Question 1

In the United States globalization has played:

Accepted Answer

A) a significant role in growing income disparity because some sectors have benefited and others have not. 
B) little role in growing income disparity because all Americans are consumers who have enjoyed lower prices. 
C) a significant role in growing income disparity because foreign workers' incomes have risen. 
D) little role in growing income disparity because while some jobs were lost, the gain in jobs balanced out those that were lost. 
A) a significant role in growing income disparity because some sectors have benefited and others have not. 
B) little role in growing income disparity because all Americans are consumers who have enjoyed lower prices. 
C) a significant role in growing income disparity because foreign workers' incomes have risen. 
D) little role in growing income disparity because while some jobs were lost, the gain in jobs balanced out those that were lost. A

Question 2

Countries can expect to gain from international trade as long as they:

Accepted Answer

A) keep production diversified. 
B) specialize according to their comparative advantage. 
C) produce only those goods for which they have a relatively high opportunity cost. 
D) use trade restrictions to reduce competition for domestic producers. 
A) keep production diversified. 
B) specialize according to their comparative advantage. 
C) produce only those goods for which they have a relatively high opportunity cost. 
D) use trade restrictions to reduce competition for domestic producers. B

Question 3

The foreign exchange market is the market in which:

Accepted Answer

A) foreigners buy U.S.real estate. 
B) foreign stocks and bonds are bought and sold. 
C) ideas from different countries are exchanged. 
D) currencies of different countries are bought and sold. 
A) foreigners buy U.S.real estate. 
B) foreign stocks and bonds are bought and sold. 
C) ideas from different countries are exchanged. 
D) currencies of different countries are bought and sold. D

Question 4

Smaller countries tend to get a larger share of the gains from trade than do larger countries.

Accepted Answer

A) True 
 B)False

Question 5

The fact that the United States has a trade deficit means that:

Accepted Answer

A) the United States is producing more than it is consuming. 
B) foreign countries can have comparative advantages in all goods. 
C) foreign countries can have comparative advantages in more goods compared to the United States. 
D) the United States is lending more to foreign countries than it is borrowing from foreign countries. 
A) the United States is producing more than it is consuming. 
B) foreign countries can have comparative advantages in all goods. 
C) foreign countries can have comparative advantages in more goods compared to the United States. 
D) the United States is lending more to foreign countries than it is borrowing from foreign countries.

Question 6

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

Accepted Answer

A) $0.25 = 1 peso 
B) $0.20 = 1 peso 
C) $0.15 = 1 peso 
D) $0.05 = 1 peso 
A) $0.25 = 1 peso 
B) $0.20 = 1 peso 
C) $0.15 = 1 peso 
D) $0.05 = 1 peso

Question 7

Refer to the graph shown.   The graph demonstrates Saudi Arabia's and the United States' production possibility curves for widgets and wadgets.Given these production possibility curves, 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 8

The Mexican demand for American goods leads to:

Accepted Answer

A) the demand for Mexican pesos and the supply of U.S.dollars on the foreign exchange market. 
B) the demand for U.S.dollars and the demand for Mexican pesos on the foreign exchange market. 
C) the demand for U.S.dollars and the supply of Mexican pesos on the foreign exchange market. 
D) the demand for U.S.dollars and the supply of U.S.dollars on the foreign exchange market. 
A) the demand for Mexican pesos and the supply of U.S.dollars on the foreign exchange market. 
B) the demand for U.S.dollars and the demand for Mexican pesos on the foreign exchange market. 
C) the demand for U.S.dollars and the supply of Mexican pesos on the foreign exchange market. 
D) the demand for U.S.dollars and the supply of U.S.dollars on the foreign exchange market.

Question 9

Economists:

Accepted Answer

A) are not concerned with the distributional effects of trade. 
B) cannot measure the distributional effects of trade. 
C) do not generally include the distributional effects of trade in their models. 
D) disagree with laypeople that the distributional effects of trade are important. 
A) are not concerned with the distributional effects of trade. 
B) cannot measure the distributional effects of trade. 
C) do not generally include the distributional effects of trade in their models. 
D) disagree with laypeople that the distributional effects of trade are important.

Question 10

If the world supply curve is SW1,

Accepted Answer

A) there is a trade surplus of Q2 -Q1. 
B) there is a trade deficit of Q2 -Q1. 
C) there is a trade deficit of Q1 -Q2. 
D) there is a trade surplus of Q1 -Q2. 
A) there is a trade surplus of Q2 -Q1. 
B) there is a trade deficit of Q2 -Q1. 
C) there is a trade deficit of Q1 -Q2. 
D) there is a trade surplus of Q1 -Q2.

Question 11

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 12

We can conclude from the table shown that Morocco has a comparative advantage in the production of tables.

Accepted Answer

A) True 
 B)False

Question 13

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 14

We can conclude from the table shown that Spain has a comparative advantage in the production of tables.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the graph shown.   If the price of shekels is $1.10, 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 16

The balance of trade measures the:

Accepted Answer

A) difference between the value of imports and that of exports. 
B) share of U.S.imports coming from various regions of the world. 
C) share of U.S.exports going to various regions of the world. 
D) exchange rate needed to make imports equal exports. 
A) difference between the value of imports and that of exports. 
B) share of U.S.imports coming from various regions of the world. 
C) share of U.S.exports going to various regions of the world. 
D) exchange rate needed to make imports equal exports.

Question 17

When comparative advantage is based on transferable factors, the law of one price tends to:

Accepted Answer

A) erode the advantage away. 
B) amplify the advantage. 
C) stabilize the advantage. 
D) make the advantage into an inherent comparative advantage. 
A) erode the advantage away. 
B) amplify the advantage. 
C) stabilize the advantage. 
D) make the advantage into an inherent comparative advantage.

Question 18

Production Possibility Schedules for Two South Pacific Island Nations   A comparative advantage in the production of mangoes is held by:

Accepted Answer

A) Kiribati. 
B) Tuvalu. 
C) both countries. 
D) neither country. 
A) Kiribati. 
B) Tuvalu. 
C) both countries. 
D) neither country.

Question 19

Immediately after World War II, the United States ran trade:

Accepted Answer

A) deficits and was an international lender. 
B) deficits and was an international borrower. 
C) surpluses and was an international lender. 
D) surpluses and was an international borrower. 
A) deficits and was an international lender. 
B) deficits and was an international borrower. 
C) surpluses and was an international lender. 
D) surpluses and was an international borrower.

Question 20

Production Possibility Schedules for Two South Pacific Island Nations   A comparative advantage in the production of coconuts is held by:

Accepted Answer

A) Kiribati. 
B) Tuvalu. 
C) both countries. 
D) neither country. 
A) Kiribati. 
B) Tuvalu. 
C) both countries. 
D) neither country.

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

In the United States globalization has played:

Countries can expect to gain from international trade as long as they:

The foreign exchange market is the market in which:

Smaller countries tend to get a larger share of the gains from trade than do larger countries.

The fact that the United States has a trade deficit means that:

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

Refer to the graph shown. The graph demonstrates Saudi Arabia's and the United States' production possibility curves for widgets and wadgets.Given these production possibility curves, you would suggest that:

The Mexican demand for American goods leads to:

Economists:

If the world supply curve is SW1,

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

We can conclude from the table shown that Morocco has a comparative advantage in the production of tables.

The resource curse is:

We can conclude from the table shown that Spain has a comparative advantage in the production of tables.

Refer to the graph shown. If the price of shekels is $1.10, the quantity of shekels supplied is:

The balance of trade measures the:

When comparative advantage is based on transferable factors, the law of one price tends to:

Production Possibility Schedules for Two South Pacific Island Nations A comparative advantage in the production of mangoes is held by:

Immediately after World War II, the United States ran trade:

Production Possibility Schedules for Two South Pacific Island Nations A comparative advantage in the production of coconuts is held by:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

International Trade Policy

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

If the world supply curve is S_W1,