Question # 1

Similar to import tariffs import quotas tend to result in.

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Higher prices ad reduced imports

Increased government revenue

Increases consumer surplus

Decreased producer surplus

The role of _________ is to direct one nation's savings into investments of another nation

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Merchandise trade flows

Service flows

Current account flows

Capital flows

The reduction or covering of foreign exchange risk is called.

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Hedging

Speculation

Intervention

Arbitrage

The factor endearment model of international trade was developed by.

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Adam Smith

David Ricardo

John Stuart Mill

Eli Heckscher and Beril Ohlin

In the calculation of gross domestic product net exports are.

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The sum of merchandise trade and services

The current account plus long term capital

The value of merchandise exports minus imports

Short term capital plus the basic balance

Quotas are government imposed limits on the ___ of goods trade between countries.

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Prices

Quantity

Revenue

Costs

The relationship between the exchange rate ad the prices of tradable goods is known as the.

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Purchasing power parity theory

Asset markets theory

Monetary theory

Balance of payments theory

The difference between a country's balances of payments and its balance of international indebtedness.

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Is equal of official reserve transactions

Occurs because of foreign exchange fluctuations

Reflects statistical discrepancies

Reflects the difference between flow and stock concepts

If a country has a bowed out production possibility frontier then production is said to be subject to.

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Constant opportunity costs

Decreasing opportunity costs

First increasing and than decreasing opportunity costs

Increasing opportunity costs

Which financial instruments provide a buyer the right to purchase or sell a fixed amount of currency at a prearranged price within a few days to a coupled of years.

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Letter of credit

Foreign currency option

Cable transfer

Bill of exchange

Intra industry trade therory.

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Explains why the United States might export autos and import clothing

Explains why the united states might export and import differentiated versions of the same product such as different type of autos.

Assumes that transport costs are very low or do not exist

Ignores seasonal considerations for agricultural goods

To stabilize the prices of primary products international commodity agreements have utilized all of the following except.

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Tariff -rate quotas applied to imported goods.

Production and export controls.

Buffer stocks

Multilateral contracts

The earliest statement of the principle of comparative advantage in associated with

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Adam Smith

David Ricardo

E . Heckscher

Bertil Ohlin

According to the Hackscher - Ohlin model the source of comparative advantage is a country's

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Technology

Advertising

Factor endowments

both a and c

The theory of ___________ suggests that government can assist domestic companies in capturing economic profits from foreign competitors

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International dumping

Countervailing duties

Strategic trade policy

Export promotion policy

Most tariffs have

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Only revenue effects

Only protective effects

Both protective ad revenue effects

Neither protective or revenue effects

increase foreign competition tend to.

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Intensify inflationary pressure at home

Induce falling output per worker hour for domestic workers

Place constraints on the wages of domestic workers

Increase profits of domestic import competing industries.

When the price of foreign currency exchange is above the equilibrium level.

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An excess demand for that currency exists in the foreign exchange market.

An excess supply of the currency exists in the foreign exchange market

The demadn for foreign exchange shifts outward to the right

The demand for foreign exchange shifts backward to the left.

_____________ represent the most widely used tool in international finance for measuring the average value of a currency relative to a number of other currencies

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Nominal exchange rates

Real exchange rates

Cross exchange rates

Exchange rate indexes

Debit entries on the balance of payments are the entries that would.

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Mean a loss of foreign exchange

Bring foreign exchange into the country

Indicate a surplus exists

Exist at the bottom line a after all accounts are totaled.

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