Exam
3: International/Current Events
Answers
1.
Which nation’s exports
of goods and services constitute the smallest share of its gross domestic
product?
a.
the U.S.
b.
the Netherlands
c.
Canada
d.
Mexico
e.
France
2.
If a $40,000 American
computer costs a Korean importer 120,000 won, the exchange
rate must be
a.
1 won to 3 dollars.
b.
1 won to 0.25 dollars.
c.
1 dollar to 0.33 won.
d.
1 dollar to 3 won.
e.
none of the above.
3.
An economic
system is said to be a
a.
market system if there is substantial central planning.
b.
traditional system if it is based on consumer sovereignty.
c.
command system if it is based on private ownership of property.
d.
market system if it relies on self-interested behavior based on
incentives.
e.
command system if it relies on long-standing practices.
4.
A nation has a
“comparative advantage” in the production of a product if
a.
it can produce the product
while other nations cannot.
b.
it can produce the product
at a lower opportunity cost than other nations.
c.
it can produce the product
but at a higher opportunity than other nations.
d.
it can produce the product
with fewer resources than other nations.
e.
the government protects
the domestic producers of that product by erecting trade barriers.
5.
Families in developing
countries are often larger
than in industrialized nations because
a.
children are viewed as
“consumption goods” instead of as “investment” goods.
b.
the governments of
developing countries encourage population growth to increase the size of their
labor force.
c.
there are more resources
per capita in developing countries.
d.
of government bans on the
use of birth control.
e.
children help the family
make a living and provide their parents with some economic security.
6.
If the U.S. eliminated all tariffs and other trade restrictions, then economic well-being would
a.
increase for the U.S., but
fall for smaller countries.
b.
increase for the U.S. but
stay the same for other countries.
c.
increase for the U.S. and
all of its trading partners.
d.
decrease for the U.S. even
if other countries did the same.
e.
decrease for the U.S. and
all of its trading partners.
7.
All of the following tend
to hinder improvements in the living standards of people in LCDs (less developed countries) except
a.
inadequate protection of
property rights.
b.
poor infrastructure.
c.
rapid population growth.
d.
high levels of saving and
investment.
e.
low labor productivity.
8.
Which of the following
people would be pleased
by a depreciation of the U.S.
dollar?
a.
a U.S. tourist traveling
in Europe
b.
a U.S. importer of Russian
vodka
c.
a U.S. exporter of heavy
equipment
d.
a French exporter of wine
to the U.S.
e.
a Japanese banker with a
large holding in U.S. currency
9.
The North American Free
Trade Agreement
a.
increased trade
restrictions among Canada, Mexico and the United States.
b.
eliminated tariffs on
imports to North America from the rest of the world.
c.
reduced trade restrictions
among Canada, Mexico and the United States.
d.
set a common tariff policy
between North America and the rest of the world.
e.
none of the above are
correct.
10.
For the U.S., the
imposition of tariffs on imported autos tends to result in
a.
a decrease in auto prices
in the U.S.
b.
lower wages for U.S.
autoworkers.
c.
higher profits for U.S.
auto companies.
d.
a decline in tax revenues
for the U.S. government.
e.
increased sales of foreign
produced automobiles.
11.
The determinants of
economic growth include all of the following except
a.
natural resources.
b.
money supply.
c.
physical capital.
d.
human capital.
e.
research and development.
12.
If the world price of a
product is higher than a country’s domestic price we know that country
a.
should import that
product.
b.
should no longer produce
that product.
c.
should export the
products.
d.
could benefit by imposing
a tariff on that product.
e.
none of the above.
13.
Trade is beneficial
because it
a.
creates jobs for
middlemen.
b.
creates jobs for shippers.
c.
allows each nation to
apply economic pressure on others nations.
d.
allows each nation to
specialize in doing what it does best.
e.
allows all people in a
country to gain.
14.
When the dollar
appreciates, the U.S.
a.
exports decrease, while
imports increase.
b.
exports and imports
decrease.
c.
exports and imports
increase.
d.
exports increase, while
imports decrease.
e.
exports and imports may
increase or decrease, we do not know.
15.
Which of the following is not
a source of foreign exchange for the United States?
a.
U.S. exports to Germany
b.
Japanese investments in
the United States
c.
U.S. imports from Korea
d.
Italian tourists visiting
the U.S.
e.
U.S. military sales to
Israel.
A
D
D
B
E
C
D
C
C
C
B
C
D
A
C