Quiz
EC 348 Final
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Questions in this quiz (91)
1A main goal for many economic institutions is the provision of public goods. Examples of international public goods are open markets in a recession, capital flows to less developed countries, international money for settlement of international debts, and last-resort lending. Public goods are defined as _____ and _____; while private goods are defined as _____ and _____
- Aa. excludable and rival; non excludable and non rival
- Bb. non excludable and non rival; excludable and rival
- Cc. excludable and non rival; non excludable and rival
- Dd. non excludable and rival; excludable and non rival
2Who attended the Bretton Woods Conference?
- A44 Allied Nations during WWII
- Bb. U.S. and UK prior to the U.S. entrance to WWII
- Cc. U.S., UK and Russia shortly after WWII
- Dd. Germany and Japan during WWII
3The goal of the IMF is
- Aa. assist the economic development of nations through the provision of loans, technical expertise, and advice
- Bb. act as a lender of last resort in the case of a debt or foreign exchange crisis
- Cc. coordinate a series of multilateral trade negotiations in the pursuit of multilateral free trade
- Dd. enforce global trade agreements
4Which of the following is true regarding the IMF?
- Aa. Some countries and many people around the world are opposed to the IMF, given the conditionality of their loans
- Bb. Since many IMF policies require consent from 85% of its members, the U.S. has veto power over many new policy proposals
- Cc. The headquarters for the IMF is in the U.S.
- Dd. All of the above
5Which of the following is true?
- Aa. The U.S ratified approval of the International Trade Organization shortly after the end of WW II, which became the GATT (General Agreement on Tariffs and Trade
- Bb. The original GATT agreement was signed in 1947
- Cc. The International Trade Organization and GATT were different titles for the same international organization created at the Bretton Woods Conference
- Dd. all of the above
6Which round of GATT discussions created the WTO?
- Aa. Kennedy Round
- Bb. Tokyo Round
- Cc. Uruguay Round
- Dd. Doha Round
7Which international economic institution builds funds primarily by borrowing from high income countries, to then provide low and middle income countries with needed loans and grants?
- Aa. IMF
- Bb. World Bank
- Cc. WTO
- Dd. GATT
8The Bretton Woods Conference resulted in two new global reserve assets, Special Drawing Rights (SDRs) and the U.S. Dollar. Today, which of the following are also considered global reserve assets?
- Aa. British Pound (GBP)
- Bb. Japanese Yen (JPY)
- Cc. Euro (EUR)
- Dd. Chinese Yuan (CNY)
- Ee. All of the above
9Which of the following regional trade agreements is specifically characterized by a free trade agreement plus a common external tariff toward non-members?
- Aa. partial trade agreement
- Bb. customs union
- Cc. common market
- Dd. economic union
10Which of the following is true as defined by the World Trade Organization?
- Aa. most favored nation status is defined as treating nations equally to best trading partners, or giving a country the best possible open trading policy
- Bb. national treatment is defined as "all rights granted to domestic goods and firms should be given to foreign goods and firms that are engaged in trade within a country"
- Cc. both of the above
- Dd. neither of the above
11Suppose in an hour's time, France can produce 1 unit of cheese or 0.25 cars. In an hour's time, Germany can produce 2 units of cheese or two cars. What is the relative per unit (opportunity) costs in France for the production of cheese and for the production of cars.
- Aa. 0.25 cars per unit of cheese, and 4 units of cheese per car
- Bb. 4 cars per unit of cheese, and 4 units of cheese per car
- Cc. 4 cars per unit of cheese, and 0.25 units of cheese per car
- Dd. 0.25 cars per unit of cheese, and 0.25 units of cheese per car
12Suppose in an hour's time, France can produce 1 unit of cheese or 0.25 cars. In an hour's time, Germany can produce 2 units of cheese or two cars. Determine comparative advantages for both countries.
- Aa. France has the comparative advantage in producing cheese, Germany the comparative advantage in producing cars
- Bb. Germany has the comparative advantage in producing cheese, France the comparative advantage in producing cars
- Cc. France has the comparative advantage in producing cheese, France the comparative advantage in producing cars
- Dd. Germany has the comparative advantage in producing cheese, Germany the comparative advantage in producing cars
13Suppose in an hour's time, France can produce 1 unit of cheese or 0.25 cars. In an hour's time, Germany can produce 2 units of cheese or two cars. For both countries to benefit from trade, the range for the terms of trade must lie between the following boundaries
- Aa. between 0.25 units of cheese for 1 car, and 1 unit of cheese for 1 car
- Bb. between 1 unit of cheese for 1 car, and 2 units of cheese for 1 car
- Cc. between 1 unit of cheese for 1 car, and 4 units of cheese for 1 car
- Dd. between 0.25 units of cheese for 1 car, and 2 units of cheese for 1 car
14Which of the following is true regarding free trade among countries?
- Aa. It can create a better standard of living for citizens living in free trade countries
- Bb. It can cause unemployment due to economic restructuring, as free trade advocates taking resources from some industries and investing them in industries where a nation has a comparative advantage
- Cc. It often requires countries to fund trade adjustment assistance programs such as retraining those unemployed due to economic restructuring
- Dd. All of the above
15The trade to GDP ratio measures
- Aa. imports/GDP
- Bb. exports/GDP
- Cc. imports + exports/GDP
- Dd. imports + subsidies/GDP
16Interindustry trade is based on gains from _________, while intraindustry trade is based on gains from ___________
- Aa. profits, revenue
- Bb. revenue, profits
- Cc. comparative advantage, economies of scale
- Dd. economies of scale, comparative advantage
17Cost advantages that occur only at the firm level are defined as
- Aa. internal economies of scale
- Bb. product differentiation
- Cc. external economies of scale
- Dd. diseconomies of scale
18The networking effects creating economic benefits for businesses and people living in the Research Triangle Area are most associated with
- Aa. internal economies of scale
- Bb. external economies of scale
- Cc. internal value added scale
- Dd. external value added scale
19Which of the following is most associated with external economies of scale in an industry?
- Aa. networking effects
- Bb. labor pool effects
- Cc. supply chain effects
- Dd. all of the above
20Which of the following is most related to New Trade Theory
- Aa. comparative advantage
- Bb. geography
- Cc. interindustry trade
- Dd. all of the above
21Which of the following is true regarding Industrial Policy?
- Aa. A government subsidy would be an example of industrial policy
- Bb. Industrial policy attempts to address and correct market failure
- Cc. Industrial policy can be used to create new industries
- Dd. All of the above
22Which of the following is a definition or example of rent seeking?
- Aa. an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the environment in which economic activities occur, rather than by creating new wealth
- Bb. a major league baseball player earns an extra salary bonus by hitting 60 home runs in a season
- Cc. an entrepreneur creates a better product than competitors, thus earning higher profits
- Dd. all of the above
23The WTO agreement which covers the global protection of intellectual property rights is
- Aa. TRIMS Agreement
- Bb. SCM Agreement
- Cc. TRIPS Agreement
- Dd. IP Agreement
24Which of the following protectionist policies do WTO members generally consider most transparent?
- Aa. tariffs
- Bb. quotas
- Cc. licence fees
- Dd. customs fees
25Suppose that the world price for a good is 40 and the domestic demand and supply curves are given by the following equations:
D: P= 80 - 2Q S: P= 10 + 3Q
What is the value of consumer surplus in the domestic market at the price of 40?- A400
- B200
26Suppose that the world price for a good is 34 and the domestic demand and supply curves are given by the following equations:
D: P= 80 - 2Q S: P= 10 + 3Q
At the world price of 34, the value of consumer surplus in the domestic market is _____, the value of producer surplus in the domestic market is _____, and domestic consumers will import ______ units of the good.- Aa. 400, 150, 15
- Bb. 529, 96, 15
- Cc. 200, 400, 15
- Dd. 150, 400, 10
27Given the previous questions with a world price of 34, and the domestic demand and supply curves given by the following equations:
D: P= 80 - 2Q S: P= 10 + 3Q
Suppose the government imposes a tariff equal to 6 which increases the price in the domestic market to 40. Given the tariff and new price to consumers, domestic consumers will now import ______ units of the good, the government will collect ______ in tariff revenue, and the total deadweight/welfare loss from lost consumer and producer surplus equals _____.- Aa. 10, 60, 15
- Bb. 15, 6, 6
- Cc. 10, 30, 9
- Dd. 100, 100, 10
28How would an economist determine the optimal licence fee to charge under a quota system?
- Aa. It should equal the amount of consumer surplus lost
- Bb. it should equal the amount of producer surplus lost
- Cc. it should equal the total welfare loss
- Dd. it should equal the amount of government revenue, if instead a tariff was enacted
29In addition to the deadweight/welfare losses created by a tariff, another potential cost of a tariff is
- Aa. retaliation
- Bb. disincentive for industry innovation
- Cc. rent seeking
- Dd. all of the above
30Suppose that in the U.S. bikes are built from a combination of domestic and foreign parts. If a U.S. bike sells for $500 (world price) but requires $300 of imported parts, what will be the effective rate of protection if a 20% tariff is levied on bikes (raising prices on bikes worldwide by 20%)?
Suppose in addition to the 20% tariff on bikes, the U.S. levies a 20% tariff on the imported parts raising their price by 20%. What will be the new effective rate of protection?- Aa. 20%, 20%
- Bb. 20% 50%
- Cc. 0%, 20%
- Dd. 50%, 20%
31Which of the following is a reason that nations protect their domestic industries?
- Aa. revenue
- Bb. cultural protectionism
- Cc. national security
- Dd. all of the above
32According to the text, which condition must exist for an infant industry to be justified in seeking government protection from trade?
- Aa. the industry must have potential economies of scale
- Bb. the industry must have potential positive externalities in addition to the output sold by the firms in the industry
- Cc. there must be a time limit set on the government protection of the industry
- Dd. all of the above
33Of the four legal procedures that American firms have at their disposal for seeking trade protection, __________ are granted in response to foreign subsidies and ___________ are granted when a foreign firm sells in a domestic market at a price that is less than fair value.
- Aa. countervailing duties, antidumping duties
- Bb. Section 301, escape clause relief
- Cc. antidumping duties, countervailing duties
- Dd. antidumping duties, Section 301
34The agency within the U.S. Department of Commerce which investigates claims from U.S. exporting firms harmed by unfair practices from foreign competition is
- Aa. White House Trade Council
- Bb. National Trade Council
- Cc. International Trade Administration
- Dd. SCM Agency
35Which of the following is normally associated with the U.S. Trade Representative?
- Aa. Section 301 action
- Bb. countervailing duty
- Cc. anti-dumping duty
- Dd. all of the above
36Section 301 of the __________ authorizes the President to take all appropriate action against a country engaged in unfair trade practices.
- Aa. U.S. Trade Act of 1931
- Bb. U.S. Trade Act of 1962
- Cc. U.S. Trade Act of 1974
- Dd. U.S. Trade Act of 1984
37The Special 301 Report prepared by the U.S. Trade Representative identifies
- Aa. countries that deny adequate protection of intellectual property rights
- Bb. countries that subsidize their agricultural products in defiance of WTO agreements
- Cc. countries that dump products in violation of WTO agreements
- Dd. all of the above
38Money flows in regard to goods and services and income are a part of the ________, while money flows in regard to assets are a part of the _______.
- Aa. current account, financial/capital account
- Bb. financial/capital account, current account
- Cc. current account, current account
- Dd. financial/capital account, financial/capital account
39A migrant worker in California sending $500 home to his village in Mexico causes a ________________ for the U.S, while an American mutual fund manager using funds from her investors to buy Brazilian telecommunication stocks would be a ________________.
- Aa. credit/inflow in the current account, debit/outflow in the financial/capital account
- Bb. debit/outflow in the current account, credit/inflow in the financial/capital account
- Cc. debit/outflow in the current account, debit/outflow in the financial/capital account
- Dd. credit/inflow in the current account, credit/inflow in the financial/capital account
40Which of the following represents a debit to the U.S. current account?
- Aa. The U.S. exports more than it imports in its trade with Ireland.
- Bb. The U.S. sends aid to countries in the Caribbean in need of repairs from recent hurricanes.
- Cc. U.S. citizens working in Mexican auto plants send their paychecks home to spouses living in the U.S.
- Dd. All of the above
41A Chinese firm purchasing a restaurant on Hillsborough Street is an example of foreign ________ investment, while that same firm purchasing corporate stock in IBM is an example of foreign _________ investment. Foreign direct investment tends to be relatively ______ , while foreign portfolio investment tends to be relatively _______.
- Aa. direct, portfolio. more liquid, less liquid
- Bb. direct, portfolio. less liquid, more liquid
- Cc. portfolio, direct. less liquid, more liquid
- Dd. portfolio, direct. more liquid, less liquid
42Which of the following is true for a country that runs a balance of payments surplus in its current account?
- Aa. There must be a trading partner that runs a balance of payments deficit in its current account.
- Bb. The country can loan its trading partner money to finance its payments for exports.
- Cc. The country can take the currency from its trading partner received in payment for exports to purchase assets in the trading partner country.
- Dd. All of the above
43Which of the following is true for a country that runs a balance of payments deficit in its current account?
- Aa. There must be a trading partner that runs a balance of payments surplus in its current account.
- Bb. The country can receive a loan from its trading partner to finance its payments for imports.
- Cc. The country can sell its assets to the trading partner, as the trading partner selling its goods can purchase those assets with the country's currency obtained in the sale of its goods.
- Dd. All of the above
44Which of the following is true?
- Aa. Given the equation for balance of payments, NX = NS - I, the U.S. has a current account deficit which is offset by total investment (I) in the U.S. being greater than total U.S. national savings (NS)
- Bb. The U.S. current account deficit allows a greater standard of living in the U.S., since U.S. citizens are able to purchase more goods both at home and abroad with trade, than can be produced and purchased within U.S. borders without trade
- Cc. The U.S. current account deficit results in more U.S. jobs and GDP from increased foreign direct investment into the U.S., and lower interest rates in financial markets from increased foreign portfolio investment into the U.S.
- Dd. The U.S. current account deficit that occurred prior to the Great Recession resulted in an increase in foreign portfolio investment, which caused more mortgage backed securities to be created, which ultimately added to the severity of the Great Recession
- Ee. All of the above
45Which of the following was agreed upon in the Basel III Agreement?
- Aa. banks should keep interest rates low
- Bb. Central banks should consult with each other before implementing a new monetary policy
- Cc. banks should increase the amount of their capital and level of liquidity
- Dd. all of the above
46Which of the following can negatively impact a country in a debt crisis?
- Aa. loans from the IMF with mandated economic restrictions
- Bb. an increasing price of the dollar in international markets if debt is denominated in dollars
- Cc. increased government spending for the provision of public goods
- Dd. all of the above
47Which of the following was common among the Asian countries adversely affected in the Asian Crisis during the 1990s?
- Aa. They all had floating/flexible exchange rates
- Bb. They all belonged to the Basel Committee
- Cc. They all had current account deficits
- Dd. All of the above
48Which of the following best describes the moral hazard problem inherent with the IMF or Central Bank responding to a crisis?
- Aa. Once the IMF or a Central Bank lends money to a bank or banks in a country in financial crisis, banks elsewhere may subsequently decide to no longer make as many risky loans to their customers
- Bb. Once the IMF or a Central Bank lends money to a bank or banks in a country in financial crisis, banks elsewhere may subsequently decide to make more risky loans to their customers
- Cc. Once the IMF or a Central Bank lends money to a bank or banks in a country in financial crisis, banks elsewhere may subsequently decide to require much more collateral from their customers
- Dd. moral hazard is not a problem inherent with the IMF or a Central Bank responding to a crisis
49Our federal government created FNMA- Fannie Mae and FHMLC- Freddie Mac
- Aa. in order to provide a secondary mortgage market
- Bb. in order to provide a primary mortgage market
- Cc. in order to regulate Wall Street
- Dd. all of the above
50Which of the following is true regarding the Great Recession?
- Aa. The Federal Reserve's actions to increase the federal funds rate prior to the Great Recession burst the housing bubble, causing the initial losses in the housing industry
- Bb. The Lehman Brothers investment bank became insolvent, meaning that the value of its assets were less than the value of its debt
- Cc. A likely reason why the Lehman Brothers investment bank wasn't bailed out is because of the fear of moral hazard
- Dd. All of the above
51Which of the following is true regarding the Ricardian and Heckscher-Ohlin Theories of comparative advantage?
- Aa. Under the Ricardian Theory, the marginal rate of transformation increases as production increases
- Bb. Under the Heckscher-Ohlin Theory, labor is the only variable
- Cc. Under the Ricardian Theory, the production possibilities curve is a straight line
- Dd. All of the above
52Suppose that the U.S. is endowed with 40 machines and 200 workers, while Canada is endowed with 10 machines and 60 workers. Determine the capital to labor ratio in each country, and from that, determine which country is relatively capital abundant?
- Aa. In the U.S. the capital to labor ratio is 5 workers per machine, in Canada the capital to labor ratio is 6 workers per machine. The U.S. is capital abundant
- Bb. In the U.S. the capital to labor ratio is 1/5 machine per worker, in Canada the capital to labor ratio is 1/6 machine per worker. The U.S. is capital abundant
- Cc. In the U.S. the capital to labor ratio is 5 workers per machine, in Canada the capital to labor ratio is 6 workers per machine. Canada is capital abundant.
- Dd. In the U.S. the capital to labor ratio is 1/5 machine per worker, in Canada the capital to labor ratio is 1/6 machine per worker. Canada is capital abundant.
53Suppose that the production requirements for a unit of steel is 2 machines and 8 workers, and the production requirement for a unit of bread is 1 machine and 8 workers. Determine the capital to labor ratio for steel production and bread production. Which good is relatively capital intensive?
- Aa. For steel the capital to labor ratio is 4 workers per machine, for bread it is 8 workers per machine. Steel is the capital intensive good.
- Bb. For steel the capital to labor ratio is 1/4 machine per worker, for bread it is 1/8 machine per worker. Steel is the capital intensive good.
- Cc. For steel the capital to labor ratio is 4 workers per machine, for bread it is 8 workers per machine. Bread is the capital intensive good.
- Dd. For steel the capital to labor ratio is 1/4 machine per worker, for bread it is 1/8 machine per worker. Bread is the capital intensive good.
54Assume in the U.S. that there is an increasing marginal rate of transformation (MRT) in the production of bread and steel (bread on y-axis, steel on x-axis). Suppose that before trade takes place, the U.S. is at a point on its PPC where it produces 20 loaves of bread and 20 units of steel, and MRT equals 1 . Now assume that trade is possible and the terms of trade are 2 units of bread for 1 unit of steel. If the U.S. then moves along its PPC to a new point producing 10 units of bread and 30 units of steel and engages in trade, which of the following definitely makes the U.S. better off compared to the original combination of 20 loaves of bread and 20 units of steel?
- Aa. The U.S. now produces 10 bread and 30 steel. If the U.S. trades 5 units of bread for 2.5 units of steel, they will have 5 units of bread and 32.5 units of steel.
- Bb. The U.S. now produces 10 bread and 30 steel. If the U.S. trades 10 units of bread for 5 units of steel, they will have 0 units of bread and 35 units of steel.
- Cc. The U.S. now produces 10 bread and 30 steel. If the U.S. trades 10 units of steel for 20 units of bread, they will have 30 units of bread and 20 units of steel.
- Dd. All of the above definitely make the U.S. better off.
55In the Heckscher-Ohlin theory with two goods and increasing costs of production, the optimal point of production on a country's production possibilities curve will occur where
- Aa. the MRT is greater than the terms of trade
- Bb. the MRT is less than the terms of trade
- Cc. the MRT is equal to the terms of trade
- Dd. all of the above
56The ________________ is most associated with the idea that an increase in the price of a good raises the income earned by the factors/inputs that are used intensively in its production
- Aa. Stolper-Samuelson Theorem
- Bb. Specific Factors Model
- Cc. Ricardian Theory of Free Trade
- Dd. Heckscher-Ohlin Trade Theory
57Which of the following is true regarding the Product Cycle Theory?
- Aa. It suggests that the production of high technology goods often takes place in high income countries in the early stage to be closer to investors
- Bb. It suggests that the product is being standardized in the middle stage
- Cc. It suggests that production takes place in the lowest cost location in the late stage
- Dd. All of the above
58While it's possible for both off-shoring and outsourcing to occur under the ______________, it's suggested that firms only engage in off-shoring (not outsourcing) under the __________
- Aa. Product Cycle Theory, OLI Theory
- Bb. OLI Theory, Product Cycle Theory
- Cc. Fannie Mae Theory, Freddie Mac Theory
- Dd. Freddie Mac Theory, Fannie Mae
59Which of the following is an example of a multinational firm?
- Aa. The Acme Fan Company has production facilities in both the U.S. and Canada
- Bb. The London Clock Company produces clocks in the UK and ships them exclusively to retailers in the U.S.
- Cc. The California Motor Works Company produces cars in Los Angeles and hires most workers from Mexico
- Dd. All of the above
60The name of the free trade agreement negotiated with Canada and Mexico by the Trump administration is
- Aa. USMCA
- Bb. NAFTA
- Cc. CUSTA
- Dd. OPEC
61The North American Agreement on Environmental Cooperation and North American Agreement on Labor Cooperation are side agreements negotiated along with which trade agreement?
- Aa. USMCA
- Bb. NAFTA
- Cc. TTIP
- Dd. TIP
62Which of the following would be the best explanation as to why Canada has a greater trade-to-GDP ratio than the U.S.?
- Aa. because Canada discourages trade with the U.S.
- Bb. because Canadians like to pay their workers less money.
- Cc. because the denominator in the ratio is smaller for Canada.
- Dd. because Canada has a larger economy.
63Suppose the current year GDP for Mexico is 100 billion pesos. Also suppose that the actual dollar exchange rate is 3 pesos per dollar, while the purchasing power parity exchange rate is 2 pesos per dollar. Which of the following is true?
- Aa. Mexican GDP (US$) is $33.33, Mexican GDP (PPP) is $50
- Bb. Mexican GDP (US$) is $50, Mexican GDP (PPP) is $33.33
- Cc. Given purchasing power parity, the cost of living in Mexico is higher
- Dd. All of the above
64Which statistic is most accurate in terms of comparing the size of different country's economies?
- Aa. GDP (US$)
- Bb. GDP (PPP)
- Cc. Big Mac Index
- Dd. trade to GDP ratio
65Which of the following is an example of a U.S. Preferential Trade Agreement?
- Aa. Caribbean Basin Initiative
- Bb. Generalized System of Preferences
- Cc. African Growth and Opportunity Act
- Dd. all of the above
66The Treaty of Rome, signed in 1957, created which type of agreement among the European Economic Community?
- Aa. free trade agreement
- Bb. customs union
- Cc. common market
- Dd. economic union
67The EU European Commission's headquarters are located in __________; and the European Central Bank's headquarters are located in __________.
- Aa. Paris, France; Barcelona, Spain
- Bb. Washington, DC; Washington, DC
- Cc. Brussels, Belgium; Frankfurt, Germany
- Dd. Brussels, Belgium; Berlin, Germany
68What are the four freedoms of the Single Market Program created in the Single European Act?
- Aa. goods, services, labor, capital
- Bb. goods, services, exchange rates, capital
- Cc. goods, services, exchange rates, technical barriers
- Dd. goods, services, exchange rates, taxes
69Which of the following was necessary for the successful implementation of the Single European Act?
- Aa. the elimination of customs controls at borders in member countries
- Bb. the elimination of technical barriers in the production of goods and services
- Cc. the Schengen Agreement
- Dd. all of the above
70Which of the three stages of deepening within the European Union created a common market among the countries?
- Aa. European Monetary System
- Bb. Single European Act
- Cc. Maastricht Treaty
- Dd. Frankfurt Treaty
71Which of the following resulted within the Exchange Rate Mechanism when demand for the German mark rose from an increase in German interest rates?
- Aa. the demand for other currencies within the Exchange Rate Mechanism fell
- Bb. German exports became relatively more expensive in the short run with the appreciation of the German mark
- Cc. The UK ultimately left the Exchange Rate Mechanism because of this event
- Dd. all of the above
72Which of the following is true regarding the European Central Bank?
- Aa. it was created within the Maastricht Treaty
- Bb. its main goal upon its founding was to finance public debt as needed in EU countries
- Cc. it does not serve as a central bank in EU countries where the deficit to GDP ratio is above 3%, and/or the debt to GDP ratio is above 60%
- Dd. all of the above
73The main goal of the Stability and Growth Pact is to
- Aa. maintain a stable monetary policy within the EU
- Bb. maintain a stable fiscal policy within the EU
- Cc. maintain an equitable agricultural program within the EU
- Dd. all of the above
74Which of the following is true regarding EU cohesion funds?
- Aa. they are designated for needed infrastructure
- Bb. they are distributed among all current EU nations
- Cc. they are funds distributed within the EU Common Agricultural Policy
- Dd. all of the above
75Which protectionist policy is most likely to also have a licensing fee?
- AVoluntary Export Restraint
- BQuota
- CTariff
- DCustoms Procedures
76Given the reasons discussed for trade protectionism, which one is least likely to be used currently by the US?
- ARevenue
- BLabor
- CNational Security
- DRetailiation
77Which of the following is true regarding free trade?
- Aa. Free trade does not make consumers better off since it generally increases the price of goods that consumers purchase
- Bb. Free trade does not make all workers better off because of economic restructuring that occurs
- Cc. Free trade generally reduces GDP per capita in countries since consumers buy goods from abroad
- Dd. All of the above
78Suppose France and Germany produce both beer and wine, and can trade these goods with each other. In an hour's time, France can produce 3 cases of beer or 1 case of wine. In an hour's time, Germany can produce 12 cases of beer or 6 cases of wine. For both countries to gain from trade given the theory of comparative advantage
- Aa. France should export beer and import wine
- Bb. Germany should export beer and import wine
- Cc. France should export both goods and not import
- Dd. Germany should export both goods and not import
79In markets with external economies of scale, we often see firms working together to share research and ideas. This is best described as
- Aa. interindustry trade
- Bb. networking effects
- Cc. labor pool effects
- Dd. supply chain effects
80Suppose that in the U.S. bikes are built from a combination of domestic and foreign parts. If a U.S. bike sells for $400 (world price) but requires $200 of imported parts, what will be the effective rate of protection if a 10% tariff is levied on bikes (raising prices on bikes worldwide by 10%)?
- Aa. 0%
- Bb. 10%
- Cc. 20%
- Dd. 50%
81Suppose that in the U.S. bikes are built from a combination of domestic and foreign parts. If a U.S. bike sells for $400 (world price) but requires $200 of imported parts, what will be the effective rate of protection if a 10% tariff is levied on bikes (raising prices on bikes worldwide by 10%), and a 10% tariff is levied on the imported parts (raising their price by 10%)?
- A0%
- B10%
- C20%
- D50%
82Which of the following is true?
- Aa. Given the equation for balance of payments, NX = NS - I, the U.S. has a current account deficit which is offset by total investment (I) in the U.S. being greater than total U.S. national savings (NS)
- Bb. The U.S. current account deficit allows a greater standard of living in the U.S., since U.S. citizens are able to purchase more goods both at home and abroad with trade, than can be produced and purchased within U.S. borders without trade
- Cc. The U.S. current account deficit results in more U.S. jobs and GDP from increased foreign direct investment into the U.S., and lower interest rates in financial markets from increased foreign portfolio investment into the U.S.
- Dd. All of the above
83Assume that you are a U.S. citizen. You currently are studying abroad in Spain. You love Spain so much that you decide to purchase a condo in Barcelona, Spain. That purchase of the condo would best be an example of
- Aa. primary income payment
- Bb. secondary income payment
- Cc. foreign direct investment
- Dd. foreign portfolio investment
84Assume that you are a U.S. citizen. You currently are studying abroad in Spain. You love Spain so much that you decide to purchase a condo in Barcelona, Spain. That purchase transaction of the condo is a
- Aa. debit to the U.S. current account
- Bb. credit to the U.S. current account
- Cc. debit to the U.S. financial/capital account
- Dd. credit to the U.S. financial capital account
85Suppose the cost for a new Chevy is $40,000. If the dollar exchange rate is 2 EUR/USD, the cost for someone in Italy to buy the Chevy is ____. If the dollar exchange rate depreciates, this should cause the _____ of dollars to ____ in the international market
- Aa. €80,000, quantity supplied, increase
- Bb. €80,000, quantity demanded, increase
- Cc. €80,000, quantity demanded, decrease
- Dd. €20,000, quantity supplied, increase
86Suppose that the U.S. federal government enacts an expansionary fiscal policy. This will tend to _____ demand for domestic goods, and ____ demand for imported goods.
- Aa. increase, increase
- Bb. decrease, decrease
- Cc. increase, decrease
- Dd. decrease, increase
87Which of the following protectionist policies do WTO members generally consider most transparent?
- Aa. customs fees
- Bb. quotas
- Cc. licence fees
- Dd. tariffs
88If interest rates in the U.S. are less than interest rates in the rest of the world, we would expect this to cause the dollar exchange rate to ____ in the international market; if GDP is growing faster in the U.S. than in economies in the rest of the world, we would expect this to cause the dollar exchange rate to ____ in the international market.
- Aa. depreciate; depreciate
- Bb. appreciate; appreciate
- Cc. depreciate; appreciate
- Dd. appreciate; depreciate
89Which of the following is true regarding the Heckscher-Ohlin Theory?
- Aa. Looking at a nation's range of production possibilities for two goods, it is generally a straight line
- Bb. A country should produce at the point where its marginal rate of transformation is equal to the terms of trade
- Cc. The marginal rate of transformation is constant along its range of production possibilities
- Dd. All of the above
90At the beginning of the Great Depression, which of the following is true regarding the actions taken by the U.S. to maintain the dollar fixed exchange rate as required by the Gold Standard?
- Aa. The U.S. was buying excess dollars in the international market with its gold reserves
- Bb. The U.S. was lowering interest rates to stabilize and maintain the required dollar exchange rate
- Cc. The U.S. was following an expansionary monetary policy to stabilize and maintain the required dollar exchange rate
- Dd. All of the above
91Which of the following is true regarding the Product Cycle Theory?
- Aa. It suggests that the production of high technology goods often takes place in high income countries in the early stage to be closer to investors
- Bb. It suggests that the product is being standardized in the middle stage
- Cc. It suggests that production takes place in the lowest cost location in the late stage
- Dd. All of the above
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- Business/Economics Quiz on EC 348 Final, created by Ansley Paris on 29/04/2021.
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- Ansley Paris
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