Unit 6 Macro

If the Fed were to increase the legal reserve requirement, we would expect:

higher interest rates, contracted GDP, appreciation of the dollar.

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n):

import quota

As a result of lower prices in the USA, what will happen to the demand for the U.S. Dollar:

increase

As a result of outcome number 22 above, what will happen to U.S. GDP

increase

If prices in the USA are increasing and there is no action taken by the "FED", interest rates will most likely

increase

Will U.S. (low inflation) exports to Canada (high inflation)

increase

As it relates to international trade, dumping:

is the practice of selling goods in a foreign market at less than cost.

In the theory of comparative advantage, a good should be produced in that nation where:

its cost is least in terms of alternative goods that might otherwise be produced.

Tariffs:

may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B:

mutually advantageous specialization and trade between A and B may still be possible.

Free trade based on comparative advantage is economically beneficial because:

promotes an efficient allocation of world resources, it increases competition, provides consumers with a wider range of products, ALL OF THESE REASONS

In effect tariffs on imports are:

subsidies for domestic producers

Comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Absolute advantage

the ability to produce a good using fewer inputs than another producer

Global competition:

the existence of competing organizations that serve international customers

Which of the following arguments comes closest to constituting a legitimate exception to the case for free trade?

the infant-industry argument

If interest rates rise in the USA, will the value of the U.S. Dollar

value appreciates

If a U.S. importer can purchase 10,000 pounds for $20,000, the rate of exchange is:

$2=1 British Pound in the US

It may be misleading to label a trade deficit as unfavorable or adverse because:

A nation's consumers benefit from a trade deficit during the period it occurs

If a nation's goods exports are $55 billion, while its goods imports are $75 billion, we can conclude with certainty that this nation has a:

Balance of Trade Deficit

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect:

Employment to decrease in the U.S. bicycle industry

If exports from the US decreases, what will happen to U.S. GDP

GDP decreases

Which of the following would call for out payments from the United States?

U.S. purchases assets abroad

Which of the following would contribute to a United States balance of payments deficit?

United States tourists travel in large numbers to Europe

Countries engaged in international trade specialize in production based on:

comparative advantage

The (WTO) World Trade Organization (Def/Main Function)

deals with the global rules of trade between nations. Main function: ensure that trade flows as smoothly, predictably and freely

If the USA exports more, the U.S. Price level will ________, if the economy is in the intermediate range of the Aggregate Supply Curve or on the Short Aggregate Supply Curve

decrease

Travel by U.S. citizens within Europe creates a:

demand for euros and a supply of dollars.

If GDP and personal incomes are increasing in the United States we would expect the value of the $ to

depreciate

The Smoot-Hawley Act:

during the Great Depression the US legislation passed this which raised import taxes to protect American business/farmera

The North American Free Trade Agreement (NAFTA)

eliminated most tariffs and other trade barriers on products and services passing between the United States, Canada, and Mexico

Which of the following transactions would be recorded as a positive entry in Canada's current account?

export of goods

On the basis of the above info

gamma should export tea to sigma and sigma should export pots to gamma

depreciation of the dollar will:

high exports and GDP