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 […]
Most currency trades in London do not involve the British pound. Indicate whether the statement is true or false ANSWER TRUE
If countries have similar factor endowments and productivities, their trade is likely to be interindustry. Indicate whether the statement is true or false ANSWER FALSE
According to the human skills theory A) trade patterns depend upon a country’s relative endowment of skilled workers. B) countries with large endowments of skilled labor will have comparative advantage in skilled labor intensive products. C) the Leontief paradox is explained by the fact that the United States is relatively skilled labor abundant. D) All […]
A system of managed floating exchange rates is A) a system in which governments may attempt to moderate exchange rate movements without keeping exchange rates rigidly fixed. B) a system in which governments use flexible exchange rates. C) a system in which governments are forbidden from attempt to moderate exchange rate movements without keeping exchange […]
If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at ? Please explain. What will be an ideal response? ANSWER No, the rise in output leads to an excess demand for money. If the central bank […]
If the United States’ production possibility frontier was flatter to the widget axis, whereas Germany’s was flatter to the butter axis, we know that A) the United States has no comparative advantage B) Germany has a comparative advantage in butter. C) the U.S. has a comparative advantage in butter. D) Germany has comparative advantages in […]
The first phase of a typical cycle of economic populism is usually A) hyperinflation. B) rising growth and rising wages. C) falling growth and falling wages. D) rising unemployment. E) severe disinflation. ANSWER B
The goal of international economic policy cooperation is to allow for greater flexibility in exchange rates. Indicate whether the statement is true or false ANSWER FALSE
