Question 1

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Accepted Answer

A)  Wealth from past production 
B)  The fact that English is the international language of business 
C)  A substantial policy to limit immigration 
D)  Extensive natural resources 
A)  Wealth from past production 
B)  The fact that English is the international language of business 
C)  A substantial policy to limit immigration 
D)  Extensive natural resources

Question 2

Countries that exported a lot of gas or oil would see their exchange rates go up as a result. This in turn could make their manufacturing exports uncompetitive and possibly slow economic growth. This situation can be described as the:

Accepted Answer

A)  renewable curse. 
B)  depreciation curse. 
C)  resource curse. 
D)  common curse. 
A)  renewable curse. 
B)  depreciation curse. 
C)  resource curse. 
D)  common curse.

Question 3

The analysis of international trade suggests that trading companies earn higher than normal profits in:

Accepted Answer

A)  the long run but not in the short run. 
B)  the short run but not in the long run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run. 
A)  the long run but not in the short run. 
B)  the short run but not in the long run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run.

Question 4

If 1 Canadian dollar costs 0.60 U.S. dollars, 1 U.S. dollar costs:

Accepted Answer

A)  0.40 Canadian dollars. 
B)  0.60 Canadian dollars. 
C)  1.40 Canadian dollars. 
D)  1.67 Canadian dollars. 
A)  0.40 Canadian dollars. 
B)  0.60 Canadian dollars. 
C)  1.40 Canadian dollars. 
D)  1.67 Canadian dollars.

Question 5

The resource curse is:

Accepted Answer

A)  the curse that countries that have an abundance of resources tend to have lower economic growth compared to countries with fewer natural resources. 
B)  the curse that countries that have fewer resources tend to have lower economic growth compared to countries with abundant natural resources. 
C)  the curse of many developing countries-they have few natural resources and their economies cannot grow. 
D)  an economic theory that has yet to be developed because there are no examples in the real world. 
A)  the curse that countries that have an abundance of resources tend to have lower economic growth compared to countries with fewer natural resources. 
B)  the curse that countries that have fewer resources tend to have lower economic growth compared to countries with abundant natural resources. 
C)  the curse of many developing countries-they have few natural resources and their economies cannot grow. 
D)  an economic theory that has yet to be developed because there are no examples in the real world.

Question 6

The discovery of a new source of oil will lead to:

Accepted Answer

A)  increased demand for a foreign currency; appreciation of the currency. 
B)  increased demand for domestic currency; depreciation of the currency. 
C)  decreased demand for domestic currency; appreciation of the currency. 
D)  increased demand for domestic currency; appreciation of the currency. 
A)  increased demand for a foreign currency; appreciation of the currency. 
B)  increased demand for domestic currency; depreciation of the currency. 
C)  decreased demand for domestic currency; appreciation of the currency. 
D)  increased demand for domestic currency; appreciation of the currency.

Question 7

A common economically unfounded fear held by laypeople is that:

Accepted Answer

A)  globalization will result in the United States losing most jobs because wages are so much higher in the United States. 
B)  globalization will result in dramatically higher prices because most services will be outsourced. 
C)  the United States has a comparative advantage in the production of all goods. 
D)  a U.S. trade surplus will result in a dramatically lower dollar. 
A)  globalization will result in the United States losing most jobs because wages are so much higher in the United States. 
B)  globalization will result in dramatically higher prices because most services will be outsourced. 
C)  the United States has a comparative advantage in the production of all goods. 
D)  a U.S. trade surplus will result in a dramatically lower dollar.

Question 8

When a country runs a trade surplus, it will:

Accepted Answer

A)  borrow from foreign countries or sell assets to them. 
B)  borrow from foreign countries or buy assets from them. 
C)  lend to foreign countries or sell assets to them. 
D)  lend to foreign countries or buy assets from them. 
A)  borrow from foreign countries or sell assets to them. 
B)  borrow from foreign countries or buy assets from them. 
C)  lend to foreign countries or sell assets to them. 
D)  lend to foreign countries or buy assets from them.

Question 9

If the U.S. dollar appreciates against the Japanese yen:

Accepted Answer

A)  U.S. goods will be cheaper for Japanese consumers. 
B)  Japanese goods will be more expensive in the United States. 
C)  the U.S. dollar will buy fewer Japanese yen. 
D)  Japanese goods will be cheaper in the United States. 
A)  U.S. goods will be cheaper for Japanese consumers. 
B)  Japanese goods will be more expensive in the United States. 
C)  the U.S. dollar will buy fewer Japanese yen. 
D)  Japanese goods will be cheaper in the United States.

Question 10

When a country runs a trade deficit, it does so by:

Accepted Answer

A)  borrowing from foreign countries or selling assets to them. 
B)  borrowing from foreign countries or buying assets from them. 
C)  lending to foreign countries or selling assets to them. 
D)  lending to foreign countries or buying assets from them. 
A)  borrowing from foreign countries or selling assets to them. 
B)  borrowing from foreign countries or buying assets from them. 
C)  lending to foreign countries or selling assets to them. 
D)  lending to foreign countries or buying assets from them.

Question 11

Assume that in Canada the opportunity cost of producing one television set is two bushels of wheat. Assume that in the United States the opportunity cost of producing one bushel of wheat is two television sets. If these two countries specialize according to comparative advantage and then trade with each other:

Accepted Answer

A)  Canada will import both televisions and wheat. 
B)  Canada will import wheat and export televisions. 
C)  the United States will import wheat and export televisions. 
D)  the United States will import both televisions and wheat. 
A)  Canada will import both televisions and wheat. 
B)  Canada will import wheat and export televisions. 
C)  the United States will import wheat and export televisions. 
D)  the United States will import both televisions and wheat.

Question 12

If the world supply curve is SW0,

Accepted Answer

A)  domestic quantity supplied is unrelated to domestic quantity demanded. 
B)  domestic quantity supplied is less than domestic quantity demanded. 
C)  domestic quantity supplied exceeds domestic quantity demanded. 
D)  domestic quantity supplied equals domestic quantity demanded. 
A)  domestic quantity supplied is unrelated to domestic quantity demanded. 
B)  domestic quantity supplied is less than domestic quantity demanded. 
C)  domestic quantity supplied exceeds domestic quantity demanded. 
D)  domestic quantity supplied equals domestic quantity demanded.

Question 13

The loss of jobs due to international trade is often:

Accepted Answer

A)  more visible than the decline in consumer prices due to international trade. 
B)  less visible than the decline in prices due to international trade. 
C)  greater than the benefit of trade in the form of decline in prices. 
D)  spread across all sectors while decline in prices is concentrated in one sector. 
A)  more visible than the decline in consumer prices due to international trade. 
B)  less visible than the decline in prices due to international trade. 
C)  greater than the benefit of trade in the form of decline in prices. 
D)  spread across all sectors while decline in prices is concentrated in one sector.

Question 14

A nation's comparative advantage in the production of an item is determined by:

Accepted Answer

A)  which country has already specialized in the production of the item. 
B)  the total and marginal costs of producing the item. 
C)  the opportunity cost of producing the item relative to a trading partner's opportunity cost. 
D)  wage rates and other input costs. 
A)  which country has already specialized in the production of the item. 
B)  the total and marginal costs of producing the item. 
C)  the opportunity cost of producing the item relative to a trading partner's opportunity cost. 
D)  wage rates and other input costs.

Question 15

The U.S. textile industry is relatively small because the United States imports most of its clothing. A clear result of the importation of clothing is that:

Accepted Answer

A)  there is less variety available than there would be without imports. 
B)  the quality of clothing is lower than it would be without imports. 
C)  the price of clothing is higher than it would be without imports. 
D)  the price of clothing is lower than it would be without imports. 
A)  there is less variety available than there would be without imports. 
B)  the quality of clothing is lower than it would be without imports. 
C)  the price of clothing is higher than it would be without imports. 
D)  the price of clothing is lower than it would be without imports.

Question 16

A widget has an opportunity cost of 4 wadgets in Saudi Arabia and 2 wadgets in the United States. Given these opportunity costs, you would suggest that:

Accepted Answer

A)  Saudi Arabia specialize in widgets and the United States in wadgets. 
B)  No trade should take place. 
C)  Saudi Arabia specialize in wadgets and the United States in widgets. 
D)  Both countries should produce an equal amount of each. 
A)  Saudi Arabia specialize in widgets and the United States in wadgets. 
B)  No trade should take place. 
C)  Saudi Arabia specialize in wadgets and the United States in widgets. 
D)  Both countries should produce an equal amount of each.

Question 17

Refer to the graph shown.   If the price of Israeli shekels is $0.90, the quantity of shekels supplied is:

Accepted Answer

A)  greater than the quantity demanded. This causes the shekel to gain value. 
B)  less than the quantity demanded. This causes the shekel to gain value. 
C)  greater than the quantity demanded. This causes the shekel to lose value. 
D)  less than the quantity demanded. This causes the shekel to lose value. 
A)  greater than the quantity demanded. This causes the shekel to gain value. 
B)  less than the quantity demanded. This causes the shekel to gain value. 
C)  greater than the quantity demanded. This causes the shekel to lose value. 
D)  less than the quantity demanded. This causes the shekel to lose value.

Question 18

If countries decide they will no longer buy U.S. assets or lend to the United States:

Accepted Answer

A)  adjustments will be set in motion to equalize comparative advantages. 
B)  adjustments will be set in motion so that the United States has more comparative advantages. 
C)  the United States can begin to run a trade deficit. 
D)  There is no reason foreign countries will not want to buy more U.S. assets than the United States buys of foreign assets. 
A)  adjustments will be set in motion to equalize comparative advantages. 
B)  adjustments will be set in motion so that the United States has more comparative advantages. 
C)  the United States can begin to run a trade deficit. 
D)  There is no reason foreign countries will not want to buy more U.S. assets than the United States buys of foreign assets.

Question 19

Production Possibility Schedules for Two South Pacific Island Nations   Which of the following statements is true?

Accepted Answer

A)  Gains from trade are possible for both countries. 
B)  Only Kiribati will benefit from trade with Tuvalu. 
C)  Only Tuvalu will benefit from trade with Kiribati. 
D)  No gains from trade are possible for either Kiribati or Tuvalu. 
A)  Gains from trade are possible for both countries. 
B)  Only Kiribati will benefit from trade with Tuvalu. 
C)  Only Tuvalu will benefit from trade with Kiribati. 
D)  No gains from trade are possible for either Kiribati or Tuvalu.

Question 20

Refer to the table shown. From this table we can conclude that if the two countries trade with each other, it is most likely that:

Accepted Answer

A)  France exports both goods to Germany. 
B)  Germany exports both goods to France. 
C)  France exports wine to Germany and imports electric generators from Germany. 
D)  France exports electric generators to Germany and imports wine from Germany. 
A)  France exports both goods to Germany. 
B)  Germany exports both goods to France. 
C)  France exports wine to Germany and imports electric generators from Germany. 
D)  France exports electric generators to Germany and imports wine from Germany.

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Countries that exported a lot of gas or oil would see their exchange rates go up as a result. This in turn could make their manufacturing exports uncompetitive and possibly slow economic growth. This situation can be described as the:

The analysis of international trade suggests that trading companies earn higher than normal profits in:

If 1 Canadian dollar costs 0.60 U.S. dollars, 1 U.S. dollar costs:

The resource curse is:

The discovery of a new source of oil will lead to:

A common economically unfounded fear held by laypeople is that:

When a country runs a trade surplus, it will:

If the U.S. dollar appreciates against the Japanese yen:

When a country runs a trade deficit, it does so by:

If the world supply curve is SW0,

The loss of jobs due to international trade is often:

A nation's comparative advantage in the production of an item is determined by:

The U.S. textile industry is relatively small because the United States imports most of its clothing. A clear result of the importation of clothing is that:

A widget has an opportunity cost of 4 wadgets in Saudi Arabia and 2 wadgets in the United States. Given these opportunity costs, you would suggest that:

Refer to the graph shown. If the price of Israeli shekels is $0.90, the quantity of shekels supplied is:

If countries decide they will no longer buy U.S. assets or lend to the United States:

Production Possibility Schedules for Two South Pacific Island Nations Which of the following statements is true?

Refer to the table shown. From this table we can conclude that if the two countries trade with each other, it is most likely that:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

If the world supply curve is S_W0,