Exam 15: Exchange Rates and the Open Economy

-If the economy in the diagram above is open to trade,the world price of oil is $25 per barrel,and a $5 per-barrel tariff is levied per barrel of oil imported,then domestic production of oil equals ________ million barrels and domestic consumption of oil equals ________ million barrels.

Producers of exported goods are _________ as a result of trade and consumers of imported goods are _________ as a result of trade.

An agreement that involves two or more countries that not only agree to eliminate tariffs and other trade restrictions on most or all mutual trade,but also agree to a common set of trade barriers to imports from non-member countries,is called a(n)

The world price is the price at which

An agreement that involves two or more countries eliminating trade restrictions on most or all mutual trade,maintaining a common set of trade barriers against imports from non-member countries,and permitting mobility of capital and labour among member countries is called

Use the following table to answer the question(s)below for Country Y,which is open to trade.Column 1 shows the price of a product,column 2 shows the domestic quantity demanded domestically (Qd),and column 3 shows the domestic quantity supplied (Qs). -Refer to the above table.At what price will there be neither exports nor imports?

The demand for shoes in a country is given by D = 60 - 0.5P,where P is the price of a pair of shoes.Supply by domestic producers is given by S = 20 + 0.5P.The world price of a pair of shoes equals $30 and this economy is open to trade.If a tariff of $4 per pair is placed on shoe imports,the quantity of shoes produced domestically will change from ________ pairs with no tariff to ________ pairs with the tariff.

-If the economy in the diagram above is open to trade and the world price of oil is $25 per barrel,then domestic production of oil equals ________ million barrels and domestic consumption of oil equals _______ million barrels.

Under free trade,countries will __________ goods for which their closed-economy domestic price exceeds the world price and __________ goods for which their closed-economy domestic price is less than the world price.

-Refer to the diagram above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi.When the world price for this product is $0.50,Zancuzi will have

The demand for DVD players in a country is given by D = 300 - 0.2P,where P is the price of a DVD player.Supply by domestic producers is given by S = 100 + 0.8P.The world price of a DVD player equals $100 and this economy is open to trade.If a tariff of $50 per unit is placed on DVD player imports,the quantity of DVD players produced domestically will change from _________ with no tariff to _________ with the tariff.

If the economy is initially suffering from a recessionary gap equal to 100 units and the marginal propensity to consume is 0.75,then the income-expenditure multiplier is equal to _______,so if net exports rise by _______ units,the economy will return to potential output.

An autarky is

________ occurs when a reduction of trade barriers among members of a trading bloc causes trade among them to take the place of trade with countries outside the bloc.

The demand for shoes in a country is given by D = 60 - 0.5P,where P is the price of a pair of shoes.Supply by domestic producers is given by S = 20 + 0.5P.The world price of a pair of shoes equals $30 and this economy is open to trade.If a tariff of $4 per pair is placed on shoe imports,the quantity of shoes demanded domestically will change from ________ pairs with trade,but no tariff,to ________ pairs with trade and a tariff.

A common market is an agreement that involves two or more countries

If the economy is initially suffering from a recessionary gap equal to 50 units and the marginal propensity to consume is 0.9,then the income-expenditure multiplier is equal to _________,so if net exports rise by _________ units,the economy will return to potential output.

The demand for DVD players in a country is given by D = 300 - 0.2P,where P is the price of a DVD player.Supply by domestic producers is given by S = 100 + 0.8P.The world price of a DVD player equals $100 and this economy is open to trade.If a quota of 50 units is placed on DVD player imports,the quantity of DVD players demanded domestically will change from _______ with no quota to _______ with the quota.

When a tariff is imposed on a good,the difference between the world price and the domestic price goes to _________,but when a quota limits the importation of the good,the difference between the world price and the domestic price goes to ________.

-If the economy in the diagram above is open to trade and the world price of oil is $25 per barrel,then domestic consumption will be ________ million barrels,of which ________ million barrels will be imported.