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| 1 | |
Over the past several years, the volume of world trade has: |
| | A) | decreased because of increased government regulation of trade through tariffs and quotas |
| | B) | decreased because of the decline in incomes brought on by global recession |
| | C) | increased because of increased government regulation of trade through tariffs and quotas |
| | D) | increased because of improvements in communications and transportation |
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| 2 | |
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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| 3 | |
U.S. exports: |
| | A) | average 4-6 percent of GDP, as do imports |
| | B) | average 18-20 percent of GDP, while imports average 10-12 percent |
| | C) | average 10-12 percent of GDP, while imports average 15-17 percent |
| | D) | average 1-2 percent of GDP, while imports average 4-6 percent |
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| 4 | |
A government agency requires that all agricultural goods entering the country undergo an unduly long inspection process to assure product quality. This is an example of: |
| | A) | an export subsidy |
| | B) | a tariff |
| | C) | a nontariff barrier |
| | D) | a quota |
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| 5 | |
Which of the following will tend to increase U.S. exports to Mexico and reduce Mexican exports to the U.S.? |
| | A) | A decrease in the dollar price of the peso |
| | B) | An appreciation of the dollar relative to the peso |
| | C) | A depreciation of the peso relative to the dollar |
| | D) | An increase in the dollar price of the peso |
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| 6 | |
Answer the next question on the basis of the following production possibilities tables for countries Alpha and Beta:
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In Beta, the domestic opportunity cost of one unit of good X is: |
| | A) | 1 unit of Y |
| | B) | 1.5 units of Y |
| | C) | 2 units of X |
| | D) | 3 units of Y |
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| 7 | |
Answer the next question on the basis of the following production possibilities tables for countries Alpha and Beta:
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According to the concept of comparative advantage: |
| | A) | Alpha should specialize in the production of X; Beta in the production of Y |
| | B) | Alpha should produce some of both goods X and Y |
| | C) | Beta should produce some of both goods X and Y |
| | D) | Beta should specialize in the production of X; Alpha in the production of Y |
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| 8 | |
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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| 9 | |
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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| 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 average living standards in Canada, Mexico, and the U.S. |
| | D) | reduced exports from the U.S. to Mexico and Canada |
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