Question # 1

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

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.

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

Specific tariffs are collected as

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Fixed amount of money per unit traded

a percentage of the price of the product

A percentage of the quantity of imports

All of the above

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

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

The effect of the most favored nation clause is to.

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Eliminate all tariffs between countries

Increase all tariff rates between countries.

Maintain a nondiscriminatory structure of tariffs

Maintain a discriminatory structure of tariffs

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

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.

Absolute advantage is determined by

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Actual difference in labor productivity between countries.

Relative difference in labor productivity between countries.

Both a and b

Neither a nor b

Direct investment and security purchases are classified as.

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Capital account transactions

Current account transactions

Unilateral transfer transactions

Merchandise trade transactions

Ad valorem tariffs are collected as.

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A percentage of the price of the product

A percentage of the quantity of imports

All of the above

Fixed amounts of money per unit traded

currency speculation is__________ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations.

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Destabilizing

Stabilizing

Inflationary

Deflationary

The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is.

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Freely fluctuating exchange rates

Adjustable pegged exchange rates

Managed floating exchange rate.

Pegged or fixed exchange rates

A product will be traded only if the pre trade price difference between the two countries

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Is less than the cost of transporting it between them

is greater than the cost of transporting it between them

Equals the cost of transporting it between them

More information is needed to answer this question

In developed countries tariffs on raw materials tend to be.

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Highest of all

Higher than on manufactured goods

Equal to tariffs on manufactured goods

Lower than on manufactured goods

Multinational corporations

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Always produce primary goods

Always produce manufactured goods

Products primary goods or manufactured goods

None of the above

Which financial instruments provide a buyer the right to purchase or sell a fixed amount of currency at a prearranged price within a few days to a coupled of years.

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Letter of credit

Foreign currency option

Cable transfer

Bill of exchange

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

International dumping may involve.

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Selling goods to foreigners at a price below that charged domestic consumers

Selling goods to foreigners at a price below the cost of production

antidumping duties being levied on the imported dumped goods

All of the above

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

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