Exam 15: Exchange Rates and the Open Economy

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 exports be equal to 100 units?

An agreement that aims to reduce restrictions on international trade between two or more countries is called

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.In equilibrium,when this economy is closed to trade,the quantity of shoes demanded domestically equals _________,and when this economy opens to trade,the quantity of shoes demanded domestically equals _________.

-If the economy represented in the diagram above is open to trade and the world price of oil is $30 per barrel,then domestic production of oil equals ________ million barrels and domestic consumption of oil equals ________ million barrels.

If trade is unrestricted,countries will __________ goods in which they have a comparative advantage and __________ goods in which they do not have a comparative advantage.

If the equation for planned aggregate expenditure is given by PAE = 5,000 + 0.9Y and potential output is equal to 55,000,then there is a(n)________ gap equal to ________ units,so if net exports ________ by ________,the economy will return to potential output.

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

An agency responsible for international trade policy is

Canada's average tariff rate peaked at ________ in 1888 but dropped below ________ by 1996.

If the economy is initially suffering from a recessionary gap,the gap could be closed by

A common market with a single currency but made up of any number of member countries is called

An agreement that involves two or more countries that agree to eliminate tariffs and other trade restrictions on most or all mutual trade of their own goods and services,but each have different tariffs for imports from non-member countries,is called

If the world price is greater than the domestic price of a commodity in a closed economy,when that economy begins to trade,the economy will _________ the commodity.

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

The G7 country with the highest ratio of trade to GDP is

-Refer to the diagram above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi.At what price will there be neither imports nor exports?

The microeconomic reasoning of the production possibilities curve suggests that an increase in trade protection tends to ________ output,but the short-run macroeconomic reasoning of the Keynesian cross diagram suggests that an increase in trade protection may ________ output.

-If the economy in the diagram above is open to trade,the world price of oil is $20 per barrel,and the government places a $5 per-barrel tariff on oil imports,then this economy will ________ million barrels of oil.

The demand for jeans in a country is given by D = 100 - 0.6P,where P is the price of a pair of jeans.Supply by domestic producers is given by S = 20 + 0.4P.The world price of a pair of jeans equals $30 and this economy is open to trade.If a tariff of $10 per pair is placed on jeans imports,the quantity of jeans produced domestically will change from __________ pairs with no tariff to __________ pairs with the tariff.

-Refer to the diagram above,where S and D are the domestic supply and demand curves for a product.The world price of the product is $6.If the economy is open to international trade but a tariff of $4 per unit is imposed,then the total revenue going to domestic producers would be ________,the total revenue (after tariff)going to foreign producers would be ________,and the tariff revenue going to the government would be ________.