Question # 1

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

The comparative advantage model of Ricardo was based on.

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Interindustry specialization and trade

Demand conditions underlying specialization and trade

Income conditions underlying specialization and trade

Which exchange rate system does not require monetary reserves for official exchange rate intervention.

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Floating exchange rates

Pegged exchange rates

Managed floating exchange rates

Dual exchange rates

An important feature of a___ is that the holder has the right , but not the obligation, to buy or sell currency

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Swap

Foreign exchange arbitrage

Foreign exchange option

Futures market contract

A depreciation of the dollar willhave its most pronounced impact on imports if the demand for imports is.

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Constant

Inelastic

Elastic

Unitary elastic

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

Debit entries on the balance of payments are the entries that would.

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Mean a loss of foreign exchange

Bring foreign exchange into the country

Indicate a surplus exists

Exist at the bottom line a after all accounts are totaled.

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

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

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

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

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Technology

Advertising

Factor endowments

both a and c

Which of the following strategies have developing countries not used to deal with the problem of unstable export markets.

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Multilateral contracts

Production and export controls

Buffer stock arrangements

Tariff rate quotes

Direct investment and security purchases are classified as.

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Capital account transactions

Current account transactions

Unilateral transfer transactions

Merchandise trade transactions

A primary reason why nations conduct international trade is because.

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some nations prefer to produce one thing while others produce another.

Resources are not equally distributed to all trading nations

Trade enhances opportunities to accumulate profits

Interest rates are not identical in all trading nations

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