International Econ. Chapter 1

1. 1From 1960 to 2012

   1. Athe U.S. economy roughly tripled in size.
   2. BU.S. imports roughly tripled in size.
   3. Cthe share of US Trade in the global economy roughly tripled in size.
   4. DU.S. Imports roughly tripled as compared to U.S. exports.
   5. EU.S. exports roughly tripled in size.
2. 2The United States is less dependent on trade than most other countries because
   

   1. Athe United States is a relatively large country with diverse resources.
   2. Bthe United States is a "Superpower."
   3. Cthe military power of the United States makes it less dependent on anything.
   4. Dthe United States invests in many other countries.
   5. Emany countries invest in the United States.
3. 3Theories of international economics from the 18th and 19th Centuries are

   1. Anot relevant to current policy analysis.
   2. Bonly of moderate relevance in today's modern international economy.
   3. Chighly relevant in today's modern international economy.
   4. Dthe only theories that actually relevant to modern international economy.
   5. Enot well understood by modern mathematically oriented theorists.
4. 4An important insight of international trade theory is that when two countries engage in voluntary trade
   

   1. Aone country always benefits at the expense of the other.
   2. Bit is almost always beneficial to both countries.
   3. Cit only benefits the low wage country.
   4. Dit only benefits the high wage country.
   5. Eit is almost never beneficial to both countries.
5. 5If there are large disparities in wage levels between countries, then
   

   1. Atrade is likely to be harmful to both countries.
   2. Btrade is likely to be harmful to the country with the high wages.
   3. Ctrade is likely to be harmful to the country with the low wages.
   4. Dtrade is likely to be harmful to neither country.
   5. Etrade is likely to have no effect on either country.
6. 6The benefits of international trade are derived from trade in
   

   1. Atangible goods only.
   2. Bintangible goods only.
   3. Cgoods but not services.
   4. Dservices but not goods.
   5. Eanything of value.
7. 7Which of the following does NOT belong?

   1. ANAFTA
   2. BUruguay Round
   3. CWorld Trade Organization
   4. Dnon-tariff barriers
   5. Emajor free trade agreements of the 1990s
8. 8International economics ________ use the same fundamental methods of analysis as other branches of economics, because ________.
   

   1. Adoes not, the level of complexity of international issues is unique
   2. Bdoes not, the interactions associated with international economic relations is highly mathematical
   3. Cdoes not, international economics takes a different perspective on economic issues
   4. Ddoes not, international economic policy requires cooperation with other countries
   5. Edoes, the motives and behavior of individuals are the same in international
      trade as they are in domestic transactions
9. 9Because the Constitution forbids restraints on interstate trade
   

   1. Athe U.S. may not impose tariffs on imports from NAFTA countries.
   2. Bthe U.S. may not affect the international value of the $ U.S.
   3. Cthe U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State.
   4. Dthe U.S. may not impose export duties.
   5. Ethe U.S. may not disrupt commerce between Florida and Hawaii.
10. 10Which of the following is NOT a major concern of international economic theory?

    1. Aprotectionism
    2. Bthe balance of payments
    3. Cexchange rate determination
    4. Dbilateral trade relations with China
    5. Ethe international capital market

11. 11"Trade is generally harmful if there are large disparities between countries in wages."
    

    1. AThis is generally true.
    2. BThis is generally false.
    3. CTrade theory has nothing to say about this issue.
    4. DThis is true if the trade partner ignores child labor laws.
    5. EThis is true if the trade partner uses prison labor.
12. 12Who sells what to whom

    1. Ahas been a major preoccupation of international economics.
    2. Bis not a valid concern of international economics.
    3. Cis not considered important for government foreign trade policy since such decisions are made in the private competitive market.
    4. Dis determined by political rather than economic factors.
    5. Eis less important than international economic theory.
13. 13The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by
    

    1. AAdam Smith.
    2. BDavid Hume.
    3. CDavid Ricardo.
    4. DEli Heckscher.
    5. ELerner and Samuelson.
14. 14After World War II, the United States has pursued a broad policy of

    1. Astrengthening "Fortress America" protectionism.
    2. Bremoving barriers to international trade.
    3. Cisolating Iran and other members of the "axis of evil."
    4. Dprotecting the U.S. from the economic impact of oil producers.
    5. Erestricting trade of manufactured goods.
15. 15The balance of payments has become a central issue for the United States because

    1. Awhen the balance of payments is not balanced, society is unbalanced.
    2. Bthe U.S. economy cannot grow when the balance of payments is in deficit.
    3. Cthe U.S. has run huge trade deficits in every year since 1982.
    4. Dthe U.S. never experienced a surplus in its balance of payments.
       the U.S. never experienced a surplus in its balance of payments.
    5. Ethe U.S. once ran a large trade surplus of about $40 billion.
16. 16The euro, a common currency for most of the nations of Western Europe, was introduced
    

    1. Abefore 1900.
    2. Bbefore 1990.
    3. Cbefore 2000.
    4. Din order to snub the pride of the U.S.
    5. Ein order to fix currencies in terms of the U.S dollar.
17. 17During the first three years of its existence, the euro
    

    1. Adepreciated against the $U.S.
    2. Bmaintained a strict parity with the $U.S.
    3. Cstrengthened against the $U.S.
    4. Dproved to be an impossible dream.
    5. Eexported exclusively to the U.S.
18. 18The study of exchange rate determination is a relatively new part of international economics, since
    

    1. Afor much of the past century, exchange rates were fixed by government action.
    2. Bthe calculations required for this were not possible before modern computers became available.
    3. Ceconomic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
    4. Ddynamic overshooting asset pricing models are a recent theoretical development.
    5. Ethe exchange rate never fluctuates.
19. 19A fundamental problem in international economics is how to produce

    1. Aa perfect degree of monetary harmony.
    2. Ban acceptable degree of harmony among the international trade
    3. Ca world government that can harmonize trade and monetary policies
    4. Da counter-cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country.
    5. Ea worldwide form of currency.
20. 20For almost 70 years international trade policies have been governed
    

    1. Aby the World Trade Organization.
    2. Bby the International Monetary Fund.
    3. Cby the World.
    4. Dby an international treaty known as the General Agreement on Tariffs and Trade (GATT).
    5. Eby the North American Free Trade Agreement (NAFTA).
21. 21The international capital market is
    

    1. A) the place where you can rent earth moving equipment anywhere in the world.
    2. Ba set of arrangements by which individuals and firms exchange money now for promises to pay in the future.
    3. Cthe arrangement where banks build up their capital by borrowing from the Central Bank.
    4. Dthe place where emerging economies accept capital invested by banks.
    5. Eexclusively concerned with the debt crisis that ended in the 1990s.
22. 22International capital markets experience a kind of risk not faced in domestic capital markets, namely
    

    1. A"economic meltdown" risk.
    2. BFlood and hurricane crisis risk.
    3. Cthe risk of unexpected downgrading of assets by Standard and Poor.
    4. Dthe risk of exchange rate fluctuations.
    5. Ethe risk of political upheaval.
23. 23Since 1994, trade rules have been enforced by
    

    1. Athe WTO.
    2. Bthe G10.
    3. Cthe GATT.
    4. DThe U.S. Congress.
    5. Ethe European Union.
24. 24In 1998 an economic and financial crisis in South Korea caused it to experience
    

    1. Aa surplus in their balance of payments.
    2. Ba deficit in their balance of payments.
    3. Ca balanced balance of payments.
    4. Dan unbalanced balance of payments.
    5. Ea lull in international trade.
25. 25In 1999, demonstrators representing a mix of traditional and new ideologies disrupted a major international trade meeting in Seattle of
    

    1. Athe OECD.
    2. BNAFTA.
    3. Cthe WTO.
    4. DGATT.
    5. Ethe G8.
26. 26International Economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know

    1. Atheir theory is the best available.
    2. Btheir theory is internally consistent.
    3. Ctheir theory passes the "reasonable person" legal criteria.
    4. Dtheir theory is good enough to explain the international trade that is actually observed.
    5. Etheir theory accounts for China's unique position in international trade.
27. 27Trade theorists have proven that the gains from international trade
    

    1. Amust raise the economic welfare of every country engaged in trade.
    2. Bmust raise the economic welfare of everyone in every country engaged in trade.
    3. Cmust harm owners of "specific" factors of production.
    4. Dwill always help "winners" by an amount exceeding the losses of "losers."
    5. Eusually outweigh the benefits of protectionist policies.
28. 28The international financial crisis of 2007 was the result of
    

    1. Afailure of the Euro currency.
    2. Brunaway inflation in the U.S.
    3. Ca deep global recession.
    4. Dthe collapse of global currency markets.
    5. Edefaults on U.S. mortgage-backed securities.
29. 29In September 2010, the finance minister of ________ declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the ________.
    

    1. AEngland; pound sterling
    2. BGermany; euro
    3. CJapan; yen
    4. DChina; renminbi
    5. EBrazil; Real
30. 30Cost-benefit analysis of international trade
    

    1. AA) is basically useless.
    2. BB) is empirically intractable.
    3. CC) focuses attention primarily on conflicts of interest within countries.
    4. DD) focuses attention on conflicts of interest between countries.
    5. EE) never leads to government intervention in international trade.
31. 31An improvement in a country's balance of payments means a decrease in its balance of payments deficit, or an increase in its surplus. In fact we know that a surplus in a balance of payments
    

    1. AA) is always beneficial.
    2. BB) is usually beneficial.
    3. CC) is never harmful.
    4. DD) is sometimes harmful.
    5. EE) is always harmful.
32. 32The GATT is
    

    1. AA) an international treaty.
    2. BB) an international U.N. agency.
    3. CC) an international IMF agency.
    4. DD) a U.S. government agency.
    5. EE) a collection of tariffs.
33. 33The international debt crisis of early 1982 was precipitated when ________ could not pay its international debts.
    

    1. AA) Russia
    2. BB) Mexico
    3. CC) Brazil
    4. DD) Malaysia
    5. EE) China
34. 34International economics can be divided into two broad sub-fields
    

    1. AA) macro and micro.
    2. BB) developed and less developed.
    3. CC) monetary and barter.
    4. DD) international trade and international money.
    5. EE) static and dynamic.
35. 35International monetary analysis focuses on
    

    1. AA) the real side of the international economy.
    2. BB) the international trade side of the international economy.
    3. CC) the international investment side of the international economy.
    4. DD) the issues of international cooperation between Central Banks.
    5. EE) the monetary side of the international economy, such as currency exchange.
36. 36The distinction between international trade and international money is not entirely clear because
    

    1. AA) real developments in the trade accounts do not have monetary implications.
    2. BB) the balance of payments includes only real measures.
    3. CC) developments caused by purely monetary changes have no real effects.
    4. DD) trade models focus on real, or barter relationships.
    5. EE) most international trade involves monetary transactions.
37. 37It is argued that global trade tends to be more important to countries with smaller economies than the U.S. Is this empirically verified?
    

    1. ATrue
    2. BFalse
38. 38How are the patterns of international trade, that is the pattern of what different countries export and import, explained?
    

    1. AClimate explains why Brazil exports coffee.
    2. BNatural resources explain why Saudi Arabia exports oil.
    3. CMore generally, differences in labor productivity and in the availability of land, labor, and capital within different countries explain patterns of trade.

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Economics Quiz on International Econ. Chapter 1, created by Lukas Antal on 30/06/2017.

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