Question # 1

A widely used indicator to differentiate developed countries from developing countries is.

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International trade per captia

Real income per capita

Unemployment per capita

Calories per capita

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.

International trade is based o the notion that.

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Different currencies are an obstacle to international trade

Goods are more mobile internationally than are resources

Resources are more mobile internationally that are goods

A country's exports should always exceeds its imports

According to the cost based definition of dumping occurs when a firm sells a product abroad at a price that is less than

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Average total cost

Average variable cost

Average fixed cost

Marginal cost

If a country has a linear production possibilities frontier then production is said to be subject to.

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Constant opportunity costs

Decreasing opportunity costs

First increasing and then decreasing opportunity costs

Increasing opportunity costs

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.

A feasible effect of international trade is that a

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Monopoly in the home market become an oligopoly in the world market

Oligopoly in the home market becomes a monopoly in the world market

Purely competitive firm in the home market becomes an oligopolistic

Purely competitive firm in the home market becomes a monopolist

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.

Which of the following organizations primarily provides long term loans to developing countries to help them develop their infrastructure such as schools hospitals and roads.

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World Bank

International Monetary fund

Council on foreign Relations

Organization of petroleum exporting countries

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 result of antidumping tariffs is to.

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increase consumer surplus in the importing country

Decrease producer surplus in the importing country

Impose a price floor on foreign prices in the importing country

Impose a price celling on foreign prices in the importing county

In the classical model of Ricardo the direction of trade is determined by

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Absolute advantage

Comparative advantage

Physical advantage

Which way the wind blows

A country that is a net international debtor initially experiences a.

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Larger savings pool available finance domestic spending

Higher interest rate which leads lower domestic investment.

Loss of funds to trading partners overseas

Decrease in tis services exports to other countire.

If a nation has an open economy it means that the nation.

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Allows private ownership of capital

Has flexible exchange rates

Has fixed exchange rates

Conducts trade with other countries

All of the following are trade problems of developing countries except.

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Unstable export markets

improving terms of trade

Limited access to the markets of industrial countries

Highly elastic demand curves for their products.

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.

Direct investment and security purchases are classified as.

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Capital account transactions

Current account transactions

Unilateral transfer transactions

Merchandise trade transactions

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

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Prices

Quantity

Revenue

Costs

Debit (-) items in the balance of payments correspond to anything that.

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Involve receipts from foreigners

Involves payments to foreigners

Increase the domestic money supply

Decrease the demand for foreign exchange

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

That the division of labor is limited by the size of th market best applies to which explanation of trade.

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Factor endowment theory

Product like cycle theory

Economics of scale theory

Over lapping demand theory

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