Reference no: EM133206342
Assignment:
1. Which of the following products are not produced at all in the United States?
a. coffee, tea, cocoa
b. steel, copper, aluminum
c. petroleum, coal, natural gas
d. typewriters, computers, airplanes
2. Over time, the economic interdependence of nations has:
a. grown
b. diminished
c. remained unchanged
d. cannot say
3. A rough measure of the degree of economic interdependence of a nation is given by:
a. the size of the nations' population
b. the percentage of its population to its GDP
c. the percentage of a nation's imports and exports to its GDP
d. all of the above
4. Economic interdependence is greater for:
a. small nations
b. large nations
c. developed nations
d. developing nations
5. The gravity model of international trade predicts that trade between two nations is larger
a. the larger the two nations
b. the closer the nations
c. the more open are the two nations
d. all of the above
6. International economics deals with:
a. the flow of goods, services, and payments among nations
b. policies directed at regulating the flow of goods, services, and payments
c. the effects of policies on the welfare of the nation
d. all of the above
7. International trade theory refers to:
a. the microeconomic aspects of international trade
b. the macroeconomic aspects of international trade
c. open economy macroeconomics or international finance
d. all of the above
8. Which of the following is not the subject matter of international finance?
a. foreign exchange markets
b. the balance of payments
c. the basis and the gains from trade
d. policies to adjust balance of payments disequilibria
9. Economic theory:
a. seeks to explain economic events
b. seeks to predict economic events
c. abstracts from the many detail that surrounds an economic event
d. all of the above
10. The Mercantilists did not advocate:
a. free trade
b. stimulating the nation's exports
c. restricting the nations' imports
d. the accumulation of gold by the nation
11. According to Adam Smith, international trade was based on:
a. absolute advantage
b. comparative advantage
c. both absolute and comparative advantage
d. neither absolute nor comparative advantage
12. The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:
a. absolute disadvantage
b. absolute advantage
c. comparative disadvantage
d. comparative advantage
13. If in a two-nation (A and B), two-commodity (X and Y) world, it is established that nation A has a comparative advantage in commodity X, then nation B must have:
a. an absolute advantage in commodity Y
b. an absolute disadvantage in commodity Y
c. a comparative disadvantage in commodity Y
d. a comparative advantage in commodity Y
14. Ricardo explained the law of comparative advantage on the basis of:
a. the labor theory of value
b. the opportunity cost theory
c. the law of diminishing returns
d. all of the above
15. Which of the following statements is true?
a. the combined demand for each commodity by the two nations is negatively sloped
b. the combined supply for each commodity by the two nations is rising stepwise
c. the equilibrium relative commodity price for each commodity with trade is given by the intersection of the demand and supply of each commodity by the two nations
d. all of the above
16. The marginal rate of transformation (MRT) of X for Y refers to:
a. the amount of Y that a nation must give up to produce each additional unit of X
b. the opportunity cost of X
c. the absolute slope of the production frontier at the point of production
d. all of the above
17. The marginal rate of substitution (MRS) of X for Y in consumption refers to the:
a. amount of X that a nation must give up for one extra unit of Y and still remain on the same indifference curve
b. amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve
c. amount of X that a nation must give up for one extra unit of Y to reach a higher indifference curve
d. amount of Y that a nation must give up for one extra unit of X to reach a higher indifference curve
18. Which of the following is not true for a nation that is in equilibrium in isolation?
a. It consumes inside its production frontier
b. It reaches the highest indifference curve possible with its production frontier
c. The indifference curve is tangent to the nation's production frontier
d. MRT of X for Y equals MRS of X for Y, and they are equal to Px/Py
19. If the internal Px/Py is lower in nation 1 than in nation 2 without trade:
a. nation 1 has a comparative advantage in commodity Y
b. nation 2 has a comparative advantage in commodity X
c. nation 2 has a comparative advantage in commodity Y
d. none of the above
20. If Px/Py exceeds the equilibrium relative Px/Py with trade
a. the nation exporting commodity X will want to export more of X than at equilibrium
b. the nation importing commodity X will want to import less of X than at equilibrium
c. Px/Py will fall toward the equilibrium Px/Py
d. all of the above
based on table 1 above, the U.S has absolute advantage in
U.S U.K
Wheat/hour 6 1
Cloth/hour 3 3
a. cloth
b. wheat
c. both
d. neither cloth nor wheat
22. If 6W were exchanged for 3C, the U.S would Gain
a. 2C
b. 6C
c. 12C
d. none of the above
23. If 6W were exchanged for 3C the U.K would gain:
a. 5C
b. 18C
c. 12C
d. 15C
Table
U.S U.K
Wheat/hour 6 1
Cloth/hour 3 2
24. With reference to table 2 above, let the wage be $6 in the U.S and £1.8 in the U.K. If the exchange rate is £1=$3, Pw and Pc in the U.S will respectively be:
a. Pw=$1 and Pc =$2
b. Pw=$4 and Pc=$0.5
c. Pw=$3 and Pc =$.58
d. None of the above
25. Pw and Pc in the U.K will respectively be:
a. Pw=$3.40 and Pc =$8.7
b. Pw=$5.40 and Pc=$2.70
c. Pw =$2 and Pc =$0.5
d. Pw=$1.5 and Pc =$1
26. Given the current exchange rate, the U.S will
a. export wheat and the U.K will export cloth
b. export both wheat and cloth
c. export none of the commodities
d. none of the above