What is the difference between the monetary approach to the exchange rate and monetary approach to the balance of payments? Briefly summarize the policy implications of the monetary approach. What will be an ideal response? ANSWER With the MABP there are not exchange rate changes so international reserve flows respond to changes in PF, […]
The assumption of increasing opportunity costs in the HO model increases the likelihood that A) there will be incomplete specialization in production after trade begins. B) countries will be better off with free international trade. C) countries will maximize their standards of living from free international trade. D) All of the above. ANSWER A
A key element in outward-looking development policies is to maintain open markets so that internal prices reflect world prices. Indicate whether the statement is true or false ANSWER TRUE
The O in OLI theory stands for ownership, and the asset owned can be tangible or intangible. Indicate whether the statement is true or false ANSWER TRUE
The net effect of a devaluation on economic growth depends on the mix of capital and labor utilized in the nation’s export industries. Indicate whether the statement is true or false ANSWER TRUE
Given the information in the table above, if it is ascertained that Foreign uses prison-slave labor to produce its exports, then home should A) export cloth. B) export widgets. C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth. ANSWER A
Which of the following is TRUE according to the case study on U.S. / China trade presented in the chapter? A) China has relative abundance in capital. B) China has relative abundance in skilled labor. C) The United States has relative scarcity in unskilled labor. D) The United States has relative scarcity in capital. […]
Based on Table 9.2, total savings, private plus public, is equal to A) 3 percent of GNP. B) 18 percent of GNP. C) 16 percent of GNP. D) 20 percent of GNP. E) None of the above. ANSWER C
The “Four Freedoms” do NOT include the right to A) vote in local elections. B) migrate within the EU. C) write insurance policies throughout the EU. D) open bank accounts anywhere in the EU. E) move goods from one country to another inside the EU. ANSWER A
Rich country to poor country migration is relatively uncommon. Indicate whether the statement is true or false ANSWER TRUE
