Question # 1

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.

Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of.

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Research and development subsides.

Loan guarantees

Low interest rate loans

All of the above

_____________ 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

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.

Current account deficits are offset by

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Merchandise trade deficits

Merchandise trade surpluses

Capital /financial account surpluses

Capital /financial account deficits

__________ is a said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries infavor of member countries.

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Trade creation

Trade diversion

Trade exclusion

Trade distortion

International trade in good sand services is sometimes used as a substitute for all of the following except.

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Internationals movement of capital

International movement of labor

International movements of technology

Domestic production of different goods and services.

A country transactions with the rest of the world are recorded in the

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Balance of international indebtedness

Balance of financial transactions

Balance of payments

Income statement

All of the following are fundamental to the world trade organization except.

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Bilateral tariff reductions to promote trade liberalization.

the use of the most favored nation clause

Nondiscrimination trading relationships

The prohibition of import quotas and export quotas

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

Small nations with more than one major trading partner lend to peg the value of their currencies to.

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gold

silver

a single currency

a basket of currencies

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

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

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

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

The trade model of the Swedish economists Hackscher and Ohlin maintains that.

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Absolute advantage determines the distribution of the gain from trade

Comparative advantage determines the distribution of the gains from trade.

The division of labor is limited by the size of the world market

A country exports goods for which its resource endowment are most suited.

The difference between what consumers have to pay for a particular and what they are willing to pay is known as.

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Consumer surplus

Producer surplus

Dead weight costs

Dead weight surplus

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

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.

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize.

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Pegged exchange rates

Freely floating exchanged rates

Managed floating exchange rates

Crewing exchange rates.

according to factor price equalization theorem, if country A is labor abundant then once trade opens.

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Wages and rents should fall in A

Wages and rents should rise in A

Wages should rise and rents should fall in A

Wages should fall and rents should rise in A

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