Exam 4A macro economics

If the nominal exchange rate between the American dollar and the Canadian dollar is $.89 Canadian dollars per American dollar, how many American dollars are required to buy a product that cost 2.5 Canadian dollars

$2.81

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is

A large supply of unskilled workers and relatively little capital

The United States abandoned the Bretton Woods system of exchange rates in

The 1970s

Countries gain from specializing in producing goods in which they have a(n) __________ advantage and trading for goods in which other countries have a(n) __________ advantage.

comparative; comparative

The balance of payments includes which three accounts

current account, financial account, capital account

When the value of a currency is determined mostly by demand and supply, but with occasional government intervention, the exchange rate system is defined as

managed float

Which of the following is most important in explaining exchange rate fluctuations in the short run

Interest rates

Purchasing power parity is the theory that, in the long run, exchange rate should be at a level such that equivalent amounts of any country's currency

Will equalize nominal interest rates across countries

Imports are goods and services bought domestically

but produced in other countries

The 1994 agreement that eliminated most tariffs among the United States, Canada, and Mexico is known as

NAFTA

In the 1930s the United States charged an average tariff rate

that exceeded 50 percent

The balance of trade is defined as

the difference between the value of the goods a country exports and the value of the goods a country imports

Terms of trade refers to

the ratio at which a country can trade its exports for imports from other countries

If Norwegian workers are more productive than Albanian workers, then trade between Norway and Albania

will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.

You are traveling in Ireland and are now thinking about buying a new digital camera. You have decided you would be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the exchange rate is $.85 euros per dollar, what is the highest price in euros you would be willing to pay for a camera

€106.25 euros

Use the table above to select the statement that accurately interprets the data in the table

Bill has a comparative advantage in picking berries

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

Honduras has a lower opportunity cost of producing bananas relative to Brazil

A Canadian oil company hires geological survey services from the United States. If all else remains equal, this will

Increase net exports

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples or miss leading because

Some individuals in both countries may be made worse off because of trade

Which of the following countries is not one of the top three exporting countries in the world

South Korea

Which of the following is an example of foreign direct investment in China

The US company Walmart buys a warehouse in Shanghai

Which of the following would increase net exports in the United States

The government of Mexico purchased 500 Ford F150 pick up trucks from the United States

Suppose china decides to sell a vast majority of their large holdings of US treasury bonds. If you are thinking of refinancing your house, how would China's action affect your decision to refinance

You want to refinance as soon as possible as interest rates should rise

An economy that has interactions in trade or finance with other economies is referred to as

an open economy

The gold standard is an example of

fixed exchange rate system

If the ______ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

opportunity

A tax imposed by a government on imports of a good into a country is called

tariff

The United States has developed a comparative advantage in digital computers, airliners, and many prescription drugs. The source of its comparative advantage in these products is

technology

From the beginning of 1973 until June 2017, the value of the dollar has _______ relative to the Canadian dollar and ________ relative to the Japanese yen

Appreciated; depreciated

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that

Australia has a lower opportunity cost of producing surfboards relative to New Zealand.

Use the table above to select the statement that accurately interprets the data in the table

Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish

An HMO hires radiology services from India to cut costs. If all else remains equal, this will

Decrease net exports

The United States has a trade ______ with all its major trading partners and a trade _______ with every region of the world except for Latin America

Deficit; deficit

28 countries in Europe have formed the European Union. After the EU was formed it

Eliminated all tariffs among its member countries

The United States usually exports _________ goods than it imports and exports _________ services than it imports

Fewer; more

Under the Brentton Wood exchange rate system, set up at 1944, which of the following was true

Foreign central banks could sell their dollars to the American government in exchange for gold

Under the gold standard, the government must have enough gold to back up any

Increase in the money supply

In 2017, President Trump _____ The transpacific partnership, in agreement designed to reduce trade barriers between the United States and 11 other countries

Pulled the United States out of negotiations on joining the TPP

Use the table above to select the statement that accurately interpret the data in the table

Rob has a greater opportunity cost than bill for picking berries

The current exchange rate system has which of the following characteristics

The United States allows the dollar to float against other major currencies

When the market value of the dollar rises relative to other currencies around the world, we say that

The dollar has appreciated

In 2016, global revenue for Amazon was 550 million lower when measured in dollars than when measured in local currencies. The reason for this discrepancy is the value of the

US dollar decreased relative to most other countries

If the dollar appreciates against the Mexican peso

US exports to Mexico become more expensive

When Sophie, a French citizen, purchases a Dell computer in Paris that was produced in Texas, the purchase is

a US export and a French import

An economic principle that explains why people pursue a different occupations is

Comparative advantage

Autarky is a situation in which a country

does not trade with other countries

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade

An increase in the tariffs charged on many goods

Examples of comparative advantage show how trade between two countries can make each better off. Compared to their pretrade positions, trade makes both countries better off because in each country

Total consumption of goods is greater

Assume that Finland and Latvia produce only two guys. If Finland has an absolute advantage and the production of these two goods compared to Latvia, Finland can still benefit from trade with Latvia

True