Question # 1

Import quotas tend to result in all of the following except.

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Domestic producers of the imported good being harmed

Domestic consumers of the imported good being harmed

Prices increasing in the importing country

Price failing in the exporting country.

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

Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no lorger manufacture the product.

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Theory of factor endearments

Theory of overlapping demands

Economies of scale theory

Product life cycle theory.

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

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an excess supply of that currency exists in the foreign exchange market.

an excess demand for that currency exists in the foreign exchange market

The supply of foreign exchange shifts outward to the right

the supply of foreign exchange shifts backward to the left

A tariff that prohibits imports has only

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a revenue effect and redistribution effect

Revenue effect and protection effect

Consumption effect and protection effect

Redistribution effect and consumption effect

A nation wishing to reduce its current account deficit would be advised to.

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Engage in more government spending.

Reduce government taxes

Increase private investment spending

Decrease domestic consumption spending

Nontariff trade barriers could include all of the following except.

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Domestic content laws

Government procurement polices

Health , safety, and environmental standards

Antidumping counter/vialling duties applied to imports.

The national security argument for protection is more likely to be valid when

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The purpose is to maintain protection for an indefinite time period.

The industry is characterized by increasing returns to scale.

the economy operates during a recession

The protected industry provides invaluable goods during periods of war

The difference between bid rates and ask rates is called the

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Profit

Arbitrage

Spread

Forward transaction

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

The arrangement where goods imported from trading partners in the developing world are subject to lower tariff rates than goods from other countries is referred to as.

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Normal trade relation status

Most favored nation status

Generalized system of preferences

Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove payments disequilibrium.

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Dual exchange rates

Adjustable pegged exchange rates

Managed floating exchange rates

Crawling pegged exchange rates.

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

In developed countries tariffs on raw materials tend to be.

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Highest of all

Higher than on manufactured goods

Equal to tariffs on manufactured goods

Lower than on manufactured goods

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

If import licenses are auctioned off to domestic importers in a competitive market their scarcity value accurse to.

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Foreign corporations

Foreign workers

Domestic corporations

The domestic government

A main advantage of specialization results from

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Economics of large scale production

The specializing country behaving as a monoploidy.

smaller production runs resulting in lower unit costs

High wages paid to foreign workers

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

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

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Prices

Quantity

Revenue

Costs

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

Most tariffs have

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Only revenue effects

Only protective effects

Both protective ad revenue effects

Neither protective or revenue effects

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