1. The principle of comparative
advantage:
a) Applies only when the gold standard is in effect
b) Is the basic reason that the United States has been running trade deficits
c) States that it is advantageous to export more than you import
d) States that total output is greatest when each product is made by the
country that has the lowest opportunity cost
2. At the core of the American trade
problem is that:
a) Americans spend too much on consumption
b) The dollar is too low
c) The Japanese are excluding American products by means of high protective
tariffs
d) American manufacturers are too quality conscious and should instead
concentrate on reducing costs
3. High protective tariffs:
a) Would be supported by most economists
b) Will become more likely if we do not reduce our trade deficit
c) Have very little support
d) Would definitely solve all our trade problems
4. A hollow corporation:
a) Makes goods abroad and ships them to the united states
b) Makes goods in the united states and ships them abroad
c) Imports foreign goods and puts its own name on them
d) Makes goods in the united states and has then sold abroad under another
company's name
5. Which statement is TRUE?
a) The Japanese have not been selling below cost nor taking advantage of
economies of scale
b) The Japanese have been selling below cost and have been taking advantage of
economies of scale
c) The Japanese have selling below cost but have not been taking advantage of
economies of scale
d) The Japanese have been taking advantage of economies of scale but have not
been selling below cost
6. The Chinese economic expansion since
the early 1980's and the Japanese economic expansion from the late 1940's
through the 1980's were:
a) Virtually identical
b) Both dependent on the American market
c) Based in the economic principles of Karl Marx
d) Based on closing their domestic markets to American goods and services
7. The least applicable argument for
protection of U.S. industry against foreign competition is the _____ argument.
a) National security
b) Infant industry
c) Low wage
d) Employment
8. A balance-of –trade surplus exists:
a) If the dollar value of exports exceeds the dollar value of imports
b) If the dollar value of imported capital exceeds the dollar value of exports
c) Only if there is relative price inflation domestically
d) Only if full employment exists domestically
9. Which statement is False?
a) Chinese factories have been pirating American goods and selling those
products in China
b) Most often "made in China" is actually made elsewhere by multinational
companies that use china as a final assembly station
c) Both China and Japan have closed markets to American-made products
d) Our trading position with Japan is very much like a colony and a colonial
power
10. Which statement is FALSE?
a) If the U.S. can produce rice more efficiently than Japan can, the U.S.
enjoys an absolute advantage
b) Economists dislike both tariffs and import quotas
c) Under the law of comparative advantage, total output is greatest when each
product is made by the country that produces it most efficiently
d) No nation will engage in trade with another nation unless it will gain by
that trade
11. Which statement is TRUE?
a) Nations should strive for self-sufficiency
b) The U.S. balance of trade has always been positive
c) Our biggest trade deficit was a little over $150 billion
d) The U.S. balance of trade turned negative in the mid-1970's
12. Which statement is TRUE?
a) The U.S. is both the world's leading creditor nation and the leading debtor
nation
b) The U.S. is neither the world's leading creditor nation nor the world's
leading debtor nation
c) The U.S. is the world's leading creditor nation and not the world's leading
debtor nation
d) The U.S. is the world's leading debtor nation and not the world's leading
creditor nation
13. Each of the following is a
requirement of a gold standard EXCEPT:
a) A nation defines its currency in terms of gold
b) A nation's money supply is made up of gold or gold certificates
c) A nation must maintain a fixed ratio between its gold stock and its money
supply
d) There must be no barriers to the free flow of gold into and out of the
country
14. The demise of the gold standard led
to:
a) More international trade
b) Greater and greater devaluation
c) Freely floating exchange rates
d) Balance-of-payment surpluses
15. A U.S. importer of French wine would
pay in:
a) Dollars
b) Gold
c) Euros
d) Special drawing rights
16. If we were on an international gold
standard:
a) Inflation would be eliminated
b) Recessions would be eliminated
c) Trade deficits and surpluses would be eliminated
d) No nation would ever have to devaluate its currency
17. Appreciation of the Canadian dollar
will:
a) Intensify an existing disequilibrium in Canada's balance of payments
b) Make Canada's exports less expensive and its imports more expensive
c) Make Canada's exports more expensive and its imports less expensive
d) Make Canada's exports and imports both more expensive
18. Freely floating exchange rates are
determined by the:
a) Forces of supply and demand for currencies
b) Government with a trade surplus
c) Government with a trade deficit
d) IMF
19. Depreciation of the dollar relative
to the yen means that the:
a) Dollar price of the yen has fallen
b) Yen prices of Japanese goods have increased to the Japanese
c) Dollar prices of imported goods from Japan have increased
d) Yen are less expensive to Americans
20. Under a system of freely flexible
(floating) exchange rates an American trade deficit with Mexico will tend to
cause:
a) The United States government to ration pesos to American importers
b) A flow of gold from the United States to Mexico
c) An increase in the peso price of dollars
d) An increase in the dollar price of pesos
advantage:
a) Applies only when the gold standard is in effect
b) Is the basic reason that the United States has been running trade deficits
c) States that it is advantageous to export more than you import
d) States that total output is greatest when each product is made by the
country that has the lowest opportunity cost
2. At the core of the American trade
problem is that:
a) Americans spend too much on consumption
b) The dollar is too low
c) The Japanese are excluding American products by means of high protective
tariffs
d) American manufacturers are too quality conscious and should instead
concentrate on reducing costs
3. High protective tariffs:
a) Would be supported by most economists
b) Will become more likely if we do not reduce our trade deficit
c) Have very little support
d) Would definitely solve all our trade problems
4. A hollow corporation:
a) Makes goods abroad and ships them to the united states
b) Makes goods in the united states and ships them abroad
c) Imports foreign goods and puts its own name on them
d) Makes goods in the united states and has then sold abroad under another
company's name
5. Which statement is TRUE?
a) The Japanese have not been selling below cost nor taking advantage of
economies of scale
b) The Japanese have been selling below cost and have been taking advantage of
economies of scale
c) The Japanese have selling below cost but have not been taking advantage of
economies of scale
d) The Japanese have been taking advantage of economies of scale but have not
been selling below cost
6. The Chinese economic expansion since
the early 1980's and the Japanese economic expansion from the late 1940's
through the 1980's were:
a) Virtually identical
b) Both dependent on the American market
c) Based in the economic principles of Karl Marx
d) Based on closing their domestic markets to American goods and services
7. The least applicable argument for
protection of U.S. industry against foreign competition is the _____ argument.
a) National security
b) Infant industry
c) Low wage
d) Employment
8. A balance-of –trade surplus exists:
a) If the dollar value of exports exceeds the dollar value of imports
b) If the dollar value of imported capital exceeds the dollar value of exports
c) Only if there is relative price inflation domestically
d) Only if full employment exists domestically
9. Which statement is False?
a) Chinese factories have been pirating American goods and selling those
products in China
b) Most often "made in China" is actually made elsewhere by multinational
companies that use china as a final assembly station
c) Both China and Japan have closed markets to American-made products
d) Our trading position with Japan is very much like a colony and a colonial
power
10. Which statement is FALSE?
a) If the U.S. can produce rice more efficiently than Japan can, the U.S.
enjoys an absolute advantage
b) Economists dislike both tariffs and import quotas
c) Under the law of comparative advantage, total output is greatest when each
product is made by the country that produces it most efficiently
d) No nation will engage in trade with another nation unless it will gain by
that trade
11. Which statement is TRUE?
a) Nations should strive for self-sufficiency
b) The U.S. balance of trade has always been positive
c) Our biggest trade deficit was a little over $150 billion
d) The U.S. balance of trade turned negative in the mid-1970's
12. Which statement is TRUE?
a) The U.S. is both the world's leading creditor nation and the leading debtor
nation
b) The U.S. is neither the world's leading creditor nation nor the world's
leading debtor nation
c) The U.S. is the world's leading creditor nation and not the world's leading
debtor nation
d) The U.S. is the world's leading debtor nation and not the world's leading
creditor nation
13. Each of the following is a
requirement of a gold standard EXCEPT:
a) A nation defines its currency in terms of gold
b) A nation's money supply is made up of gold or gold certificates
c) A nation must maintain a fixed ratio between its gold stock and its money
supply
d) There must be no barriers to the free flow of gold into and out of the
country
14. The demise of the gold standard led
to:
a) More international trade
b) Greater and greater devaluation
c) Freely floating exchange rates
d) Balance-of-payment surpluses
15. A U.S. importer of French wine would
pay in:
a) Dollars
b) Gold
c) Euros
d) Special drawing rights
16. If we were on an international gold
standard:
a) Inflation would be eliminated
b) Recessions would be eliminated
c) Trade deficits and surpluses would be eliminated
d) No nation would ever have to devaluate its currency
17. Appreciation of the Canadian dollar
will:
a) Intensify an existing disequilibrium in Canada's balance of payments
b) Make Canada's exports less expensive and its imports more expensive
c) Make Canada's exports more expensive and its imports less expensive
d) Make Canada's exports and imports both more expensive
18. Freely floating exchange rates are
determined by the:
a) Forces of supply and demand for currencies
b) Government with a trade surplus
c) Government with a trade deficit
d) IMF
19. Depreciation of the dollar relative
to the yen means that the:
a) Dollar price of the yen has fallen
b) Yen prices of Japanese goods have increased to the Japanese
c) Dollar prices of imported goods from Japan have increased
d) Yen are less expensive to Americans
20. Under a system of freely flexible
(floating) exchange rates an American trade deficit with Mexico will tend to
cause:
a) The United States government to ration pesos to American importers
b) A flow of gold from the United States to Mexico
c) An increase in the peso price of dollars
d) An increase in the dollar price of pesos
