capitalist democracy) had defeated all alternatives. A. True B False

A. True

If Country B has a fixed exchange rate and it faces a balance of payments deficit, what are some actions the government could take to maintain the peg (prevent Country B currency from losing value)? (Check all that apply) A. Use the Country B Central Bank to increase interest rates in Country B B. Use the Country B Central Bank to reduce interest rates in Country B C. Impose capital controls to prevent actors from using Country B currency to buy foreign currency D. Use Country B currency reserves to buy foreign currency E. Use foreign currency reserves to buy back Country B currency from other countries

A. Use the Country B Central Bank to increase interest rates in Country B C. Impose capital controls to prevent actors from using Country B currency to buy foreign currency E. Use foreign currency reserves to buy back Country B currency from other countries

East Asian governments used industrial policies to: A. create incentives to export B. promote the export of skilled labor C. increase the cost of investment in targeted industries D. reduce protection on infant industries E. use credit to assist importers' input suppliers

Answer: A.

Governments, under WTO rules, cannot ban imports of a product on health or safety grounds unless a preponderance of scientific evidence indicates that the product is, in fact, harmful: A. True B. False

Answer: A.

If England has a lot of capital relative to labor compared to the United States, and computers are capital-intensive and clothes are labor-intensive, then: A. England will have a comparative advantage in producing computers and the United States will have a comparative advantage in producing clothes B. The US will have a comparative advantage in producing computers and England will have a comparative advantage in producing clothes C. England will have a comparative advantage in producing both computers and clothes D. The US will have a comparative advantage in producing both computers and clothes

Answer: A.

In The Game of Trust tournament, which strategy tends to win if the game is played repeatedly few times (e.g., 3 times)? A. Always cheat B. Always cooperate C. Detective D. Copycat E. Grudger

Answer: A.

World trade has grown so rapidly over the last 60 years because: A. the WTO and GATT supported and encouraged such growth B. the world's economic output has grown more than trade C. as a consequence of greater wealth equality between rich and poor nations D. of the competition between the US and the USSR E. national economies becoming less connected

Answer: A.

According to Rodrik, at the start of the Industrial Revolution, the income gap between the richest and poorest regions in the world was 2:1; today the difference is 20:1, and the gap between the richest and poorest country is 80:1 A. True B. False

Answer: A. True

As reported in The Economist, as of December 2019, the WTO's appellate body can no longer resolve disputes because the United States has been blocking the appointment of judges: A. True B. False

Answer: A. True

Bangladesh's economy has averaged close to 6 percent annual growth in the past 20 years. A. True B. False

Answer: A. True

In the 1990s, Krugman estimated that trade had little effect on reducing workers wages - instead, his research indicated that almost all of the decline in unskilled labor wages was caused by technology. But by 2013, his research indicated that the sheer volume of trade with China had significantly increased the negative effect of trade on unskilled labor earnings: A. True B. False

Answer: A. True

The WTO appellate judges ruled that the US is violating WTO rules by banning clove-flavored cigarettes because US law still allows the sale of mint-flavored cigarettes: A. True B. False

Answer: A. True

Two possible solutions for a government's credible commitment problem resulting from the time-consistency problem regarding unemployment and inflation include A. Floating exchange rates B. Legislative oversight C. Fixed exchange rates D. Independent central banks E. Capital controls

C. Fixed exchange rates D. Independent central banks

According to Keynes, (select 3 correct answers) A. The economy will automatically and efficiently return to full employment because when unemployment increases, wages will fall, which will motivate businesses to hire more workers B. Governments should increase spending at all times in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and increase long-term growth C. Governments should cut taxes during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand D. Governments should increase spending during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand E. Governments should reduce interest rates during times of unemployment in order to increase borrowing for items such as cars and houses, which will motivate businesses to invest and create jobs to produce enough to meet demand

C. Governments should cut taxes during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand D. Governments should increase spending during times of unemployment in order to increase consumption, which will increase aggregate demand, which will motivate businesses to invest and create jobs to produce enough to meet demand E. Governments should reduce interest rates during times of unemployment in order to increase borrowing for items such as cars and houses, which will motivate businesses to invest and create jobs to produce enough to meet demand

As a result of Argentina's peg to the dollar, the following three economic developments occurred (in the first several years): A. The Argentinian peso was phased out and replaced with the dollar B. Imports from other countries became expensive C. Imports from other countries became cheap D. Argentinian exports to other countries became cheap E. The Argentinian peso became strong F. Argentinian exports to other countries became expensive G. The Argentinian peso became weak

C. Imports from other countries became cheap E. The Argentinian peso became strong F. Argentinian exports to other countries became expensive

Two differences between the HIPC debt initiative and previous programs include the following: A. Commercial loans were converted into bonds with a lower face value B. Middle income countries had the same access to IMF and World Bank funds as low-income countries C. In a two-stage process, the debtor government must first work use a participatory process to design a plan, and must then satisfactorily implement the plan in order to complete the program D. Debts owed to multilateral lenders were reduced/forgiven E. There were conditions, such as trade liberalization and state-owned enterprises privatization, in exchange for new loans and rescheduled debts

C. In a two-stage process, the debtor government must first work use a participatory process to design a plan, and must then satisfactorily implement the plan in order to complete the program D. Debts owed to multilateral lenders were reduced/forgiven

A firm's decision about whether to conduct international transactions through the market or to internalize these transactions depends on an interaction between A. Locational advantages and profit opportunities B. Natural resource opportunities and market opportunities C. Locational advantages and market imperfections D. Labor costs and transportation costs E. Comparative advantage and transaction costs

C. Locational advantages and market imperfections

Based on the Jeff Stein article, President Trump's monetary policy preferences appear to follow ... A. The Partisan Model B. The Strategic Trade Model C. The Electoral Model D. The Factor Model E. The Sectoral Model

C. The Electoral Model

Foreign direct investment includes (check all that apply) A. When an individual investor buys a mutual fund invested in foreign firms B. When an investment firm lends money to a foreign government C. When a firm in one country purchases an existing plant or factory in a second country D. When a firm in one country builds a new plant or factory in a second country E. When an investment firm buys sovereign bonds from a foreign government

C. When a firm in one country purchases an existing plant or factory in a second country D. When a firm in one country builds a new plant or factory in a second country

According to The Economist article, "The pandemic has widened the wealth gap," the wealthy have become wealthier because ... A. low interest rates reduced inflation, making the dollar more valuable B. high interest rates increased returns from lending money to banks C. low interest rates made property, stocks, and bonds more valuable D. high interest rates made the dollar more valuable

C. low interest rates made property, stocks, and bonds more valuable

Because Keynes believed that the cause of persistent high unemployment ultimately lay in inadequate demand for goods, he proposed that governments use fiscal and monetary policies to A. manage savings rates B. manage interest rates C. manage aggregate demand D. manage imports E. manage budget deficits

C. manage aggregate demand

What four countries are BRICs? A. India B. Canada C. China D. Russia E. Chile F. Brazil G. Botswana H. Indonesia

A. India C. China D. Russia F. Brazil

Match the exchange rate system to its definition 1. Governments establish a set price for their currencies in terms of an external standard, such as gold or another country's currency 2. The value of one currency in terms of another is determined entirely by the activities of private actors as they purchase and sell currencies in the foreign exchange market 3. Governments establish a set price for their currencies in terms of an external standard, but governments can change that price in certain circumstances 4. Governments do not commit themselves to a set price for their currencies, but they do intervene in the foreign exchange market to influence their currency's value against other currencies A. Fixed Exchange Rate System B. Fixed-but-Adjustable Exchange Rate System C. Floating (or flexible) Exchange Rate System D. Managed Float Exchange Rate System

1. A- Fixed Exchange Rate System 2. C- Floating (or flexible) Exchange Rate System 3. B- Fixed-but-Adjustable Exchange Rate System 4. D- Managed Float Exchange Rate System

As explained in The Economist's (2021) "Has the pandemic shown inflation to be a fiscal phenomenon?" ... 1. A central bank ... 2. The government ... achieves fiscal stimulus by selling bonds to investors for cash, then 3. When a central banks does QE, it ... A. is responsible for hitting inflation targets B. achieves fiscal stimulus by selling bonds to investors for cash, then distributing the cash to households C. distributes cash in exchange for bonds, thus increasing cash in circulation

1. A- is responsible for hitting inflation targets 2. B- achieves fiscal stimulus by selling bonds to investors for cash, then distributing the cash to households 3. C- distributes cash in exchange for bonds, thus increasing cash in circulation

Match the outcomes of different levels of miscommunication in a repeated Game of Trust. 1. If the level of miscommunication is High ... 2. If the level of miscommunication is Low ... 3. If there is no chance of miscommunication ... A. It's best to always cheat B. Copycat is the best strategy C. It pays to be more forgiving

1. A. 2. C. 3. B.

1. All national currencies are fixed to gold. Governments do not restrict currency exchange; central banks respond to surpluses or deficits of gold by lowering or raising interest rates, resulting in exchange rate stability but price instability Classic Gold Standard 2. All national currencies are fixed to gold (and the dollar, which is fixed to gold) but can change the exchange rate if they face a fundamental disequilibrium, with approval from the IMF. Governments are allowed to restrict currency exchange to prevent foreign currency, resulting in exchange rate stability, but declining confidence in the dollar led to a liquidity problem Bretton Woods System 3. The exchange rate for most national currencies, as well as gold prices, are determined by transactions in foreign exchange markets and gold markets rather than set by governments Floating Exchange Rate System A. Floating Exchange Rate System B. Classic Gold Standard C. Bretton Woods System

1. B- Classic Gold Standard 2. C- Bretton Woods System 3. A- Floating Exchange Rate System

According to Eichengreen in the Core Econ video, 1. The Gold Standard is similar to 2. Germany was the center of; 3. The United States can handle a single currency because it has A. the European Monetary System (EMS) B. the Euro (EMU) system - both keep exchange rates stable C. high labor mobility and a federal system of taxes and transfers

1. B- the Euro (EMU) system - both keep exchange rates stable 2. A- the European Monetary System (EMS) 3. C- high labor mobility and a federal system of taxes and transfers

According to Acemoglu and Robinson, 1. Inclusive Institutions: 2. Extractive Institutions: A. Allocate power to a narrow ruling elite, leading to corruption and poor long-term economic growth B. Such as rule of law and property rights tend to promote economic growth over time

1. B. 2. A.

1. Increase in a currency's value under a fixed exchange rate system Revaluation 2. Decrease in a currency's value under a fixed exchange rate system Devaluation 3. Increase in a currency's value under a flexible exchange rate system Appreciation 4. Decrease in a currency's value under a floating exchange rate system A. Devaluation B. Appreciation C. Revaluation D. Depreciation

1. C- Revaluation 2. A- Devaluation 3. B- Appreciation 4. D- Depreciation

Match the balance of payments-related term to its definition 1. A broad category that includes imports and exports of both goods and services, as well as payments such as interest and profits, and foreign aid and remittances 2. Imports and exports of manufactured items and agricultural goods 3. A broad category that includes purchases of stock and bonds in a foreign country and foreign direct investment 4. The sum of inflows and outflows of import spending, export revenues, payments and receipts such as interest and profits, and net inflows and outflows of foreign direct investment and other financial transactions 5. The process by which a country brings its payments into balance when money flowing out due to imports, direct investment abroad, and so on does not equal the money flowing in due to exports, foreign direct investment inflows, and so on A. Balance of payments adjustment B. Balance of payments position C. Capital account D. Trade account E. Current Account

1. E- Current Account 2. D- Trade Account 3. C- Capital Account 4. B- Balance of Payments Position 5. A- Balance of Payments Adjustment

Match the term to the definition: 1. Exports are almost fully accounted for by one product 2. Export-oriented agricultural sectors that have few linkages to other parts of the local economy 3. In an economy in which few people earn a money wage, no single manufacturing firm can sell its products unless other manufacturing activities start simultaneously 4. Owners of manufacturing firms in one industry will not invest to increase production unless they are certain owners of manufacturing firms in interdependent industries will also increase production 5. Production of one good increases demand in industries that support components for that industry A. Pecuniary External Economies Coordination Problem B. Backward Linkages C. Enclave Agriculture D. Complimentary Demand Coordination Problem E. Mono-exporter

1. E. Mono-Exporter 2. C. Enclave Agriculture 3. D. Complimentary Demand Coordination Problem 4. A. Pecuniary External Economies Coordination Problem 5. B. Backward Linkages

What are some obstacles to robust growth in the 2020s mentioned in The Economist article? A. A rise in American interest rates could trigger crisis for overstretched governments such as Brazil and Indonesia B. The Delta variant undermined investment in education C. China is increasingly adopting neoliberal policies that are exacerbating income inequality D. The costs of political instability are likely to rise E. The economic costs of climate change are likely to rise

A. A rise in American interest rates could trigger crisis for overstretched governments such as Brazil and Indonesia B. The Delta variant undermined investment in education D. The costs of political instability are likely to rise E. The economic costs of climate change are likely to rise

In order for monetary policy to successfully stimulate hiring, A. An increase in inflation must be unexpected in order to reduce the real wage rate B. A decrease in inflation must be unexpected in order to reduce the real wage rate C. A decrease in inflation must be unexpected in order to increase the real wage rate D. An increase in inflation must be unexpected in order to reduce the nominal wage rate E. An increase in inflation must be expected in order to increase the nominal wage rate

A. An increase in inflation must be unexpected in order to reduce the real wage rate

According to the podcast, foreign capital lent a lot of money to Argentina in the years after Argentina pegged its currency to the dollar because (identify the two correct answers) A. Argentina was perceived as a high-growth economy B. Argentina's currency was now considered much safer C. Argentina's currency was now worth less, which made it more competitive on foreign markets, which promoted exports, which increased its GDP D. Argentina had monetary autonomy which enabled it to stimulate the economy in the case of downturns E. Argentina imposed new capital controls which ensured that it would be able to maintain the peg

A. Argentina was perceived as a high-growth economy B. Argentina's currency was now considered much safer

The rapid accumulation of debt in the 1970s contributed to A. Economic growth in Latin America in the 1970s B. Economic decline in Latin America and sub-Saharan Africa in the 1970s C. Economic decline in Latin America in the 1970s D. Economic growth in East Asia but economic stagnation in Latin America in the 1970s E. Economic growth in East Asia but economic decline in Latin America in the 1970s

A. Economic growth in Latin America in the 1970s

According to the Sectoral Model of Monetary and Exchange Rate Politics, ... (select the best 3 amswers) A. Export-oriented producers prefer a fixed exchange rate because they are heavily engaged in international trade B. Export-oriented producers prefer a fixed exchange rate because a fixed exchange rate enables macroeconomic stimulus C. Sectors that intensively use comparatively scarce factors prefer a floating exchange rate because a floating exchange rate enables macroeconomic stimulus D. Sectors that intensively use comparatively abundant factors prefer an undervalued exchange rate E. Sectors that intensively use comparatively abundant factors prefer a floating exchange rate because a floating exchange rate enables macroeconomic stimulus

A. Export-oriented producers prefer a fixed exchange rate because they are heavily engaged in international trade C. Sectors that intensively use comparatively scarce factors prefer a floating exchange rate because a floating exchange rate enables macroeconomic stimulus D. Sectors that intensively use comparatively abundant factors prefer an undervalued exchange rate

For most of the past 30 years, most foreign direct investment has A. Flowed from advanced industrialized countries, to advanced industrialized countries B. Flowed from advanced industrialized countries, to developing countries C. Flowed from developing countries, to advanced industrialized countries D. Flowed from developing countries, to developing countries

A. Flowed from advanced industrialized countries, to advanced industrialized countries

Which two of the following were problems facing Argentina in the 1990s? A. Hyperinflation B. Deflation C. Asset bubble D. Economic recession E. Lack of monetary autonomy because of membership in a monetary union

A. Hyperinflation D. Economic recession

The puzzle that The Economist (2020) article, "Why does low unemployment no longer lift inflation?" explores is ... A. Inflation remains low, at both high and low unemployment rates B. Unemployment remains high, at both high and low interest rates C. Unemployment remains high, at both high and low inflation rates D. Inflation is high at both low and high unemployment rates E. Inflation is negative at high unemployment rates

A. Inflation remains low, at both high and low unemployment rates

According to the podcast, after Argentina defaulted on its debt, (Check all that apply) A. Lenders sued Argentina in court in New York and won but were not able to collect B. Lenders sued Argentina in court in New York, which forced the Argentinian government to pay back the lenders C. Lenders sued Argentina in the World Court for Sovereign Credit, which forced the Argentinian government to pay back the lenders D. Argentina's economy was able to recover to a large degree because its exports became cheaper in world markets E. Lenders sanctioned Argentina by refusing to lend to Argentina at levels anywhere close to the lending before the default

A. Lenders sued Argentina in court in New York and won but were not able to collect D. Argentina's economy was able to recover to a large degree because its exports became cheaper in world markets E. Lenders sanctioned Argentina by refusing to lend to Argentina at levels anywhere close to the lending before the default

According to the Unholy Trinity, if governments have the three following policy goals, they must choose two and sacrifice the third: A. Monetary autonomy B. Low taxes C. Trade surplus D. A fixed exchange rate E. Capital mobility

A. Monetary autonomy D. A fixed exchange rate E. Capital mobility

According to the Political Trilemma of the World Economy, if governments have the three following goals, they must choose two and sacrifice the third: A. Nation State self-determination B. Low inflation C. Low taxes D. Hyperglobalization E. Democracy

A. Nation State self-determination D. Hyperglobalization E. Democracy

Examples of positive externalities that can be transferred through FDI include (Check all that apply) A. Technology B. Crowded-out investment C. Pollution D. Managerial expertise E. Marketing networks

A. Technology D. Managerial expertise E. Marketing networks

Which of the following occurred during the implementation of the Bretton Woods monetary system? (Select the three best answers) A. The Marshall Plan helped European governments acquire a sufficient supply of dollars to enable them to make their currencies fully convertible with the dollar B. Britain attempted to restore convertibility of the pound shortly after the end of World War 2, but convertibility was quickly suspended because the country was in danger of running out of dollars and gold C. The Bretton Woods system was originally designed to make the German mark the primary reserve asset, because the German Central Bank (the Bundesbank) had a reputation for keeping inflation under control D. The Marshall Plan helped European countries import goods from the US and other countries

A. The Marshall Plan helped European governments acquire a sufficient supply of dollars to enable them to make their currencies fully convertible with the dollar B. Britain attempted to restore convertibility of the pound shortly after the end of World War 2, but convertibility was quickly suspended because the country was in danger of running out of dollars and gold D. The Marshall Plan helped European countries import goods from the US and other countries

Nationalization of foreign-owned private property became widespread following WORLD WAR ONE because (Check all that apply) A. The Marxist-Leninist government in the Soviet Union rejected the idea of private property B. Some Latin American countries began to expropriate foreign owned investments, especially in the extractive industries and public utilities C. Developing countries began to broaden the notion of "pubic purpose" to include the state's role in the process of economic development D. Governments throughout Africa became independent, and the newly enfranchised voters demanded more control of their economies E. Persian Gulf countries expropriated oil fields in response to high oil prices and Western support for the state of Israel

A. The Marxist-Leninist government in the Soviet Union rejected the idea of private property B. Some Latin American countries began to expropriate foreign owned investments, especially in the extractive industries and public utilities C. Developing countries began to broaden the notion of "pubic purpose" to include the state's role in the process of economic development

Which of the following occurred during the breakdown of the Bretton Woods monetary system? (Select the 4 best answers) A. The Nixon administration loosened monetary policy (reduced interest rates) to stimulate the US economy B. The US ran large, consistent balance of payment deficits because of the Vietnam War C. Germans who worried about inflation more than collapse of the exchange rate system sold large volumes of dollars to buy back German marks D. Germans who worried about inflation sold large volumes of German marks to buy dollars, because dollars were considered more stable (because they were fixed to gold) E. The US ran large, consistent balance of payment deficits because of expanded welfare programs at home, including Medicaid, Medicare, and Social Security

A. The Nixon administration loosened monetary policy (reduced interest rates) to stimulate the US economy B. The US ran large, consistent balance of payment deficits because of the Vietnam War C. Germans who worried about inflation more than collapse of the exchange rate system sold large volumes of dollars to buy back German marks E. The US ran large, consistent balance of payment deficits because of expanded welfare programs at home, including Medicaid, Medicare, and Social Security

Venezuela is unable to import essentials such as medical supplies because ... A. The government overvalued the exchange rate, so there is a shortage of dollars to buy foreign medicine B. The exchange rate is floating, and so the currency has depreciated, making foreign medicine too expensive for people to afford C. The government undervalued the currency (the bolivar), so people cannot afford to buy foreign medicine D. They no longer export oil

A. The government overvalued the exchange rate, so there is a shortage of dollars to buy foreign medicine

Which two of the following were important inhibitors to the creation of the Euro, according to the Continental Breakup podcast? A. The importance of sovereignty to France B. At the end of World War II, Germany no longer wanted to dominate Europe C. The oil crisis in the 1970s D. The memory of high inflation in the Weimar Republic E. At the end of the Napoleonic War, France no longer wanted to dominate Europe F. German Unification G. Italian voters were faced with a vote to dramatically increase taxes

A. The importance of sovereignty to France D. The memory of high inflation in the Weimar Republic

According to the Partisan Model of Monetary and Exchange Rate Politics, A. There is a tradeoff between low unemployment and low inflation B. A decrease in interest rates will result in lower inflation but carries the risk of higher unemployment. C. An increase in interest rates will result in lower unemployment but carries the risk of higher inflation D. Left wing parties tend to favor low interest rates and a fixed exchange rate more than left right wing parties E. Left wing parties tend to favor high interest rates and a floating exchange rate more than right wing parties

A. There is a tradeoff between low unemployment and low inflation

Governments of advanced industrial economies increased their role in the government, such as attempting to achieve full employment, after World War 2 because ... (Select the best 2 answers) A. There was a shift in political power away from the propertied classes to the working class B. There was a shift in ideas call neoliberal economics C. There was a shift in ideas called the Keynesian Revolution D. There was a shift in political power away from the landed gentry to the urban industrialists E. The United States used its position as a hegemon to force other governments to change their policies

A. There was a shift in political power away from the propertied classes to the working class C. There was a shift in ideas called the Keynesian Revolution

President Biden has continued with policies restricting Chinese FDI in the US, including banning Huawei. A. True B. False

A. True

Thanks to foreign direct investment (FDI) such as pharmaceuticals, medical devices, and computer chips, Ireland went from the poorest of the rich to among the richest, according to the Economist article, "The good, the bad, and the ugly." A. True B. False

A. True

According to Oatley, moral hazard was an issue with respect to the Asian crisis ... A. When banks believed that the government will bail them out if they suffer large losses on the loans they have made B. When banks believed that the government may devalue the local currency C. When banks believed that foreign lenders would stop rolling over their short-term loans D. When banks believed that borrowers may decide not to pay back their loans E. When banks believed that borrowers are using borrowed funds for illicit activities such as drug smuggling or human trafficking

A. When banks believed that the government will bail them out if they suffer large losses on the loans they have made

According to The Economist article about Exxon, the Guyanese government's response to the discovery of offshore oil was to A. allow Exxon to drill as effectively as possible, and to debate on what government programs the royalties will be spent on B. impose a carbon tax to ensure the negative externalities of pollution will be compensated with socially-beneficial government spending C. create a tax and trade program to ensure oil production is effective as possible D. require that Exxon invest in green energy such as wind and solar, so the country is not dependent on oil and gas-based energy. E. allow Exxon to drill as effectively as possible, and funnel the profits toward top government officials.

A. allow Exxon to drill as effectively as possible, and to debate on what government programs the royalties will be spent on

The Economist's (2021) "Has the pandemic shown inflation to be a fiscal phenomenon?" concludes that Quantitative Easing (QE) is only inflationary if ... A. fiscal policy simultaneously increases debt-financed spending B. interest rates are well above zero C. fiscal policy does not increase debt-financed spending D. interest rates fall to zero

A. fiscal policy simultaneously increases debt-financed spending

Export-processing zones are industrial areas set aside for MNCs with special rules or subsidies. Foreign firms based in EPZs are primarily allowed to A. import components free of taxes, as long as all of their output is exported B. pay workers less than elsewhere in the country C. pay workers more than elsewhere in the country D. ignore safety and environmental regulations E. import components for assembly free of taxes, as long as none of their output is exported

A. import components free of taxes, as long as all of their output is exported

In 2015, the Greek government only allowed people to withdraw 60 Euros per day from the ATM because A. the Greek banks were about to run out of money B. the Greek central bank needed to maintain a fixed exchange rate with the rest of Europe C. the Greek government was not collecting enough in taxes D. the Greek Central Bank lowered interest rates to stimulate the economy, which led to high demand for Euros

A. the Greek banks were about to run out of money

According to Peter Temin (cited in Oatley), the US economy has evolved into a dual economy in which ... A. there are two distinct groups - insiders, who benefit from globalization (including college graduates in major cities) and outsiders who have not benefitted from globalization (including those without a college degree and living in small towns or rural areas). B. there are two distinct groups: insiders, who have political connections that enable them to benefit despite the challenges of globalization, and outsiders, who pay the costs of globalization. C. there are two distinct groups: coastal ellites, who benefit from globalization because they live near major ports, and real Americans, who are the primary economic producers yet are alienated from the fruits of their labor .

A. there are two distinct groups - insiders, who benefit from globalization (including college graduates in major cities) and outsiders who have not benefitted from globalization (including those without a college degree and living in small towns or rural areas).

Cordell Hull argued that World War 2 was caused, in part, by the United States abandoning global economic leadership and free trade after World War 1: A. True B. False

Answer: A.

Match the Term to the Definition: 1. A status quo in which at least one member of society can be made better off without making any other member of society worse off 2. A status quo in which no member of society can be made better off without making some other member of society worse off 3. An outcome in which none of the players has an incentive to change their strategy unilaterally 4. A strategy that enables a player to reward other players for cooperating and punish them for cheating. 5. A situation in which parties to an agreement cannot be certain that the other parties will comply with the terms of the agreement. 6. A strategy that is the best reply to all of the other player's strategies. A. Reciprocity Strategy B. Pareto Optimal C. Nash Equilibrium D. Pareto Suboptimal E. Dominant Strategy F. Enforcement Problem

Answer: 1. D-Pareto Suboptimal 2. B-Pareto Optimal 3. C- Nash Equilibrium 4. A-Reciprocity Strategy 5. F- Enforcement Problem 6. E- Dominant Strategy

According to the factor model, A. Land-owners are likely to benefit economically from and to support free trade in countries with low population density B. Business owners are likely to benefit economically from and to support free trade in advanced economy countries C. Workers are likely to benefit economically from and to support free trade in backward economy countries D. Workers are likely to benefit economically from and to support free trade in advanced economy countries E. Business owners are likely to benefit economically from and to support free trade in backward economy countries

Answer: A, B, C.

Three problems associated with ISI policies, particularly in Africa, included: A. Persistent budget deficits from government investments in productive capacity and subsidies for public services such as electricity, water, and transportation B. Low levels of exports C. Low levels of exports D. Low levels of exports E. Excess capacity in agriculture

Answer: A, B, C.

According to strategic-trade theory, ... (check all that apply): A. Firms operating in oligopolistic markets can earn profits greater than could be earned in equally risk investments in other sectors of the economy B. Some industries are characterized by oligopolistic competition C. Markets are perfectly competitive D. There are cases in which newly-created firms will not be efficient initially but could be efficient when they become mature E. Diminishing marginal returns of capital means that large firms tend to be less efficient than small firms

Answer: A, B, D.

Landowners dominated politics prior to World War II in Latin America, Asia, and Africa ... (Check all that apply): A. Because the countries are land abundant (especially relative to capital), so they primarily export agricultural goods, which enriches the landowners B. Primarily through colonial structures in Asia C. Because the countries are land scarce, so landowners are able to demand high rents, which enriches the landowners D. Primarily through colonial structures in Latin America E. Primarily through colonial structures in Africa

Answer: A, B, E.

Which of the following are true statements about the Bangladesh T-Shirt Economy podcast? A. Jobs in t-shirt factories made the lives of women better off in many ways B. Jobs in t-shirt factories made the lives of women better off in many ways C. Jobs in t-shirt factories made the lives of women better off in many ways D. By getting into the T-shirt business, Bangladesh has brought a huge amount of people out of poverty E. Jobs in t-shirt factories made male farmers' lives worse off in many ways. F. Most workers in the t-shirt factories are women

Answer: A, D, F.

According to strategic-trade theory, the location of high-technology industries is primarily determined by ... (choose the best two answers): A. Economies of scale and experience B. High factor endowments in skilled labor C. High factor endowments in capital D. Timing of market entry E. High factor endowments in land

Answer: A, D.

A country with many veto players in the political system is likely to have more: A. Policy stability B. Policy stability

Answer: A.

According to the Trade Show podcast, one of the first laws passed by the United States Congress was a tariff: A. True B. False

Answer: A.

Autarky means: A. Absence of trade B. Absence of order C. Political rule by the few D. Political rule by one leader

Answer: A.

According to the basic Ricardian model, which of the following are true? (Check all that apply): A. Trade leads to increased consumption opportunities in each country because of specialization B. Trade leads to increased consumption opportunities in each country because of comparative advantage C. Trade leads to increased consumption opportunities in the country with absolute advantage and reduced consumption opportunities in the country with absolute disadvantage D. Two countries with the same opportunity costs between products and a constant rate of product transformation can still benefit from trade

Answer: A. and B.

As a result of ISI policies, developing countries in the 1960s and 1970s ... (Check all that apply): A. experienced high rates of industrialization B. had rapid economic growth C. became increasingly dependent on agriculture as their manufacturing industries failed due to inefficiency D. had stagnant or negative economic growth rates in the 1960s and 1970s

Answer: A. and B.

If Argentina needs 4 workers to make a car and 8 workers to make a boat, and Brazil needs 10 workers to make a car and 10 workers to make a boat, and the countries DO trade, then ... (check all that apply): A. Argentina will export cars to Brazil B. Argentina will export boats to Brazil C. Brazil will export cars to Argentina D. Brazil will export boats to Argentina E. The countries will not trade

Answer: A. and D.

If England has a lot of capital relative to labor compared to the United States and the countries do trade, then (check all that apply): A. England will export capital-intensive goods to the US B. England will export labor-intensive goods to the US C. England will import capital-intensive goods from the US D. England will import labor-intensive goods from the US

Answer: A. and D.

Which two core principles stand at the base of the WTO? A. Nondiscrimination B. Market conservatism C. Political liberalism D. Market liberalism E. Preferential discrimination

Answer: A. and D.

A public good is defined by which two characteristics? (check all that apply): A. Non-rivalry B. Oversupply C. Excludability D. Undersupply E. Non-excludability

Answer: A. and E.

According to Rodrik, two lessons from East Asian countries including China include: A. Deep integration into global financial markets and the WTO offers the best opportunities for dramatic economic growth B. Successful long-term economic growth is generally promoted when markets and private incentives play a large role in the economy C. Successful long-term economic growth is generally promoted when markets and private incentives play a large role in the economy D. Selectively applying tariffs, import quotas, and price controls can be compatible with or even facilitate long-term economic growth E. Globalization and diversification are not necessary for long-term dramatic economic growth

Answer: B and D.

The Group of 77 developing countries used the UN Conference on Trade and Development (UNCTAD) talks and GATT talks to pursue ... (Check all that apply): A. Liberalization of international commodity prices, to allow for the price of commodity imports to fall to more affordable levels B. Elimination of trade barriers on commodities in industrialized nations C. Preferential access for import of manufactured goods from developing countries into industrialized nations D. Financial transfers from advanced industrialized nations E. International commodity price stabilization by setting a floor for commodity prices to stop those prices from falling too low

Answer: B, C, D, E.

China's economic reform was based on the following three pillars: A. Deregulation of agricultural markets and private ownership of land B. Gradual withdrawal of state financial support for manufacturing enterprises C. Gradual withdrawal of state financial support for manufacturing enterprises D. Gradual withdrawal of state financial support for manufacturing enterprises E. Gradual withdrawal of state financial support for manufacturing enterprises

Answer: B, C, D.

If Argentina needs 4 workers to make a car and 8 workers to make a boat, and Brazil needs 10 workers to make a car and 10 workers to make a boat, then (check all that apply) NOTE: You might want to look at the glossary to clarify the difference between absolute and comparative advantage: A. Brazil has an absolute advantage in making boats B. Argentina has an absolute advantage in making boats C. Brazil has a comparative advantage in making boats D. Argentina has a comparative advantage in making boats E. Argentina has a comparative advantage in making cars

Answer: B, C, and E.

Three reasons for the global shift from structuralism to neoliberalism as the guiding philosophy for economic development include: A. ISI policies were unsuccessful in promoting industrialization in countries who pursued those policies B. An economic crisis in the 1980s forced indebted countries to reform, and the IMF and World Bank pushed neoliberal policies C. A handful of Latin American countries outperformed other developing countries D. A handful of East Asian countries outperformed other developing countries E. Many countries that pursued ISI policies experienced economic imbalances such as budget and trade deficits

Answer: B, D, E

According to the structuralist Singer-Prebisch theory, A. Developing countries' terms of trade improve over time, as periphery countries spend an increasingly larger share of their income on manufactured goods, which increases demand from local manufacturing firms B. Developing countries' terms of trade deteriorate over time, as primary commodity prices fall relative to manufactured goods prices C. Developing countries' terms of trade deteriorate over time, as periphery countries spend an increasingly smaller share of their income on manufactured goods, which reduces demand from local manufacturing firms D. Developing countries' terms of trade deteriorates over time, as core countries spend an increasingly larger share of their income on commodities from developing countries, which increases export income for developing countries but creates disincentives for developing countries to industrialize E. Developing countries' terms of trade improve over time, as they become wealthier and therefore more capital abundant and therefore gain comparative advantage in manufacturing

Answer: B.

Comparative advantage means: A. One country can produce a product with fewer worker-hours than another country B. One country can produce a product at a lower opportunity cost (in terms of other products foregone) than another country

Answer: B.

Does the coalition in support of tire tariffs comply with the factor model or the sector model? A. The factor model, which argues that factors are immobile across sectors B. The sector model, which argues that factors are immobile across sectors C. The sector model, which argues that factors are immobile across sectors D. The sector model, which argues that factors are mobile across sectors

Answer: B.

If a country that isn't trading is offered the option to start trading, then equilibrium production and consumption will be changed by a country's decision: A. to specialize in the production of one good in order to obtain more of another good in which it has a comparative advantage B. to specialize in the production of one good in which it has a comparative advantage in order to obtain more of another good in which it has a comparative disadvantage C. to specialize in the production of one good in which it has a comparative disadvantage in order to obtain less of another good in which it has a comparative advantage D. to avoid trade with another country with which it has a comparative disadvantage

Answer: B.

In The Game of Trust, which strategy tends to win if the game is played repeatedly many times (e.g., 10 times)? A. Always cooperate B. Copycat C. Detective D. Grudger E. Always cheat

Answer: B.

The WTO reduces the impact of raw power on international trade relations because: A. it does not provide a dispute-settlement mechanism that allows governments to enforce common rules B. it brings the rule of law to bear in international trade relations C. it does not bring the rule of law to bear in international trade relations D. it does not reflect the interests of the most powerful political systems E. it promotes discriminatory international trade

Answer: B.

The logic of the collective action problem helps us understand why ... A. Consumers rather than producers dominate trade politics B. Governments rarely liberalize trade unilaterally C. Trade politics tend to favor liberalization D. Public radio is so successful in fundraising drives E. Governments tend to liberalize trade unilaterally

Answer: B.

The marginal rate of substitution is a consumption indifference curve that: A. typically slopes upwards B. tells us how much of one good the consumer is willing to give up to acquire an additional unit of the second good C. reflects the assumption of increasing marginal utility D. each additional good provides a greater increase of utility E. reflects the increasing aggregate utility of a country's consumption

Answer: B.

Tit-for-tat is an example of ... (Note: The Evolution of Trust game calls Tit-for-Tat "Copycat"): A. Third party enforcement B. Reciprocity strategy C. Enforcement problem D. Pareto improvement E. Prisoner's dilemma

Answer: B.

Which of the following statements are true of the collective action problem? A. Larger groups can more easily solve collective action problems because it is easier for large groups to monitor free-riders B. Smaller groups may be more successful in achieving their policy aims because of per-person transaction costs C. Larger groups can more easily solve collective action problems because the necessary contribution size is smaller per person D. Larger groups tend to be more successful in achieving their policy aims because they are larger collectively

Answer: B.

In the new deal signed between the US and the EU, it was agreed that governments on each side would no longer be allowed to subsidize Boeing and Airbus. A. True B. False

Answer: B. False

The infant industry protection argument assumes that: (check all that apply): A. Diminishing marginal returns of capital means that large firms tend to be less efficient than small firms B. Tariffs can help firms in new industries by providing them with a guaranteed domestic market C. There are cases in which newly-created firms will not be efficient initially but could be efficient when they become mature D. Mature firms are less efficient than young firms because mature firms use outdated technologies E. Tariffs and other forms of protection can only make society worse off by preventing factors from moving out of low-return and into high-return industries

Answer: B. and C.

Which two of the following statements are true? A. The sector model predicts that political conflict will be between economic classes B. The factor model predicts that political conflict will be between economic classes C. The sector model predicts that political conflict will be between export-oriented and import-substituting industries D. Predictions from the factor model are more likely to be true than predictions from the sector model if factor mobility is low E. The factor model predicts that political conflict will be between export-oriented and import-substituting industries

Answer: B. and C.

Which of the following give countries more bargaining power in WTO trade talks? (CHECK ALL THAT APPLY): A. Commitment to talks demonstrated by forgoing alternatives such as regional trade agreements B. Patience C. Impatience D. An attractive alternative to a successful trade agreement E. Determination not to walk away from talks

Answer: B. and D.

After the WTO appellate body made its decision between Indonesia and the US, ... (CHECK ALL THAT APPLY): A. The US lifted its ban on flavored cigarettes B. The US and Indonesia reached a secret settlement. C. Indonesia raised tariffs on US imports of electronics and pharmaceuticals D. The WTO fined the US $42 million for every year it kept its ban on flavored cigarettes in place E. Indonesia began exporting cigarette-looking clove cigars to the US

Answer: B. and E.

The following conditions must be met for cooperation to be achieved in a prisoner's dilemma scenario of trade negotiations (CHECK ALL THAT APPLY): A. Each government must have an attractive outside option B. An institution such as the WTO must act as a third party enforcer C. Governments must use reciprocity strategies to enforce the cooperation outcome D. Each government must sufficiently value future benefits E. The game must be played repeatedly by the same governments

Answer: C, D, E

"Non-discrimination" ensures that: A. each WTO member are required to lower tariffs with other WTO members B. each WTO member faces identical opportunities to trade with other non-WTO members C. each WTO member faces identical opportunities to trade with other WTO members D. each WTO member are required to raise tariffs with other non-WTO members. E. each WTO member faces preferential opportunities to trade with other WTO members

Answer: C.

In secondary ISI, emphasis shifts from: A. the manufacture of simple consumer goods for domestic consumption to manufacture of simple consumer goods for export B. the manufacture of consumer durable goods to intermediate exports C. the manufacture of simple consumer goods to consumer durable goods and intermediate inputs D. the manufacture of simple consumer goods for exports to the import of cheaper consumer durable goods

Answer: C.

Which of the following is true, according to Oatley? A. The state-based approach assumes that protectionism reduces social welfare and that national policy reflects the goals of national policy makers B. The society-based approach assumes that under certain conditions trade protection can raise social welfare and that national policy reflects the balance of power between competing interest groups C. The society-based approach assumes that protectionism reduces social welfare and that national policy reflects the balance of power between competing interest groups D. The society-based approach assumes that protectionism reduces social welfare and that national policy reflects the goals of national policy makers E. The state-based approach assumes that under certain conditions trade protection can raise social welfare and that national policy reflects the balance of power between competing interest groups

Answer: C.

Who was in the coalition supporting tariffs on tires in the Grizz podcast? A. Tire company owners and tire company customers B. Tire company workers and tire company customers C. Tire company owners and tire company workers

Answer: C.

There are two reasons why firms might be efficient in the long run but not efficient in the short run: A. High labor productivity B. Diminishing marginal returns of capital C. Economies of experience D. Relative capital abundance E. Economies of scale

Answer: C. and E.

According to the "chicken tax" in the podcast ... A. China put a tariff on chickens, and the US responded with a tariff on imported trucks B. The US put a tariff on imported cars, and China responded with a tariff on imported chicken parts C. Germany put a tariff on imported cars, and the US responded with a tariff on imported chickens D. Germany put a tariffs on imported chickens, and the US responded with a tax on imported trucks

Answer: D.

China is labor abundant relative to the US and the US is capital abundant relative to China. According to Stolper-Samuelson, when China began to trade more intensively with the United States, this would have the following effects in the US: A. Higher relative prices for labor intensive goods and higher relative prices for capital intensive goods, and therefore lower wages for labor and higher profits for capital in the US B. Lower relative prices for labor intensive goods and higher relative prices for capital intensive goods, and therefore higher wages for labor and higher profits for capital in the US C. Lower relative prices for labor intensive goods and lower relative prices for capital intensive goods, and therefore lower wages for labor and higher profits for capital in the US D. Lower relative prices for labor intensive goods and higher relative prices for capital intensive goods, and therefore lower wages for labor and higher profits for capital in the US E. Lower relative prices for labor intensive goods and lower relative prices for capital intensive goods, and therefore lower wages for labor and lower profits for capital in the US

Answer: D.

ISI policies increase opportunities for ... A. rent seeking - efforts by private actors to achieve higher-than-market returns by investing in highly productive real estate B. governments to implement reforms to bring the economic system back into balance C. urban workers to seek housing that costs less money to rent D. rent seeking - efforts by private actors to achieve higher-than-market returns by corruptly using the political system, for example bribing officials to acquire import licenses

Answer: D.

In the Game of Trust, which strategy tends to win if the game is played just once? A. Copycat B. Cooperate C. Detective D. Cheat E. Grudger

Answer: D.

In theory, countries with a majoritarian electoral system, compared to countries with PR electoral systems, are predicted to: A. Have lower tariffs, because political parties will appeal to large groups such as consumers B. Have higher tariffs, because political parties will appeal to large groups such as labor C. Have higher tariffs, because political parties will appeal to large groups such as farmers D. Have higher tariffs, because interest groups such as sugar growers or textile workers will capture legislators and press for protection E. Have lower tariffs, because interest groups such as automobile manufacturers or corn farmers will capture legislators and press for access to foreign markets

Answer: D.

India developed a manufacturing industry in the 1930s because A. India had a comparative advantage in manufacturing because of its relative abundance in skilled labor relative to trade partners B. India had a comparative advantage in manufacturing because of its relative abundance in skilled labor relative to trade partners C. When India left the British Empire after World War 1, a nationalist government was committed to self-reliance D. Markets for Indian exports constricted, forcing Indians to produce their own manufactures rather than import cheaper manufactures from abroad E. Markets for Indian exports expanded, enabling export revenues to be invested in capital accumulation

Answer: D.

The Hecksher-Ohlin trade model argues that: A. developed countries have the same basic factor endowments B. developed countries have the same comparative advantages C. developed countries have a lot of capital but little labor D. comparative advantage arises from differences in factor endowments E. comparative advantage arises from similarities in factor endowments

Answer: D.

The claim that developing countries face a continuous decline in their terms of trade: A. has been confirmed by most recent research according to Oatley. B. cannot be tested because the hypothesis is too generalized according to Oatley C. did not influence trade and development policies of developing countries according to Oatley D. has been disputed by most recent research according to Oatley. E. has been disputed by most recent research according to Oatley.

Answer: D.

According to the prisoner's dilemma view of trade bargaining, the Group of 20's preference ordering is as follows: A. Best option is both sides liberalize, then Group 20 liberalizes and EU protects, then both sides protect, then Group 20 protects and EU liberalizes B. Best option is both sides liberalize, then Group 20 protects and EU liberalizes, then Group 20 liberalizes and EU protects, then both sides protect C. None of the above D. Best option is Group 20 protects and EU liberalizes, then both sides liberalize, then Group 20 liberalizes and EU protects, then both sides protect E. Best option is Group 20 protects and EU liberalizes, then both sides liberalize, then both sides protect, then Group 20 liberalizes and EU protects

Answer: E.

Import substitution industrialization (ISI) was based on the strategy of: A. substituting previously exported simple consumer goods with newly domestically produced ones B. substituting previously exported advanced consumer goods with newly domestically produced advanced agricultural ones C. substituting previously imported advanced consumer goods with newly domestically produced simple ones D. substituting previously imported agricultural goods with newly domestically produced manufacturing ones E. substituting previously imported simple consumer goods with newly domestically produced ones

Answer: E.

The history of hegemonic transitions provides some support that: A. world trade has floundered during periods of hegemonic leadership and flourished during periods without it B. The European Union could reconstruct the world economy in the coming decades because China will not have the resources to do so C. the United States reconstructed the world economy after WW II even though it didn't have resources to do so D. the British failed to reconstruct the world economy after WW II even though it had the resources to do so E. world trade has flourished during periods of hegemonic leadership and floundered during periods without it

Answer: E.

The status quo tariff policies before the Doha Round of trade bargaining, according to Oatley, is: A. Low tariffs in developing countries on agricultural products and on manufactured goods. B. High tariffs in developing countries on agricultural products and on manufactured goods. C. High tariffs in the advanced industrialized countries on manufactured products and high tariffs in developing countries on agricultural goods. D. Low tariffs in the advanced industrialized countries on agricultural products and low tariffs in developing countries on manufactured goods. E. High tariffs in the advanced industrialized countries on agricultural products and high tariffs in developing countries on manufactured goods.

Answer: E.

According to Rodrik, the average rich person (top 10% of income distribution) in a poor country (bottom 10% of countries) earns more money than the average poor person (bottom 10% of income distribution) in a rich country (top 10% of countries): A. True B. False

Answer: False

Which of the following are often included in Import Substitution Industrialization policies? (Check all that apply) A. Government investment in manufacturing enterprises B. Taxation of agricultural exports C. Taxation on manufactured imports D. Government control of agricultural export boards E. Government control of foreign exchange to facilitate import of capital goods

Answers: A, B, C, D, E

What was Cuba's exchange rate policy in 2020, according to The Economist article? A. Fixed exchange rate B. A dual-currency system with different exchange rates for different purposes C. Managed float D. Fixed but adjustable E. Floating exchange rate

B. A dual-currency system with different exchange rates for different purposes

Professors have an incentive to tell students that there will be a final exam during the course of the semester in order to encourage them to study, but at the end of the semester, professors have an incentive to cancel the final exam in order to avoid grading. This is an example of A. A subgame perfect equilibrium in a sequential game B. A time consistency problem C. A calculation of expected utility D. A Nash Equilibrium in a sequential game E. A commitment mechanism

B. A time consistency problem

According to Oatley, each crisis in the decade of financial crises (in Asia, Latin America, Turkey, and Russia) was distinctive in some way, yet all shared two important similarities: A. Each country used import substitution industrialization (ISI) policies to promote economic development B. Each country developed a heavy reliance on short-term foreign capital C. Each country maintained some form of floating exchange rate (including policies such as a managed float) D. Each country maintained some form of fixed exchange rate (including policies such as a crawling peg) E. Each country developed a heavy reliance on long-term foreign capital

B. Each country developed a heavy reliance on short-term foreign capital D. Each country maintained some form of fixed exchange rate (including policies such as a crawling peg)

Although income inequality within countries has fallen in recent decades, global inequality has increased. A. True B. False

B. False

China-based multinational corporations systematically replace local top leadership in corporations they purchase abroad with Chinese executives. A. True B. False

B. False

FDI is more problematic for recipient countries than other types of capital flows, according to The Economist article, "The good, the bad, and the ugly." A. True B. False

B. False

The CEO of Unilever said that COVID-19 has made it difficult for him to manage his international business because he can't fly around to communicate with his underlings around the world. A.True B. False

B. False

Turkey appears to have successfully implemented central bank independence, which has successfully kept inflation under control. A. True B. False

B. False

The massive accumulation of debt in Latin American countries in the 1970s made those countries vulnerable to international shocks because A. The debt did not contribute to economic growth, leading to high debt service to GDP ratios B. ISI's focus on capital-intensive projects failed to generate exports, which led to high debt service to export revenue ratios C. The borrowed money was not spent on productivity-enhancing investments such as hydroelectric projects D. The inflow of money weakened Latin American currencies relative to their trading partners, which undermined exports, leading to high debt service to export revenue ratios E. ISI policies failed to generate economic growth, leading to high debt service to GDP ratios

B. ISI's focus on capital-intensive projects failed to generate exports, which led to high debt service to export revenue ratios

Cost advantages that provide incentives for horizontal integration often arise when ______ are the most important source of a firm's revenue A. Specific assets B. Intangible assets C. Liquid assets D. Positive externalities E. Natural resources

B. Intangible assets

Between 1982 and 1986, net capital flows were transferred from the seventeen most heavily indebted countries to banks in advanced industrial countries because A. Private capital holders in developing countries did not have any profitable investment opportunities in developing countries, so they invested all of their savings to bank in advanced industrial countries B. Lenders acted as a united front because they solved the free-rider problem by the IMF refusing to advance credit to a government until commercial banks pledged new loans to the same government C. Borrowers acted as a united front because they solved the free-rider problem by the IMF refusing to advance credit to a commercial bank until commercial banks pledged new loans to the same government D. Structural adjustment policies led to rapid economic growth in those debtor countries, generating surplus savings that were invested to generate low-risk returns

B. Lenders acted as a united front because they solved the free-rider problem by the IMF refusing to advance credit to a government until commercial banks pledged new loans to the same government

hree major economic shocks that hit Latin America in 1979 and the early 1980s included: A. Oil prices fell, reducing the availability of foreign capital to borrow from oil exporting countries such as Saudi Arabia B. Recession in the advanced industrialized world reduced demand for Latin American goods and reduced their terms of trade C. Interest rates went down in the US, which attracted foreign investment to the US instead of to Latin America, which forced Latin American governments to raise their interest rates to attract continued flows of capital D. Oil prices rose again, increasing the cost of imports E. Interest rates went up in the US, which translated into higher interest rates for Latin America debt with variable interest rates

B. Recession in the advanced industrialized world reduced demand for Latin American goods and reduced their terms of trade D. Oil prices rose again, increasing the cost of imports E. Interest rates went up in the US, which translated into higher interest rates for Latin America debt with variable interest rates

Creditors initially diagnosed the debt crisis of the early 1980s as a A. Structural economic orientation toward domestic markets rather than world markets which could be solved with loans conditioned on structural adjustment policies such as trade liberalization and liberalization of FDI B. Short-term liquidity problem that could be solved with new loans in exchange for reduced budget deficits and exchange rate devaluation to improve the balance of trade C. Short-term liquidity problem that could be solved with new loans in exchange for increased budget deficit spending to stimulate the economy and exchange rate devaluation to improve the balance of trade D. Moral hazard problem that could be solved by withholding future loans until developing country governments could demonstrate a greater commitment to fiscal prudence E. A coordination problem among lenders that could be solved by the IMF refusing to advance credit to a government until commercial banks pledged new loans to the same government

B. Short-term liquidity problem that could be solved with new loans in exchange for reduced budget deficits and exchange rate devaluation to improve the balance of trade

Which three of the following policies were conditions of IMF assistance during the Asian financial crisis? A. Loosened fiscal policies to stimulate the economy B. Structural reforms, such as deregulation and privatization of state-owned enterprises C. Conditionality on macroeconomic stabilization, including loosened monetary policy to stimulate the economy D. Conditionality on macroeconomic stabilization, including tightened monetary policy to restore market confidence and stem capital outflow E. Tightened fiscal policies to generate financial resources to rebuild the financial sector

B. Structural reforms, such as deregulation and privatization of state-owned enterprises D. Conditionality on macroeconomic stabilization, including tightened monetary policy to restore market confidence and stem capital outflow E. Tightened fiscal policies to generate financial resources to rebuild the financial sector

The rise in private lending to developing countries in the 1970s was driven by two events: A. The creation of a UN agency that offered development loans at concessional interest rates B. The 1973 oil shock, which generated large current account surpluses in oil-exporting countries that enabled those countries to lend petrodollars to commercial banks, who then lent to developing countries C. Growing demand for foreign capital in developing countries pursuing ISI strategies D. The Kennedy Administration's "Alliance for Progress," designed to use government aid to prevent the spread of Cuban-style socialist revolutions Washington Consensus-related economic reforms

B. The 1973 oil shock, which generated large current account surpluses in oil-exporting countries that enabled those countries to lend petrodollars to commercial banks, who then lent to developing countries C. Growing demand for foreign capital in developing countries pursuing ISI strategies

Which Goldman Sachs prediction was achieved by the BRICs? A. The BRIC economies would, by 2025, have GDP per capita levels at least half that of the 6 wealthiest developed economies (America, Britain, France, Germany, Italy and Japan). B. The BRIC economies would, by 2025, have a combined GDP at least half that of the 6 largest developed economies. C. By 2040, GDP per capita in the BRIC countries would be higher than that of the G6. D. The BRIC economies would, by 2040, have a combined GDP at least half that of the 6 largest developed economies. E. By 2040, the combined economies of the BRIC countries would be larger than that of the G6.

B. The BRIC economies would, by 2025, have a combined GDP at least half that of the 6 largest developed economies.

The following three factors motivated indebted Latin American governments to reduce their role in their countries' domestic financial systems and to liberalize their capital accounts in the late 1980s and 1990s: A. ISI policies enabled manufacturers to become sufficiently large and efficient to compete in world markets, which transformed the majority of manufacturers into proponents of export-oriented policies B. The US and other bilateral and multilateral donors advanced funds to guarantee the principal of "Brady bonds," which were commercial bank debt converted into bonds with lower face value, thus enabling debtor governments to capture a larger share of the benefit of reform C. Key members of the ISI coalition lost the strength to oppose economic reform D. Governments recognized that the outward-oriented policies of East Asian governments offered useful lessons for Latin American governments E. The Brady Bond plan converted bonds into commercial loans, which enabled the governments to negotiate for loan forgiveness with a smaller number of banks rather than a large number of portfolio investors

B. The US and other bilateral and multilateral donors advanced funds to guarantee the principal of "Brady bonds," which were commercial bank debt converted into bonds with lower face value, thus enabling debtor governments to capture a larger share of the benefit of reform C. Key members of the ISI coalition lost the strength to oppose economic reform D. Governments recognized that the outward-oriented policies of East Asian governments offered useful lessons for Latin American governments

The most generous bilateral foreign aid donors in the world are A. The World Bank and the IMF B. The United States in terms of absolute dollars, and small Northern European countries in terms of aid as share of national income C. The United States in terms of absolute dollars and in terms of aid as share of national income D. The World Bank and small Northern European countries E. The World Bank and the United States

B. The United States in terms of absolute dollars, and small Northern European countries in terms of aid as share of national income

Asian banks who borrowed short-term loans from abroad to lend long-term loans in Asia faced two types of risk A. Balance of payments risk, which arose from the low exports and high imports caused by ISI policies B. The risk of sudden stops: that foreign lenders would stop rolling over their short-term loans C. Exchange rate risk, which arose from the possibility that the government would revalue the local currency D. Default risk, that the foreign governments providing the loans would default E. Exchange rate risk, which arose from the possibility that the government would devalue the local currency

B. The risk of sudden stops: that foreign lenders would stop rolling over their short-term loans E. Exchange rate risk, which arose from the possibility that the government would devalue the local currency

What are four improvements global capitalism has achieved in recent decades, according to Oatley? A. Income and wealth inequality has been falling for the past 25 years. There have been no multi-country armed conflicts since the end of World War 2 in 1945. B. Where as worldwide per capita income only doubled in the 12,000 years leading to 1800, it tripled from 1800-1900, and increased tenfold from 1900-2000 C. Whereas 1/3 of the world population lived under colonial rule in 1900, no-one lived under colonial rule in 2000. D. Whereas 3/4 of the global population lived in extreme poverty in 1950, only 1/10 lived in global poverty in 2013. E. The average person lives twice as long today as in 1913 and 50% longer than in 1950.

B. Where as worldwide per capita income only doubled in the 12,000 years leading to 1800, it tripled from 1800-1900, and increased tenfold from 1900-2000 C. Whereas 1/3 of the world population lived under colonial rule in 1900, no-one lived under colonial rule in 2000. D. Whereas 3/4 of the global population lived in extreme poverty in 1950, only 1/10 lived in global poverty in 2013. E. The average person lives twice as long today as in 1913 and 50% longer than in 1950.

According to The Economist (2020) article, if a country runs a current account deficit of $10 billion per year, it can fund this deficit in the following ways: A. by borrowing from the Central bank B. by borrowing $10 billion from abroad C. by running a budget surplus D. by selling $10 billion in assets (property, stocks, or whole businesses) to foreigners

B. by borrowing $10 billion from abroad D. by selling $10 billion in assets (property, stocks, or whole businesses) to foreigners

The IMF was intended to limit two kinds of behavior: A. abuse of the gold standard and conditionality agreements B. competitive devaluations and abuse of the stabilization fund. C. competitive devaluations and conditionality agreements D. exchange restrictions and conditionality agreements E. competitive revaluations and exchange restrictions

B. competitive devaluations and abuse of the stabilization fund.

The current account imbalances in the United States during the Reagan administration were due to A. cutting taxes and cutting military spending B. cutting taxes and raising military spending C. raising taxes and raising military spending D. raising taxes and cutting military spending E. cutting taxes and greater exports

B. cutting taxes and raising military spending

MNCs usually enjoy more bargaining power than host countries in low-skilled labor-intensive manufacturing industries because A. only a few developing countries have excess low skilled labor B. investments in low-skilled manufacturing entail a relatively low amount of fixed capital C. investments in low-skilled manufacturing cannot be readily moved out of a particular country D. technology in many manufacturing industries changes rapidly and, therefore, is easily transferred to host workers E. like natural-resource investments, manufacturing investments can become hostages

B. investments in low-skilled manufacturing entail a relatively low amount of fixed capital

Some American and European policymakers fear that governments intend to use their SWFs to achieve A. prestige rather than political objectives B. political rather than economic objectives C. social rather than economic objectives D. economic rather than political objectives E. domestic rather than international objectives

B. political rather than economic objectives

Monetary policy is insulated from political influence in countries with an independent central bank because... A.Elected governments control monetary policy and exchange rate policy B. Central banks control monetary policy and fiscal policy C. Actually, monetary policy is NOT fully insulated from political influence because although central banks control monetary policy, elected governments generally play an active role in exchange rate policy, a backdoor to influence monetary policy D. Central banks generally control both monetary policy and exchange rate policy

C. Actually, monetary policy is NOT fully insulated from political influence because although central banks control monetary policy, elected governments generally play an active role in exchange rate policy, a backdoor to influence monetary policy

Why might abandoning the current (at the time the article was written) exchange rate policy lead to inflation in Cuba? A. Because the current official exchange rate undervalues the Cuban currency. B. Because the Trump administration imposed sanctions on Cuba. C. Because the current official exchange rate overvalues the Cuban currency. D. Because the current official exchange rate overvalues the dollar. E. Because the current exchange rate policy is a floating exchange rate.

C. Because the current official exchange rate overvalues the Cuban currency.

Obsolescing bargaining power happens when A. the MNC can easily remove its fixed investment from the country B. uncertainty about the return on the investment stays high C. technology has been significantly transferred to the host country workers D. technology has not been significantly transferred to the host country workers E. the MNC has monopoly control over the necessary capital

C. technology has been significantly transferred to the host country workers

The typical advanced industrialized country has been less inclined to try to restrict the activities of foreign firms than has the typical developing country for the following reasons: A. Developing countries have been more vulnerable to foreign domination than have larger and more diversified economies B. When countries both host foreign firms and are home base to MNC parents, they are unlikely to adopt policies that reflect purely host-country concerns C. Advanced industrialized countries are generally more willing to allow the market to drive economic activity, whereas developing country are more likely to intervene in the economy D. All of the above

D. All of the above

According to Oatley, developing countries draw heavily on foreign capital because A. Developing countries tend to be authoritarian, and these authoritarian governments benefit from capital inflows even though investment has no positive effect on per capita incomes B. Domestic capitalists tend to be politically powerful in developing countries, and the attraction of foreign capital increases the returns that can be earned by domestic capitalists because developing countries are relatively capital abundant C. Foreign capital is a way for developing countries to avoid overborrowing Relying heavily on foreign capital to finance investment is the best way to avoid a debt crisis D. Foreign capital is a way for developing countries to overcome a shortage of domestic savings to increase investment and thereby raise per capita incomes

D. Foreign capital is a way for developing countries to overcome a shortage of domestic savings to increase investment and thereby raise per capita incomes

According to the Continental Breakup podcast, two events that contributed to the European Monetary Union's creation included ... (Select the best 2 answers) A. France wanted to create a United States of Europe B. German policy makers believed it would help keep German inflation rates low C. Germany was eager to pursue deeper monetary cooperation D. Greece and other Mediterranean countries promised to maintain low budget deficits and inflation E. The French conditioned support for German unification on German support for monetary union

D. Greece and other Mediterranean countries promised to maintain low budget deficits and inflation E. The French conditioned support for German unification on German support for monetary union

According to the evidence cited by Oatley A. Independent central banks appear to reduce inflation, but may also be associated with lower growth and lower unemployment B. Independent central banks appear to have no effect on inflation, economic growth, or unemployment C. Independent central banks appear to reduce inflation and improve economic growth, but are also associated with lower unemployment D. Independent central banks appear to reduce inflation, but may also be associated with lower growth and higher unemployment E. Independent central banks clearly reduce inflation, increase economic growth, and increase unemployment

D. Independent central banks appear to reduce inflation, but may also be associated with lower growth and higher unemployment

When firms earn a substantial share of their revenues from ______, they have strong incentives to integrate vertically (Check all that apply) A.Intangible assets, such as railways that have been built from a particular location to a particular port B. Intangible assets, such as know-how among a set of employees C. Specific assets, such as know-how among a set of employees D. Specific assets, such as natural resources E. Specific assets, such as factories that manufacture component parts

D. Specific assets, such as natural resources E. Specific assets, such as factories that manufacture component parts

One reason the Bretton Woods intermational monetary system came to an end was because A. The Nixon administration was unwilling to take action to reduce unemployment B. The Nixon administration signaled to the Federal Reserve that it wanted interest rates to go up C. The Nixon administration adopted austerity fiscal policies to reduce the governments budget deficits D. The Nixon administration signaled to the Federal Reserve that it wanted interest rates to stay low E. The Nixon administration was unwilling to let the dollar be devalued

D. The Nixon administration signaled to the Federal Reserve that it wanted interest rates to stay low

Governments cannot move the unemployment rate below the natural rate of unemployment for more than a short time because of the following dynamics of wage bargaining: A. Workers care about their nominal wage but are paid a real wage B. When negotiating multiyear contracts, workers will demand a real wage increase equal to or greater than the expected future inflation rate in order to avoid a deterioration in their buying power C. Labor market institutions such as labor unions and labor market laws such as minimum wages can raise the demand for labor D. When negotiating multiyear contracts, workers will demand a nominal wage increase equal to or greater greater than the expected future inflation rate in order to avoid a deterioration in their buying power E. Labor market institutions such as labor unions and labor market laws such as minimum wages can lower the natural rate of unemployment substantially

D. When negotiating multiyear contracts, workers will demand a nominal wage increase equal to or greater greater than the expected future inflation rate in order to avoid a deterioration in their buying power

According to the Yes or No podcast, in Greece's 2015 referendum, a Yes vote was a vote in favor of ... A. accepting an EU stimulus package in exchange for structural adjustment conditions that include lower taxes and lower government spending B. leaving the European Union's common market but keeping the Euro currency C. leaving the European Union and switching back to the Greek drachnae currency D. accepting an EU bailout in exchange for the Greek government raising taxes and cutting spending E. accepting an EU stimulus package to finance increased government spending and tax cuts to stimulate the Greek economy

D. accepting an EU bailout in exchange for the Greek government raising taxes and cutting spending

According to The Economist's article on India, the reason many foreign firms are investing FDI into partnerships with local firms rather than establishing independent subsidiaries is because ... A. Indian companies have a comparative advantage in understanding how to sell to Indian customers B. Indian companies have a stronger brand among Indian customers. C. Indian companies have proprietary technology and patents that foreign firms want to have access to. D. foreign-owned firms face regulatory and tax law disadvantages relative to native Indian firms.

D. foreign-owned firms face regulatory and tax law disadvantages relative to native Indian firms.

In "Why does low unemployment no longer lift inflation?", Jim Bullard asked "Who killed the Phillips curve?" and offered the answer, "The suspects are in this room." What he meant was ... A. Central bankers brought an end to the Phillips curve because no longer try to keep unemployment low B. Central bankers brought an end to the Phillips curve because they refuse to reduce interest rates below zero C. Central bankers brought an end to the Phillips curve by lowering interest rates when inflation is about to rise, and raising interest rates when inflation is about to fall D. One of the Japanese guards in the room had likely killed William Phillips E. Central bankers brought an end to the Phillips curve by raising interest rates when inflation is about to rise, and lowering interest rates when inflation is about to fall

E. Central bankers brought an end to the Phillips curve by raising interest rates when inflation is about to rise, and lowering interest rates when inflation is about to fall

Which of the following statements are true of the relationship between macroeconomic policy and exchange rates? A. Floating exchange rates make it more difficult for a government to stimulate the economy by lowering interest rates B. Exchange rate policy has no effect on the ability of governments to stimulate the economy with monetary policy C. Fixed exchange rates make it easier for a government to stimulate the economy by raising interest rates D. Fixed exchange rates make it more difficult for a government to stimulate the economy by raising interest rates E. Floating exchange rates make it easier for a government to stimulate the economy by lowering interest rates

E. Floating exchange rates make it easier for a government to stimulate the economy by lowering interest rates

When Francois Mitterand became president of France, A. He pursued policies to maintain low inflation, reflecting his party's support by workers, then was obliged to cut interest rates when businesses protested high interest rates B. He pursued policies to increase economic growth, reflecting his party's support by businesses, then was obliged to peg the Franc to the German mark in response to foreign speculators C. He pursued policies to maintain low inflation, reflecting his party's support from business interests, then was obliged to cut interest rates when voters protested high interest rates D. He pursued policies to reduce unemployment, reflecting his party's support by workers, then was obliged to abandon its floating exchange rate policy and peg the Franc to the German mark in response to foreign speculators E. He pursued policies to reduce unemployment, reflecting his party's support by workers, devalued the Franc in response to foreign speculators, and ultimately abandoned the peg

E. He pursued policies to reduce unemployment, reflecting his party's support by workers, devalued the Franc in response to foreign speculators, and ultimately abandoned the peg

According to The Economist (2020) article, "Why does low unemployment no longer lift inflation?", the problem with the flat Phillips curve was that ... A. Monetary policy may not be effective in encouraging job creation if inflation is not low enough to reduce nominal wages B. Fiscal policy may not be effective in encouraging job creation if inflation is not high enough to reduce real wages C. Monetary policy may not be effective in encouraging job creation if unemployment is not high enough to reduce prices D. Fiscal policy may not be effective in encouraging job creation if inflation is not low enough to increase real wages E. Monetary policy may not be effective in encouraging job creation if inflation is not high enough to reduce real wages

E. Monetary policy may not be effective in encouraging job creation if inflation is not high enough to reduce real wages

Debtor governments never threatened collective default because A. They were caught in a prisoners dilemma - individual default would yield individual benefits, but collective default would carry collective costs B. Each government had an incentive to unilaterally default C. They were caught in a battle of the sexes - each country would be better off defaulting if the other country also defaulted, but each country would be better off not defaulting if the other country did not default D. Developing country governments were controlled by capitalists whose savings would be destroyed if the government defaulted E. They were caught in a prisoners dilemma - collective default could yield collective benefits, but each government had an incentive to defect from collective default in order to seek a better bilateral deal

E. They were caught in a prisoners dilemma - collective default could yield collective benefits, but each government had an incentive to defect from collective default in order to seek a better bilateral deal

Nationalization was common during the late 1960s and the first half of the 1970s. Nationalizations occurred most often in A. banking and transportation. B. banking and public utilities C. transportation and extractive industries D. banking and extractive industries E. extractive industries and public utilities

E. extractive industries and public utilities

Sovereign wealth funds are A. royalty-owned funds that purchase private assets in foreign markets B. royalty-owned funds that purchase public assets in foreign markets C. government-owned funds that purchase public assets in domestic markets. D. government-owned funds that purchase private assets in domestic markets E. government-owned funds that purchase private assets in foreign markets

E. government-owned funds that purchase private assets in foreign markets

In order to attract capital flows from current account surplus countries in the early 1980s, the United States had to A. cut government spending B. lower taxes C. maintain relatively low interest rates D. weaken the value of the dollar E. maintain relatively high interest rates

E. maintain relatively high interest rates

According to Oatley, governments' reluctance to alter macroeconomic policies in order to reduce current-account imbalances in the early 2000s ultimately sparked A. the decision to use floating exchange rates B. a glut of US manufacturing exports C. China's policy of pegging the renminbi (RMB) to the dollar D. the decision to return to fixed exchange rates E. the great financial crisis of 2007-2009

E. the great financial crisis of 2007-2009