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
Proponents of ISI assumed that governments A) were capable of identifying and correcting market failures. B) were capable of identifying and correcting the excesses of economic populists. C) should enact orthodox stabilization plans. D) could control the terms of trade. E) Both A and D. ANSWER A
Date: September 10th, 2020
Which of the following does NOT indicate intraindustry trade? A) Trading Jeeps for Toyotas B) Trading Boeing airplanes for Airbus airplanes C) Trading Bush beer for Heineken beer D) Trading Japanese-made films for Hollywood-made films E) Trading oil for trucks ANSWER E
Date: September 10th, 2020
MacDougall’s results can be interpreted as A) evidence against the classical model. B) evidence against the Heckscher-Ohlin model. C) support for the classical model. D) support for the Heckscher-Ohlin model. ANSWER C
Date: September 10th, 2020
In order to protect against foreign exchange risk, firms can use A) the spot market for foreign exchange. B) interest rate arbitrage. C) purchasing power parity. D) the forward market for foreign exchange. E) the J-curve. ANSWER D
Date: September 10th, 2020
Based on the case study, “Exchange Rates, Auto Prices, and Currency Wars,” explain why exchange rates are of critical importance to firms in the automobile industry, and how Japan has benefited from changes in the value of the Yen. What will be an ideal response? ANSWER See the discussion at the beginning of the […]
Date: September 10th, 2020
Which of the following is TRUE about monopolistic competition? A) One firm serves as the entire industry. B) A small number of firms serve the entire market. C) It is competition among many firms producing similar but differentiated products. D) The pattern of production and trade is difficult to predict. E) It enjoys no economies […]
Date: September 10th, 2020
Which of the following is an example of a regional currency arrangement? A) exchange rate union B) currency cartel associations C) free-trade zones D) most-favored nation status E) agreement on commercial trade ANSWER A
Date: September 10th, 2020
