The figure above represents the demand and cost functions facing a Brazilian Steel producing monopolist. If it were unable to export, and was constrained by its domestic market, what quantity would it sell at what price? What will be an ideal response? ANSWER It would sell 5 (million tons) at a price of $8/ton.
Date: September 10th, 2020
Which of the following are true statements about IBFs? A) IBFs are subject to reserve requirements. B) IBFs are allowed to receive deposits from, and make loans to, nonresidents of the U.S. or other IBFs. C) IBFs are subject to interest rate regulations. D) All of the above. ANSWER B
Date: September 10th, 2020
Fiscal expansion under fixed exchange rates will have what temporary effect? A) the money supply will decrease. B) output will decrease. C) the exchange rate will increase. D) the exchange rate will decrease. E) there will be no effect. ANSWER D
Date: September 10th, 2020
Illustrate the effectiveness of monetary policy with fixed exchange rates. What will be an ideal response? ANSWER The required intervention to maintain the fixed exchange rate will undo any effect on income of an increase or decrease in the money supply. Illustrate by shifting LM curve and then explaining how intervention will return LM […]
Date: September 10th, 2020
It is still the conventional wisdom in the U.S. that compliance with NAFTA requirements is having a deleterious effect on U.S. highway safety standards, on U.S. pollution and other environmental standards, and on U.S. jobs. What facts would proponents of an expansion of NAFTA (e.g., to include all of Central and South American countries) need […]
Date: September 10th, 2020
Reform of a country’s trading system, including the reduction or elimination of trade barriers, is an example of A) an orthodox stabilization plan. B) a heterodox stabilization plan. C) economic populism. D) import substitution industrialization. E) structural reform. ANSWER E
Date: September 10th, 2020
Complaints are often made to the International Trade Commission concerning foreign “dumping” practices. These complaints typically claim that A) U.S. firms are harmed by the unfair pricing of foreign exporters. B) foreign companies are charging exorbitant prices that are higher than the true value of the products. C) foreign companies are charging prices that are […]
Date: September 10th, 2020
By fixing the exchange rate, the central bank gives up its ability to A) adjust taxes. B) increase government spending. C) influence the economy through fiscal policy. D) depreciate the domestic currency. E) influence the economy through monetary policy. ANSWER E
Date: September 10th, 2020
Explain the purpose of the following figure 14-2 from the text in the context of the interest rates on the dollar and the Japanese Yen between 1980 and 2010. What will be an ideal response? ANSWER Since the dollar and the Yen interest rates are not measured in comparable terms, they can move quite […]
Date: September 10th, 2020
All else equal, if Canada raises its interest rates, A) the dollar depreciates. B) the U.S. demand for Canadian dollars increases. C) the Canadian supply of Canadian dollars increases. D) Both A and B. E) Both A and C. ANSWER D
Date: September 10th, 2020
