Illustrate with a graph the effects of fiscal policy when exchange rates are fixed. What will be an ideal response? ANSWER Draw horizontal BP curve. Fiscal policy shifts IS. Monetary policy must accommodate by shifting LM to match IS in order to maintain fixed exchange rate.
Date: September 10th, 2020
The most common form of price discrimination in international trade is A) dumping. B) non-tariff barriers. C) Voluntary Export Restraints. D) preferential trade arrangements. E) product boycotts. ANSWER A
Date: September 10th, 2020
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 […]
Date: September 10th, 2020
Which type of industry is likely to see more intraindustry trade? What will be an ideal response? ANSWER High technology
Date: September 10th, 2020
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 […]
Date: September 10th, 2020
The Shipbreakers of Alang arouse the ire of Greenpeace because of A) India’s non-repentant nuclear stance. B) India’s import-competing industrialization policies. C) the difficulty of avoiding ship accidents between Greenpeace’s sailboat and the reconstructed Container ships of Alang. D) the large amount of pollution associated with the operations at Alang. E) their competition with capital-intensive […]
Date: September 10th, 2020
The Lost Decade refers to the years between approximately A) 1975 and 1985. B) 1980 and 1990. C) 1987 and 1997. D) 1972 and 1980. E) 1960 and 1970. ANSWER B
Date: September 10th, 2020
In the model of monopolistic competition, trade costs between countries will cause domestic and foreign markets to have ________ prices, ________ quantities sold, and ________ profit levels. A) different; different; different B) identical; different; different C) different; different; identical D) identical; different; identical E) identical; identical; different ANSWER A
Date: September 10th, 2020
The Country of Rhozundia is blessed with rich copper deposits. The cost of copper produced (relative to the cost of widgets produced) is therefore very low. From this information we know that A) Rhozundia has a comparative advantage in copper. B) Rhozundia should import copper and export widgets. C) Rhozundia should export both widgets and […]
Date: September 10th, 2020
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) […]
Date: September 10th, 2020
