Question # 1

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

The balance of trade can only worsen if income_______ relative to absorption

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Increases

Decreases

Does not change

None of the above

The supply of foreign currency tends to be

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Upward sloping

Down ward sloping

Vertical

Any of the above

If a country has a bowed out production possibility frontier then production is said to be subject to.

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Constant opportunity costs

Decreasing opportunity costs

First increasing and than decreasing opportunity costs

Increasing opportunity costs

Dynamic gains from trad could result from

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The stimulus of additional investment spending as markets open

Economies of large scale production as markets open

Additional competition made possible by the opening of markets

All of the above

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

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

The NAFTA is a

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Monetary union

Free trade area

Common market

Customs union

If tastes are identical between countries then comparative advantage is determined by

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Supply conditions only

Demand conditions only

Supply and demand conditions

Can't tell without more information.

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.

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

When imports from a higher cost supplier with in customs union replace imports from a lower cost supplier outside the custom union, there exists.

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Trade creation

Trade diversion

Dynamic welfare effects

Comprehensive welfare efffects

When one country provides most favored nation status for another if agrees to.

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Change that nation's product a lower tariff than any other nations

Charge that nation's products a tariff rate no higher than that on any other nation.

Charge that nation's products a higher tariff than any other nation's

Export to that nation any products that it wants to purchase

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

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Factor endowments

both a and c

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PPSC Economics Chapter 5 International Economics MCQs With Answers

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