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| 1 | |
Over the last three decades, the dollar volume of U.S. exports and imports: |
| | A) | has increased in both constant dollar terms and relative to GDP |
| | B) | has increased in constant dollar terms but has decreased relative to GDP |
| | C) | has fallen behind both Germany and Japan |
| | D) | has remained constant both in constant dollar terms and relative to GDP |
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| 2 | |
Two countries, East and West, both produce food and clothing. West can produce both food and clothing using fewer resources than can East. According to the principle of comparative advantage: |
| | A) | West and East can not profitably specialize and trade with one another |
| | B) | both East and West should specialize in the good for which they have a comparative advantage and then trade with one another |
| | C) | West should specialize in both goods and trade with East |
| | D) | East should specialize in both goods and trade with West |
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| 3 | |
Two nations, Gamma and Delta, both produce shoes and dresses. Gamma has a comparative advantage in the production of shoes if: |
| | A) | it can produce shoes with fewer resources than Delta |
| | B) | its domestic opportunity cost of shoes in terms of dresses is lower than Delta's |
| | C) | its supply of shoes is greater than Delta's |
| | D) | it is wealthier than Delta |
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| 4 | |
For a nation to gain from trade, it must have: |
| | A) | no tariffs or other trade barriers |
| | B) | an absolute advantage in the production of at least one good |
| | C) | an absolute advantage in the production of at least two goods |
| | D) | a comparative advantage in the production of at least one good |
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| 5 | |
A decrease in the U.S. demand for Mexican goods will: |
| | A) | increase the demand for the peso and increase its dollar price |
| | B) | increase the supply of the peso and decrease its dollar price |
| | C) | decrease the supply of the peso and increase its dollar price |
| | D) | decrease the demand for the peso and decrease its dollar price |
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| 6 | |
If the dollar appreciates relative to the South Korean won, then: |
| | A) | U.S. goods will be more expensive to the South Koreans |
| | B) | U.S. exports to South Korea will increase |
| | C) | U.S. imports from South Korea will decrease |
| | D) | it will be cheaper for South Koreans to travel in the U.S. |
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| 7 | |
At an exchange rate of $1 = 5 francs, a bottle of French perfume costs a U.S. tourist in Paris $20. If the exchange rate becomes $1 = 4 francs, this same bottle will cost: |
| | A) | $16 |
| | B) | $20 |
| | C) | $24 |
| | D) | $25 |
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| 8 | |
The GATT negotiations that created the WTO were known as the: |
| | A) | Kennedy Round |
| | B) | Tokyo Round |
| | C) | Malaysia Round |
| | D) | Uruguay Round |
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| 9 | |
A tariff: |
| | A) | raises the price of imported goods, increasing the demand for domestic substitutes |
| | B) | lowers the cost of producing domestic goods |
| | C) | offsets the effect of a quota |
| | D) | raises the price of domestic goods, lowering the demand for them |
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| 10 | |
One major outcome of the North American Free Trade Agreement is: |
| | A) | massive investment by Asian companies in Mexico to exploit reduced tariffs |
| | B) | increased unemployment in Mexico |
| | C) | higher living standards in Canada, Mexico, and the U.S. |
| | D) | reduced exports from the U.S. to Mexico and Canada |
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