Reference no: EM132271717
1. Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is
- the infant industry argument.
- comparative advantage argument.
- dumping.
- a regional trade bloc.
2. If Kami can produce 40 tablets or 30 cellphones during a month's time, while Sally can produce 10 tablets or 20 cellphones, then it is correct to state that
- Kami has a comparative advantage in producing tablets.
- Kami has a comparative advantage in producing both tablets and cellphones.
- Sally has a comparative advantage in producing both tablets and cellphones.
- Sally has an absolute advantage in tablets.
3. Trade deflection is an act that
- decreases the amount of international trade in the world.
- increases the amount of international trade in the world.
- has no impact on the amount of international trade in the world.
- is illegal among all countries in the world.
4. To avoid trade restrictions, a U.S. firm moves its final production process to Ireland and then ships the final products to Germany. This is an example of
- trade deflection.
- trade diversion.
- protectionism.
- rules of origin.
5. The infant-industry argument for tariff protection is that tariffs should be imposed to protect from competition
- industries that are essential if a country is to become an industrial nation.
- industries needed for national defense.
- industries that cannot compete with foreign competitors at this point in time, but will be able to once they gain some size and experience.
- industries that can compete with foreign competitors at this point in time and are deemed essential by the government.
6. A record of all transactions between households, firms, and the government of one country and the rest of the world is the
- balance of trade.
- balance of payments.
- International Monetary Fund.
- government budget.
7. In the balance of payments, a deficit item is any transaction
- that leads to a receipt by a resident of a country or its government.
- that leads to a payment by a resident of a country or its government.
- that is an export of a good or service.
- that makes residents of a country worse off.
8. The legally established value of a country's monetary unit in terms of another under the Bretton Woods system was called the
- exchange rate.
- dirty float.
- special draw.
- par value.
9. Assume there is an increased demand in the United States for Australian wines. If all other factors are held constant, this will result in
- an increase in the U.S. dollar exchange rate for Australian dollars.
- an appreciation of the U.S. dollar.
- a movement along the demand curve for Australian wine.
- a decrease in the par value of the Australian dollar.
10. Exchanging dollars for euros to pay a computer manufacturer in Belgium would occur
- in the foreign exchange market.
- at the Federal Reserve.
- at the European Central Bank.
- in the letter of credit market.
11. Suppose a country has a current account surplus and that there is no intervention by finance ministries or central banks. This current account surplus indicates that the country has
- a deficit in its capital account.
- a surplus in its capital account.
- the official reserve transactions balance is positive.