How does the growth in the daily volume of foreign currency transactions compare with the growth rate of the global economy? What will be an ideal response? ANSWER Currency transactions are growing more rapidly.
The action of arbitrage is A) the process of buying a currency cheap and selling it dear. B) the process of buying a currency dear and selling it cheap. C) the process of buying and selling currency at the same price. D) the process of selling currency at different prices in different markets. E) the […]
With fixed exchange rates, central banks must finance trade deficits, allow a devaluation, or else use trade restrictions to restore equilibrium. Indicate whether the statement is true or false ANSWER TRUE
Trading French wine for California wine is an example of intraindustry trade. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is NOT a characteristic of populist regimes? A) Nationalistic ideologies B) Focus on economic growth C) Focus on income redistribution D) Using economic tools to reach specific goals regarding labor, the orientation of business or the role of foreigners E) Focus on controlling inflation ANSWER E
According to the product life cycle model, comparative advantage A) may move from one country to another as a product matures. B) always stays in the country where a product is invented. C) in agricultural or homogeneous manufactured goods is determined by the stage of the life cycle these products are in. D) Both A […]
The current account must necessarily always be in balance. Indicate whether the statement is true or false ANSWER FALSE
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
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 […]
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