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.
Date: September 10th, 2020
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 […]
Date: September 10th, 2020
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.
Date: September 10th, 2020
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 […]
Date: September 10th, 2020
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
Date: September 10th, 2020
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 […]
Date: September 10th, 2020
In basic terms, the current account is equal to A) imports plus exports. B) savings minus consumption. C) exports minus imports. D) savings plus exports. ANSWER C
Date: September 10th, 2020
Which of the following would cause the LM curve to shift to the right? A) increased money supply B) a larger U.S. capital account deficit C) a depreciation of the dollar D) lower level of U.S. income ANSWER D
Date: September 10th, 2020
The liabilities side of a central bank’s accounts consists of A) deposits held by private banks. B) currency in circulation. C) deposits held by private banks and currency in circulation. D) deposits held by foreign banks, domestic assets, and currency in circulation. E) foreign assets and domestic assets. ANSWER C
Date: September 10th, 2020
In order for the condition E$/HK$ = PUS/PHK to hold, what assumptions does the principle of purchasing power parity make? A) Only that there are no transportation costs and restrictions on trade. B) Only that the markets are perfectly competitive, i.e., P = MC. C) The factors of production are identical between countries. D) No […]
Date: September 10th, 2020
