Explain what is a “vehicle currency.” Why is the U.S. dollar considered a vehicle currency? What will be an ideal response? ANSWER A vehicle currency is one that is widely used to denominate international contracts made by parties who do not reside in the country that issues the vehicle currency. Since in 2004, nearly […]
Which type of industry is likely to see more intraindustry trade? What will be an ideal response? ANSWER High technology
We know that in antiquity, China exported silk because no one in any other country knew how to produce this product. From this information we know that A) China had a comparative advantage in silk. B) China had an absolute advantage, but not a comparative advantage in silk. C) no comparative advantage could exist because […]
The most important participants in foreign exchange markets are ________. Fill in the blank(s) with correct word ANSWER Commercial banks
If output more than doubles when all inputs are doubled, production is said to occur under conditions of A) increasing returns to scale. B) imperfect competition. C) intraindustry trade. D) interindustry trade. ANSWER A
Exxon Mobil wants to pay 160,000 to a German supplier. They get an exchange rate quotation from its own commercial bank and instructs it to debit their dollar account and pay 160,000 to the supplier’s German account. If the exchange rate quoted is $1.2 per euro, how much is debited to Exxon Mobil’s account? A) […]
International free trade always hurts the nations that run deficits, and benefits the nations that run surpluses. Indicate whether the statement is true or false ANSWER FALSE
It is possible for every nation to have BOP surpluses. Indicate whether the statement is true or false ANSWER FALSE
The HPAE “economic miracle” illustrates a clear case in which A) exports and growth were positively related. B) exports were promoted by successful economic growth. C) economic growth was determined by successful export promotion. D) trade policy dominated other considerations in promoting economic growth. E) import substitution enhanced economic development. ANSWER A
At the end of the populist cycle, workers are better off than they were before the populist cycle began in terms of real wages and job creation. Indicate whether the statement is true or false ANSWER FALSE
