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
Low wages and poor working conditions in many U.S. trade partners A) prove that the gains-from-trade arguments of the Ricardian model are false. B) may be a fact of life, but economists don’t care. C) are facts emphasized by U.S. labor in its contract negotiations. D) prove that the gains-from-trade arguments of the Ricardian model […]
The development of countries like South Korea has been supported by all of the following EXCEPT A) high domestic interest rates. B) high domestic saving rates. C) large endowments of human capital. D) high levels of labor productivity. E) reduced government regulation. ANSWER A
Which of the following is NOT a major actor in the foreign exchange market? A) corporations B) central banks C) commercial banks D) non-bank financial institutions E) tourists ANSWER E
Under PPP (and by the Fisher Effect), all else equal A) a rise in a country’s expected inflation rate will eventually cause a more-than proportional rise in the interest rate that deposits of its currency offer in order to accommodate for the higher inflation. B) a fall in a country’s expected inflation rate will eventually […]
The BP curve presents combinations of y and i that yield balance of trade equilibrium. Indicate whether the statement is true or false ANSWER FALSE
In 2003, the per-capita income in China was roughly ________ of that in the U.S. A) one hundredth B) one eighth C) one half D) the same as E) one twentieth ANSWER B
The United States became a net international debtor in 1985 for the first time since World War I. Indicate whether the statement is true or false ANSWER TRUE
