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
Trade without serious income distribution effects is most likely to happen A) in sophisticated manufactures trade between rich countries. B) in simple manufactures trade between developing countries. C) in sophisticated manufactures trade between rich and poor countries. D) in agricultural trade between rich countries. E) in labor-intensive industries like clothing. 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 […]
Which of the following statements about the financial crisis that began in 2008 is true? A) It was a great illustration of how interdependent national economies are. B) Most economists agree that it originated in China. C) It only lasted 3 weeks. D) It only affected housing markets. ANSWER A