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
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
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
Which of the following would cause the IS curve to shift to the left? A) an increase in government expenditures B) a decrease in the money supply C) an increase in domestic investment D) a decrease in taxes ANSWER B
If a country has a large deficit in its current account A) it has a large surplus in its financial account. B) it exports more than it imports. C) it is a net creditor to the rest of the world. D) None of the above are necessarily true. ANSWER A
A central bank’s international reserves consists of its holdings of A) gold. B) silver and gold. C) foreign assets and gold. D) domestic assets and precious metals. E) foreign and domestic currency holdings. ANSWER C
The future date on which the currencies are actually exchanged is called what? A) the value date B) the spot exchange date C) the two-day window D) the commitment date E) the forward exchange rate ANSWER A
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
The current account is equal to A) S – I. B) C + I + G + X. C) I + X. D) T – G. ANSWER A
It may be argued that Japan’s explicit promotion of its microchip industry was an excellent example of successful industrial policy. What criteria would you apply to determine whether such a policy is or is not successful? Judging from your own stated criteria, was Japan’s exercise successful? Why or why not? What information would a government […]