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
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 […]
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
According to Linder, the gains from international trade come about because consumers are exposed to A) a greater variety of goods. B) increasing returns to scale. C) imperfect competition. D) None of the above. ANSWER A
The Shipbreakers of Alang represent a perfect example of how a developing country can apply the principles of the Heckscher-Ohlin model, since A) shipbreaking is generally considered to be a capital-intensive operation and India, being a large country has much capital. B) shipbreaking is a labor-intensive operation in India, and India has many workers since […]
What policies would you recommend to the U.S. government to lower the balance of trade deficit and decrease net capital inflows? What will be an ideal response? ANSWER Lower the fiscal deficit.
