ROUND III: INTERNATIONAL ECONOMICS/COMPARATIVE SYSTEMS

  1. The main reason why one nation trades with another is to:
    1. save its natural resources from rapid depletion.
    2. exploit the advantages of specialization.
    3. eliminate the danger of retaliation from other nations.
    4. improve political alliances.
    5. copy other nations’ goods.
  2. If Brazil voluntarily ships coffee to the United States in return for airplanes:
    1. Brazil will benefit, but the United States will lose.
    2. one of the two nations will benefit and the other nation will lose since the trade does not increase the physical quantities of coffee and airplanes available.
    3. both Brazil and the United States will benefit since the trade allows each nation to acquire items better suited to its needs.
    4. both Brazil and the United States will lose since there is no increase in the production of coffee or airplanes and the trade will involve certain transaction costs.
    5. Brazil will lose, but the United States will benefit.
  3. If a nation does not have an absolute advantage in producing anything, it:
    1. has no comparative advantage either.
    2. will have a comparative advantage in the activity in which it is efficient.
    3. will try to get along without trade.
    4. will export raw materials and import finished products.
    5. none of the above.
  4. A reduction in the tariff on imported steel would most likely benefit:
    1. workers in the steel industry.
    2. the domestic producers of steel.
    3. the domestic consumers of steel.
    4. foreign producers at the expense of domestic consumers.
    5. domestic producers at the expense of foreign consumers.
  5. A tariff:
    1. is a tax on exported items.
    2. is a tax on imported items.
    3. is a limit on the amount of imports.
    4. is a subsidy to export.
    5. restricts the amount of exports.
  6. If a U.S. dollar exchanges for 2.0 German marks, then the dollar price of a mark is:
    1. two cents.
    2. 50 cents.
    3. 100 cents.
    4. 200 cents.
    5. none of the above.
  7. If the exchange rate between the U.S. dollar and the West German mark were 0.60 (60 cents = one mark), what would be the price in dollars of a German automobile that costs 50,000 marks?
    1. $5,000
    2. $8,333
    3. $30,000
    4. $80,000
    5. $300,000
  8. If the exchange rate of the English pound goes from $1.80 to $1.60, then the pound has:
    1. appreciated and the English will find U.S. goods cheaper.
    2. appreciated and the English will find U.S. goods more expensive.
    3. depreciated and the English will find U.S. goods more expensive.
    4. depreciated and the English will find U.S. goods cheaper.
    5. depreciated, but this will have no effect on the cost of U.S. goods to the English because the U.S. goods are priced in dollars.
  9. In terms of exports and imports, what country is the U.S.’ largest trading partner?
    1. Japan
    2. England
    3. Mexico
    4. China
    5. Canada
  10. Probably the strongest factor causing the exchange value of the U.S. dollar to rise in the early 1980s was:
    1. high U.S. interest rates.
    2. high U.S. growth rates.
    3. high U.S. inflation rates.
    4. low U.S. inflation rates.
    5. low U.S. growth rates.
  11. If Mexico experiences a major recession, what will happen in the U.S.?
    1. an increase in aggregate demand.
    2. a decrease in aggregate demand.
    3. an increase in aggregate supply.
    4. a decrease in aggregate supply.
    5. none of the above.
  12. An expansionary fiscal policy will:
    1. reduce the current account deficit and reduce the capital account surplus.
    2. reduce the current account deficit and increase the capital account surplus.
    3. increase the current account deficit and reduce the capital account surplus.
    4. increase the current account deficit and increase the capital account surplus.
    5. none of the above.
  13. Which of the following is the best example of a currently existing planned economy?
    1. United States
    2. United Kingdom
    3. Russia
    4. Cuba
    5. Iowa
  14. Compared to the no-trade situation, when a country exports a good:
    1. domestic consumers gain, domestic producers lose, and the gains outweigh the losses.
    2. domestic producers gain, domestic consumers lose, and the gains outweigh the losses.
    3. domestic consumers gain, domestic producers lose, and the losses outweigh the gains.
    4. domestic producers gain, but domestic consumers lose an equal amount.
    5. none of the above.
  15. Socialism refers to a form of economic organization in which:
    1. profits do not exist.
    2. the state owns the factors of production.
    3. a central committee makes all planning decisions.
    4. private individuals own the factors of production.
    5. workers do not work for money.

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