Question # 1

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 term of trade is given by theprices.

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Paid to all goods exported by the home country

Received for all goods exported by the home country

Received for exports and paid for imports.

Of primary products as opposed to manufactured products.

Tariff levels in advanced countries tend to be ___ tariff levels in developing countries.

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Higher than

Equal to

Lower than

There is no general pattern

Should international transpiration costs decrease the effect on international trade would include a.

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Increases in the volume of trade

Smaller gain from trade

Decline in the income of home producers

Decrease in the level of specialization in production.

Prohibiting a trade between two people

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Will promote economic efficiency

Probably Will inhibit productive efficiency

Might be necessary if resources are to be put to their most highly valued uses

Will have no effect on other persons.

The effect of the most favored nation clause is to.

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Eliminate all tariffs between countries

Increase all tariff rates between countries.

Maintain a nondiscriminatory structure of tariffs

Maintain a discriminatory structure of tariffs

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

Specific tariffs are collected as

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Fixed amount of money per unit traded

a percentage of the price of the product

A percentage of the quantity of imports

All of the above

Credit (+) items in the balance of payments correspond to anything that.

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Involves receipts from foreigners

Involves payments to foreigners

Increases the domestic money supply

Decrease the demand for foreign exchange

The most widely traded currency in the foreign exchange market is the.

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Euro

Chinses yuan

British pound

U.S. Dollar

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

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Technology

Advertising

Factor endowments

both a and c

the_____________ analysis considers the ability of domestic and foreign prices to adjust to devaluation in the short run.

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Pass through

Absorption

Adjustment mechanism

currency contract period

Which exchange rate mechanism is intended to insulates the balance of payments from short term capital movements while providing exchange rate stability for commercial transactions.

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Dual exchange rates

Managed floating exchange rates

Adjustable pegged exchange rates

Crawling pegged exchange rates.

Trade based on comparative advantage assures that.

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Only the strongest suvrive

Some people are rich and others are poor

Each item is produced using the least amount of time needed to produce it

Each item is produced at as low a cost possible in terms of other things given up

A tax of 18 cents per unit of imported cheese would be an example of a.

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Compound tariff

Effective tariff

Ad valorem tariff

Specific tariff

Import substitution is an example of

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The principle of comparative advantage

The pricnipal of absolute advantage

An outward looking growth strategy

An inward looking growth strategy

According to the Heckscher - Ohlin model

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^{Every one automatically gains from trade}

The gainers from trade out number the losers from trade

The scarce factor necessary gains from trade

None of the above

When all of the debit or credit items in the balance of payments are combined

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Merchandise imports equal merchandise exports

Capital imports equal capital exports

Services exports equal service imports

the total surplus or deficit equals zero

The "balance of trade" is a record of.

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Exports and imports of financial assets

The current account plus capital account

The net export of goods and services

The value of merchandise exports minus imports

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

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