Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale? A) Job creation at domestic firms entering international trade B) Lower prices for the domestic consumers of the product now being traded C) Increased sales and lower per unit costs for the firm doing the exporting D) […]
In his tests, Leontief used an input-output table to A) calculate the capital and labor required to produce $1 million of U.S. exports and imports. B) calculate the labor productivity of American workers relative to foreign workers. C) calculate the capital productivity of American capital relative to foreign capital. D) All of the above. […]
Leontief’s results were considered paradoxical because the United States was believed to be A) technologically efficient relative to the rest of the world. B) capital abundant relative to the rest of the world. C) labor abundant relative to the rest of the world. D) All of the above. ANSWER B
China’s recent experience supports the proposition that A) “economic miracles” are solely to be expected in small countries. B) central planning and socialism can promote sustained economic growth. C) a lessening of income disparities is a prerequisite for economic growth. D) growth in a large country cannot be affected by its foreign sector. E) policy […]
Refer to above figure. The monopolist can export as much as it likes of its steel at the world price of $5/ton. How much steel will the monopolist sell, and at what price? What will be an ideal response? ANSWER It would sell 10 million tons at $5/ton.
Imagine scale economies were not only external to firms, but were also external to individual countries. That is, the larger the worldwide industry (regardless of where firms or plants are located), the cheaper would be the per-unit cost of production. Describe what world trade would look like in this case. ANSWER Presumably each country […]
Given the information in the table above. What is the opportunity cost of Cloth in terms of Widgets in Foreign? What will be an ideal response? ANSWER One half a widget.
In 2010, about A) 20 percent of foreign exchange transactions involved exchanges of foreign currencies for U.S. dollars. B) 10 percent of foreign exchange transactions involved exchanges of foreign currencies for U.S. dollars. C) 30 percent of foreign exchange transactions involved exchanges of foreign currencies for U.S. dollars. D) 40 percent of foreign exchange transactions […]
Which of the following is an example of intraindustry trade? A) Trading peanut oil for tractors B) Trading crude oil for automobiles C) Trading Nokia smartphone for Apple iPhones D) Trading jeans for cotton ANSWER C
Covered interest arbitrage involves both A) the purchase of a foreign asset and a forward contract in the market for foreign exchange. B) the purchase of a domestic asset and a spot contract in the market for foreign exchange. C) the sale of a foreign asset and the purchase of a forward contract in the […]
