The open-economy multiplier is equal to the reciprocal of the marginal propensity to save. Indicate whether the statement is true or false ANSWER FALSE Explanation: It is equal to the reciprocal of the marginal propensity to save plus the marginal propensity to import.
Date: September 10th, 2020
The United States finances current account deficits largely with dollars and, as a result, faces almost no constraint on its ability to run deficits. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Suppose the United states production possibility frontier was flatter to the widget axis, whereas Germany’s was flatter to the butter axis. We now learn that the German wage doubles, but U.S. wages do not change at all. We now know that A) the United States has no comparative advantage. B) Germany has a comparative advantage […]
Date: September 10th, 2020
The HPAE (High Performance Asian Economies) countries A) have all consistently supported free trade policies. B) have all consistently maintained import-substitution policies. C) have all consistently maintained non-biased efficient free capital markets. D) have all maintained openness to international trade. E) have all outperformed the U.S. ANSWER D
Date: September 10th, 2020
Faced with the evidence of poor working conditions and low wages in the border maquiladoras, economists A) shrug their shoulders and ignore the issue. B) agree that trade theory is thus proven hollow and internally inconsistent. C) argue that U.S. consumers should not consume lettuce. D) argue that the poor conditions and low wages are […]
Date: September 10th, 2020
Suppose that the U.S. Open ticket costs $100 and the British Open ticket costs £50 and the exchange rate is $1.43. How much does the British Open ticket cost for an American attending the British Open? What will be an ideal response? ANSWER $1.43 * 50 = $71.50
Date: September 10th, 2020
Intraindustry trade is characterized by what two features? What will be an ideal response? ANSWER Economies of scale and differentiated products
Date: September 10th, 2020
Suppose the United States’ production possibility frontier was flatter to the widget axis, whereas Germany’s was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that A) the United States has no comparative advantage B) Germany has a comparative advantage in butter. C) […]
Date: September 10th, 2020
Under a flexible-price monetary approach to the exchange rate A) when the domestic money supply falls, the price level would eventually fall, increasing the interest rate. B) when the domestic money supply falls, the price level would fall right away, causing a reduction in the interest rate. C) when the domestic money supply falls, the […]
Date: September 10th, 2020
Which of the following statements is TRUE about a vehicle currency? A) It is widely used to denominate contracts made by parties who reside in the country that issues the vehicle currency. B) The dollar is sometimes called a vehicle currency because of its pivotal role in many foreign exchange deals. C) There is much […]
Date: September 10th, 2020
