The highest component of GNP is A) the current account. B) investment. C) government purchases. D) consumption. E) trade. ANSWER D
Date: September 10th, 2020
If the dollar interest rate is 4 percent, the euro interest rate is 6 percent, then A) an investor should invest only in dollars. B) an investor should invest only in euros. C) an investor should be indifferent between dollars and euros. D) invest only in dollars if the exchange rate is expected to remain […]
Date: September 10th, 2020
The Lost Decade began in 1990 when Colombia announced that it lacked the international reserves it needed to pay the interest and principle due on its foreign debt. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Leontief showed that U.S. exports were capital intensive relative to U.S. imports. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Which of the following has been confirmed by empirical tests of the Ricardian model? A) All predictions of the model for a multi-product, multi-country world are highly unrealistic. B) The existence of nontraded goods results in a high degree of specialization among countries. C) International trade has no impact on income distribution. D) The unimportance […]
Date: September 10th, 2020
________ is(are) department(s) of U.S. banks that are permitted to engage in Eurocurrency banking. A) Eurobanks B) The Paris Club C) International Banking Facilities D) Both A and C ANSWER C
Date: September 10th, 2020
How are the following transactions entered into the U.S. balance of payments? (a) The U.S. government sends $2,000 worth of food aid to Africa. (b) A U.S. firm exports $10,000 worth of goods to the United Kingdom, payable in 3 months. (c) A U.S. tourist in Amsterdam spends $200 for food and hotels. ANSWER […]
Date: September 10th, 2020
When a multinational affiliate replicates elements of a production process in a foreign country it is called ________ foreign direct investment. A) vertical B) horizontal C) transitional D) bisectional E) direct ANSWER A
Date: September 10th, 2020
If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, then A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 4 percent. B) an investor should invest only in euros if the expected dollar depreciation against the euro is 4 percent. C) […]
Date: September 10th, 2020
Describe the two sources of economies of scale and how these economies of scale lead to intraindustry trade. What will be an ideal response? ANSWER Internal economies of scale come from decreasing average costs as production increases. The source of the decrease in average costs could be the spread of fixed costs over a […]
Date: September 10th, 2020
