unit+six--international+economics

 Unit Six--International Economics

Answer Page--Unit Six


 * Topics may include:** International Trade, Comparative and Absolute Advantage, Opportunity Cost, Imports, Exports, Free Trade, Current Accounts, Capital Accounts, Exchange Rates, Capitalism, Socialism, Traditional, Command, and Market Economics, Developed versus Developing Countries

1. The capital account of the nation’s balance system is responsible for… a) net investment income b) recording foreign purchases of assets within a nation c) recording exported and imported goods and services d) net transfers e) all of the above Elizabeth Lawandales

2. The Factor(s) that affect exchange rate include: I. consumer tastes II. Specialization III. Relative incomes IV. Relative inflation a) I only b) II only c) III, IV d) I, III, IV e) I, II, III, IV Elizabeth Lawandales

3. If the euro is worth 120 yen and the 3 euros are worth 180 rupees how many rupees equal 1 yen? a) 60 b) .67 c) 1.53 d) 6 e) 40 Elizabeth Lawandales

4. France wants airplanes made in the U.S.A.  This will result in… a) The demand curve moves right and the dollar appreciates b) The demand curve moves left and the dollar depreciates c) The supply curve moves right and the dollar appreciates d) The supply curve moves left and the dollar depreciates e) The supply curve moves left and the demand curve moves right and the dollar depreciates Elizabeth Lawandales

5.  When the original supply curve moves to S1… a)The peso is losing value b)The dollar is losing value c)The dollar is gaining value d)There is no change in peso value e)There is no change in dollar value Elizabeth Lawandales

6. Pounds Produced per Hour  Which of the following is correct a)This problem uses the output method b)Sara Lee should specialize in cheese c)Kraft has absolute advantage in bread d)Oppurtunity cost for kraft producing cheese is 2 loaves of bread e)Sara Lee has absolute advantage in producing cheese Elizabeth Lawandales
 *  || cheese || bread ||
 * Kraft || 10 || 5 ||
 * SaraLee || 8 || 16 ||

Refer to diagram for 7-8 Hours to produce a unit

 7. What is true about this scenario a) Jack has the absolute advantage on ipods b) Jack has the absolute advantage on water bottles c) The oppurtunity cost for Jack to produce a water bottle is 3/5 ipods d) this problem uses input method e) this problem uses output method Elizabeth Lawandales
 * <span style="font-family: Arial,Helvetica,sans-serif;"> || <span style="font-family: Arial,Helvetica,sans-serif;">water bottles || <span style="font-family: Arial,Helvetica,sans-serif;"> || <span style="font-family: Arial,Helvetica,sans-serif;">ipods || <span style="font-family: Arial,Helvetica,sans-serif;"> ||
 * <span style="font-family: Arial,Helvetica,sans-serif;">Jack || <span style="font-family: Arial,Helvetica,sans-serif;">3 || <span style="font-family: Arial,Helvetica,sans-serif;">5 ||
 * <span style="font-family: Arial,Helvetica,sans-serif;">Mike || <span style="font-family: Arial,Helvetica,sans-serif;">4 || <span style="font-family: Arial,Helvetica,sans-serif;">8 ||

8. Who has the comparative and absolute advantage? a) Jack has comparative advantage in ipods and absolute advantage in ipods b) Mike has comparative advantage in water bottles and absolute advantage in water bottles c) Jack has comparative advantage in water bottles and Mike has absolute advantage in ipods d) Mike has comparative advantage in ipods and Jack has absolute advantage in ipods e) Jack has comparative advantage in water bottles and Mike has absolute advantage in water bottles Elizabeth Lawandales

9. Free trade... a) promotes consumption b) deters monopoly c) helps prevent wars d) provides wider range of choice e) all of the above Elizabeth Lawandales

10. A tariff on a product does all of the following EXCEPT.. a) increase price b) generate revenue for government c) increase consumption d) increase domestic production e) reduce imports Elizabeth Lawandales

11. When America imports $2.9 billion worth of goods and exports $1.7 billion worth of goods for a given year, it is running a and it is likely that a) trade deficit; tariffs and quotas do not play a controlling roll in the economy. b) trade deficit; the country is bordering complete economic collapse. c) trade surplus; the country is bordering complete economic collapse. d) trade surplus; America is economically stronger than most of its trader partners despite the surplus. e) trade surplus; tariffs and quotas are very prevalent in the economic system. -Michael Remensnyder

12. A managed float, the current system for determining international exchange rates, is where a) command economic systems control all aspects, regulations, and standards of exchange. b) all money traded internationally is backed upon a gold standard. c) occasional intervention is allowed, but most of the time exchange rates are determined by supply and demand. d) exchange rates are controlled solely by nations who buy and sell currencies to adjust and set rates. e) exchange rates are completely controlled by supply and demand in the world economy. -Michael Remensnyder

13. Trade restrictions have advocates in many different industries in market economies for all of the following reasons except a) they help to prevent dumping in international trade. b) they help protect and foster the growth of infant industries. c) they help promote diversity in industry and production within a country. d) they help to increase and protect domestic employment. e) they help keep domestic prices low and control inflation. -Michael Remensnyder

14. Exchange rates can be affected by I. purchasing power parity II. speculators who work only in real estate markets III. relative income levels IV. changes to the international gold standard. a) III. b) II. and IV. c) I., II., and III. d) I. and III. e) III. and Iv. -Michael Remensnyder

Use the following for question 5. 15. The changes in the demand and/or supply curves most likely indicate which of the following is in place in America's economy: a) An increase in foreign dumping on the US bike industry b) Employment in rising in foreign bike industries c) A monopoly on all domestic bike production by Toys-R-Us d) An import quota on bikes e) A lack of tariff against bike imports -Michael Remensnyder

16. Which of the following is not an advantage that market economies have over command economies? a) Large personal incentive is available for innovation and economic success b) Allows stability in long-term projects where a large amount of risk is involved c) Price changes signal change in and prioritize importance of goods for the public d) Avoids excessive corruption and tedious government bureacracy and micro-management of economy e) Quick and efficient, effective resource distribution -Michael Remensnyder

17. Which of the following discourage competition and/or act as trade restrictions? I. Liscensing requirements for the right to sell a particular pharmeceutical drug II. Import quotas on the amount of cotton to be imported from Brazil III. Tariffs on each shipment of Honda Accords imported to the U.S. a) I. b) I. and III. c) II. and III. d) I. and II. e) I., II., and III. -Michael Remensnyder

Use the following for question 8. 18. As the Demand curve shifts to D*, the dollar will _, the yen will _, and its supply will _. exchage rates rates graph a) depreciate; appreciate; shift to S* b) depreciate; appreciate; shift to S c) appreciate; depreciate; shift to S* d) appreciate; depreciate; shift to S e) appreciate; appreciate; shift to S
 * -Michael Remensnyder

Use the following for questions 9 and 10.** <span style="font-family: Arial,Helvetica,sans-serif;"> 19. Who has the higher absolute advantage, and who has the higher comparative advantage for soccer ball production? a) Italy has absolute advantage in soccer ball production while Spain has the comparative advantage. b) Spain has both absolute and comparative advantages in soccer ball production. c) Italy has both absolute and comparative advantages in soccer ball production. d) Spain has absolute advantage in soccer ball production while Italy has the comparative advantage. e) It is impossible to determine which country has the higher comparative advantage; Spain has the higher absolute advantage. -Michael Remensnyder
 * <span style="font-family: Arial,Helvetica,sans-serif;"> || <span style="font-family: Arial,Helvetica,sans-serif;">** Soccer Balls produced per hour ** || <span style="font-family: Arial,Helvetica,sans-serif;">** Pairs of cleats produced per hour ** ||
 * <span style="font-family: Arial,Helvetica,sans-serif;"> **Spain** || <span style="font-family: Arial,Helvetica,sans-serif;">** 45 ** || <span style="font-family: Arial,Helvetica,sans-serif;">** 30 ** ||
 * <span style="font-family: Arial,Helvetica,sans-serif;"> **Italy** || <span style="font-family: Arial,Helvetica,sans-serif;"> 20  || <span style="font-family: Arial,Helvetica,sans-serif;"> 25  ||

20. Which country has a lower opportunity cost for 1 pair of cleats? a) Italy; 5/4 balls b) Spain; 4/5 balls c) Spain; 3/2 balls d) Italy; 4/5 balls e) Spain; 2/3 balls -Michael Remensnyder

21. Which country is the United States's most important trading partner? a) Mexico b) Canada c) Japan d) China e) Taiwan Jacqueline Baron

22. A lower relative or comparative cost than that of another producer is called? a) appreciation b) trade bloc c) exchange rates d) comparative advantage e) terms of trade Jacqueline Baron

23. Appreciation of a nation's currency affects imports/exports how? a) imports decrease/exports increase b) both remain constant c) exports decrease/ imports increase d) both increase e) both decrease Jacqueline Baron

24. In what way do governments not influence trade flows? a) exchange rates b)protective tariffs c) export subsidies d) quotas e) non tariff barriers Jacqueline Baron

25. Which of these does the current account balance not include? a) service transactions b) governent spending c) net investment income d) goods transactions e) net transfers Jacqueline Baron

26. What occurs when a sum of the current and capital accounts is negative? a) balancce-of-payments surplus b) trade deficit c) devaluation d) fixed exchange rate e) balance-of-payments deficit Jacqueline Baron

27. Exchange rates were pegged and the IMF helped stabilize foreign exchange rates under what? a) gold standard b) Bretton Woods system c) fixed-exchange-rate system d) flexible-exchange-rate system e) World Trade Organization Jacqueline Baron

28. Which document marked the beginning of a trend toward lower U.S tariffs? a) Smoot-Hawley Tariff Act b) General Agreement on Tariffs and Trade c) North American Free Trade Agreement d) Reciprocal Trade Agreements Act e) Bretton Woods system Jacqueline Baron

Use the following table for questions 29 and 30.

<span style="font-family: Arial,Helvetica,sans-serif;"> 29. Who has the absolute advantage in maple syrup and pancakes? a) Maple syrup- Canada/ Pancakes-Canada. b) Maple syrup- U.S/ Pancakes-U.S. c) Maple syrup- U.S/ Pancakes- Canada d) Maple syrup- Canda/ Pancakes- U.S e) Neither, both have the same proportions.
 * <span style="font-family: Arial,Helvetica,sans-serif;"> || <span style="font-family: Arial,Helvetica,sans-serif;"> Bottles of Maple Syrup produced per hour  || <span style="font-family: Arial,Helvetica,sans-serif;"> Pancakes produced per hour  ||
 * <span style="font-family: Arial,Helvetica,sans-serif;"> Canada || <span style="font-family: Arial,Helvetica,sans-serif;">150 || <span style="font-family: Arial,Helvetica,sans-serif;">85 ||
 * <span style="font-family: Arial,Helvetica,sans-serif;">U.S || <span style="font-family: Arial,Helvetica,sans-serif;"> 115 || <span style="font-family: Arial,Helvetica,sans-serif;"> 340  ||

30. Who has the comparative advantage in producing maple syrup in terms of pancakes? a) Canada; 85/150 pancakes b) U.S; 115/340 pancakes c) Both have the same comparative advantage. d) U.S; 340/115 pancakes. e) Canada; 150/85 pancakes

31. When is a nation's total output the largest? a) when unemployment is 0. b) when productivity is on the rise. c) when exports are greater than imports. d) when each good produced by the nation has the lowest opportunity cost to produce that good. e) when total exports are equal to imports. Meredith Palaio 32. I can write a paper in an hour. It takes Liz an hour and a half. I can do a math problem in one minute, but it takes Liz an hour and a half to do that too. Which of us has the absolute advantage in paper writing? a) Liz, and she has the comparative advantage in paper writing b) Liz, but she does not have the comparative advantage in paper writing c) Me, but I have the comparative advantage in math problems d) Me, and I have the comparative advantage in paper writing e) Me, but neither of us has the comparative advantage Meredith Palaio 33. From the above scenario, if Liz and I specialize in the most efficient way, what is the total output of papers and math problems after 3 hours. a) 180 math problems, 2 papers b) 90 math problems, 2 papers c) 180 math problems, 1.5 papers d) 90 math problems, 3 papers e) 90 math problems, 1 paper Meredith Palaio 34. If the two countries below specialize on the basis of a comparative advantage analysis, which is benefited?

<span style="font-family: Arial,Helvetica,sans-serif;"> a) only USA because they have the absolute advantage in golfer production b) only Kenya because they have the absolute advantage in cross country runner production c) Neither nation, they should not trade with each other d) Both nations e) only USA because they have a stronger economy Meredith Palaio 35. In the scenario above, which nation should train golfers and which should train cross country runners? a) US; Kenya b) Kenya; US c) They should both do a combination to create the ideal amount of golfers/cross country runners d) Neither; the two nations would not benefit from specialization e) None of the above Meredith Palaio 36. In the scenario above, where would the ideal combination (as a result of specialization) of golfers/cross country runners lie on the nations’ productions possibilities curve? a) Point A b) Point B c) Point D d) Point A and C are possible e) Point A, B, and C are possible Meredith Palaio 37. Which of the following goods can be tariffed in the US? I. Champagne II. Ford Taurus III. Sombrero a) I only b) II only c) III only d) II and III e) I and III Meredith Palaio
 * 1) of professionals each country can train in a 20 year period
 * USA  ||
 * Golfers ||  30  ||  25  ||  20  ||  10  ||  0  ||
 * Cross-Country Runners ||  0  ||  1  ||  2  ||  4  ||  5  ||
 * Kenya  ||
 * Golfers ||  1  ||  0  ||
 * Cross-Country Runners ||  0  ||  30  ||

Goods Imports -200 Goods Exports A Balance on Services 140 Imports of Services -50 Exports of Services B Net Transfers -73 Net Investment Income C Balance on Current Account **D** US Purch. of Assets Abroad -50 Balance on Capital Account **25** <span style="font-family: Arial,Helvetica,sans-serif;"> 38. Using the figure above, did the United States run a capital/current acount deficit or surplus for this term? a) deficit of 25 b) surplus of 2 c) deficit of 3 d) surplus of 25 e) deficit of 2 Meredith Palaio
 * <span style="font-family: Arial,Helvetica,sans-serif;">**Current Account:** Balance on Goods -100
 * Capital Account:** Foreign Purch. of US Assets 75
 * Official Reserves** Official reserves **-2**
 * Account:** **$0** ||

39. Fill in the blanks A and B from above. a) 100; -150 b) -100; 180 c) 100; 190 d) -100; 190 e) 190; 190 Meredith Palaio

40. Fill in blanks C and D. a) 10; 23 b) -10; 25 c) -10; 23 d) 30; -10 e) 10; -23 Meredith Palaio

Andrew Quinlan 41-50 Unit 6 International Ecnomics 41. Which of the following events affect exchange rates? I. Travel to one country increases II. Prices go up in one country III. Goods demanded changes relative to another country

A. I only B. II only C. I, II only D. I, II, III E. None of the above

42. When the dollar is strong (costs more) or weak (costs less) exports... Strong Weak A. increase increase B. decrease decrease C. increase decrease D. decrease no- change E. decrease increase

43. Current Acount __Man-land exports of goods +900 Man-land imports of goods -800 Man-land exports of services +350 Man-land imports of services -500 Balance of Trade 1.__

Net investment income +20 Net transfers -26 Balance on current Account 2.

Capital Account __Man-land capital going abroad -200 Foreign capital coming into man-land +250 Balance on capital account 3.__ Balance on current account Plus balance on capital account 4.

Official Reserves Account __Official reserves transactions Balance 5.__ Total $0 A.100, -50, 75, 6, -6 B.50, 56, -50,6,-6 C.-50, -56, 50, -6, 6 D. -60, -86, 50, -36, 36 E.None of the above

44. What does NAFTA stand for? A.North African Foreign Topics Agreement B. Northern Association of Free Trade Agreements C. Never Allow Free Trade Argument D. North American Free Trade Agreement E. Northern Association of Foreign Trade Allowance

45. Using the graphs below answer the following question. On which graph is the equilibrium price for motor bikes the highest relative to the quantity supplied for that price? A. International Motorbike Market B. Rest of the World’s Motorbike Market C. Both International Motorbike Market and The U.S. Motorbike Market are equal D. The U.S. Motorbike Market E. Both International Motorbike Market and Rest of the World’s Motorbike Market

46. Which of the following of Monetary Policy is used to affect exchange rates? I. changing interest rates II. Government spending III. Raising/lowering taxes A. I only B. I, II only C. I, II, III D. I, III only E. II, III only

47. A tariff placed on an imported good would cause the price level of the good to do what? A. Fluctuate up and down B. Decrease C. Increase D. No-change E. Not even able to be sold in the country

48. If the dollar price of the peso rises, then: A. the dollar appreciates relative to the peso B. the peso price of dollars rises C. the peso depreciates relative to the dollar D. the dollar depreciates relative to the peso E. none of the above

49. If Russia and China begin to engage in bilateral change, then: A. Russia will import both cars and dolls B. Russia will export cars and import dolls C. Neither country will be better off by importing/exporting either good D.Russia will export both cars and dolls E. Russia will import cars and export dolls

50. Using the graph below answer the following question. If S represents domestic supply and D represents domestic demand, then which way would S move if it was changed to the total world supply instead of just the domestic supply? A. to the right

B. no change at all

C. to the left

D. only the demand curve would shift right

E. only the demand curve would shift left

Andrew Donoho 51-60

51. Since the 1940's, general tariffs have: a) Declined b) increased c) Become illegal d) Stayed the same e) risen and fallen frequently

52. For the United States as a whole, volume of international trade has: a) Increased absolutely but not relative to GDP. b) Increased relative to GDP but not absolutely. c) Increased both relative to GDP and absolutely. d) Decreased relative to GDP but not absolutely. e) Decreased relative GDP and Absolutely.

53. If the value of a foreign currency rises, which of the following are true: I. International value of Dollar falls. II. Foreign currency price of the dollar falls. III. International value of foreign currency rises. IV. Dollar price of foreign currency rises. a) III. b) II. and IV. c) I, II, and III. d) I. and III e) All of the above

54. Protective tariffs are designed to: a) Shield foreign consumers from domestic competition. b) Shield domestic producers from foreign competition. c) Build additional funds for producers. d) Lower costs for consumers. e) Allow more free-flowing trade.

55. Which created a downward trend in Tariffs: a) Smoot-Hawley tariff act. b) Reciprocal Trade Agreement act. c) Both the Smoot-Hawley tariff act and the Reciprocal Trade Agreement act. d) Fordney-McCumber. e) None of the above.

56. Which of the following organizations created a free trade zone involving the US: a) GATT b) WTO c) EU d) NAFTA e) none of the above.

57. A __ is a trade barrier by which firms limit their amount of exports to a particular country: a) Revenue tariff. b) Import Quota. c) nontariff barrier d) Protective tariff. e) Voluntary export restriction

58. An INDIRECT/long-term effect of tariffs would be: a) Decline in consumption b) Increased domestic production c) Expand inefficient industries d) Create a decline in imports e) Allow for greater tariff revenue.

Output per worker: Australia Brazil Sleds: 300 200 Clarinets: 2 1 59. Based on the table, Brazil has a: a. Comparative advantage in sleds. b. Comparative advantage in clarinets. c. Absolute advantage in sleds. d. Absolute advantage in clarinets. e. None of the above.

Labor required: Austria Belgium Steel 3 8 Brooms 2 1

60. Based on the table: a. Belgium has a comparative advantage in brooms. b. Austria has a comparative advantage in steel. c. Austria has an absolute advantage in steel. d. Belgium has an absolute advantage in brooms. e. All of the above.