Question # 1

A current account surplus implies that

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The country is a net lender to the rest of the world

The country is running a net capital account surplus

Foreign investment in domestic securities is at very low levels

All of the above

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.

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

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

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

The gain from international trade are closely related to.

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the labor theory of value

How much the autarky price differs from international terms of trade change.

The fact that a country must lose from trade

All of the above

Direct investment and security purchases are classified as.

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Capital account transactions

Current account transactions

Unilateral transfer transactions

Merchandise trade transactions

Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differtial in excess of transaction costs are called.

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Differential actions

Cash transactions

Arbitrage

Forward transactions

__________ policies attempt to foster industrialization by establishing high barriers to import of foreign goods to promote local production.

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absolute advantage

Comparative advantage

Export led growth

Import substitution

Which trade policy results in the government levying both a specific tariff and an advalorem tariff on imported goods.

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Compound tariff

Nominals tariff

Effective tariff

Revenue tariff

The current account includes

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The value of trade in merchandise

Services

Unilateral transfers

All of the above

The asset market approach is most helpful in explaining.

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Why exchange rate remain quite stable

Why government change their money supplies

Long term exchange rate movements

Short term exchange rate movements

The least common type of transaction in the foreign exchanges is a.

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Forward transaction

Spot transaction

Swap transaction

None of the above

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

International trade forces domestic firms to become more completive in terms of.

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The introduction of new products

Product design and quality

Product price

All of the above

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

The NAFTA is a

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Monetary union

Free trade area

Common market

Customs union

A sudden shift from import tariffs to free trade may induce short term unemployment in.

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Import competing industries

Industries that are only exporters

Industries that sell domestically as well as export

Industries that neither import nor export

Investors engage in ____ when they move funds into foreign currencies in order to take advantage of interest rates abroad the are higher than domestic interest rates.

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Currency arbitrage

Interest arbitrage

Short positions

Long positions

The movement to free international trade is most likely to generate short term unemployment in which industries'.

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Industries in which there are neither imports nor exports

Import competing industries.

Industries that sell to domestic and foreign buyers

Industries that sell to only foreign buyers

The product cycle theory of trade is essentially a

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Static short run trade theory

Dynamic, long run trade theory

Zero sum theory of trade

Negative sum theory of trade

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