Question 1

Which of the following does NOT belong?

Accepted Answer

A)   NAFTA
B)   Uruguay Round
C)   World Trade Organization
D)   non-tariff barriers
E)   major free trade agreements of the 1990sF) A) and B)
G) B) and C)

Question 2

Since 1994, trade rules have been enforced by

Accepted Answer

A)   the WTO.
B)   the G10.
C)   the GATT.
D)   The U.S. Congress.
E)   the European Union.F) All of the above
G) C) and D)

Question 3

The distinction between international trade and international money is not entirely clear because

Accepted Answer

A)   real developments in the trade accounts do not have monetary implications.
B)   the balance of payments includes only real measures.
C)   developments caused by purely monetary changes have no real effects.
D)   trade models focus on real, or barter relationships.
E)   most international trade involves monetary transactions.F) C) and D)
G) A) and E)

Question 4

A fundamental problem in international economics is how to produce

Accepted Answer

A)   a perfect degree of monetary harmony.
B)   an acceptable degree of harmony among the international trade policies of different countries.
C)   a world government that can harmonize trade and monetary policies
D)   a counter-cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country.
E)   a worldwide form of currency.F) A) and B)
G) C) and D)

Question 5

Who sells what to whom

Accepted Answer

A)   has been a major preoccupation of international economics.
B)   is not a valid concern of international economics.
C)   is not considered important for government foreign trade policy since such decisions are made in the private competitive market.
D)   is determined by political rather than economic factors.
E)   is less important than international economic theory.F) B) and D)
G) B) and C)

Question 6

Trade theorists have proven that the gains from international trade

Accepted Answer

A)   must raise the economic welfare of every country engaged in trade.
B)   must raise the economic welfare of everyone in every country engaged in trade.
C)   must harm owners of "specific" factors of production.
D)   will always help "winners" by an amount exceeding the losses of "losers."
E)   usually outweigh the benefits of protectionist policies.F) A) and B)
G) C) and D)

Question 7

An important insight of international trade theory is that when two countries engage in voluntary trade

Accepted Answer

A)   one country always benefits at the expense of the other.
B)   it is almost always beneficial to both countries.
C)   it only benefits the low wage country.
D)   it only benefits the high wage country.
E)   it is almost never beneficial to both countries.F) All of the above
G) B) and E)

Question 8

International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread. How might you reconcile these two facts?

Accepted Answer

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Question 9

The United States is less dependent on trade than most other countries because

Accepted Answer

A)   the United States is a relatively large country with diverse resources.
B)   the United States is a "Superpower."
C)   the military power of the United States makes it less dependent on anything.
D)   the United States invests in many other countries.
E)   many countries invest in the United States.F) All of the above
G) A) and B)

Question 10

For almost 70 years international trade policies have been governed

Accepted Answer

A)   by the World Trade Organization.
B)   by the International Monetary Fund.
C)   by the World.
D)   by an international treaty known as the General Agreement on Tariffs and Trade (GATT) .
E)   by the North American Free Trade Agreement (NAFT
A)  .F) B) and C)
G) A) and B)

Question 11

"Trade is generally harmful if there are large disparities between countries in wages."

Accepted Answer

A)   This is generally true.
B)   This is generally false.
C)   Trade theory has nothing to say about this issue.
D)   This is true if the trade partner ignores child labor laws.
E)   This is true if the trade partner uses prison labor.F) A) and B)
G) C) and D)

Question 12

The study of exchange rate determination is a relatively new part of international economics, since

Accepted Answer

A)   for much of the past century, exchange rates were fixed by government action.
B)   the calculations required for this were not possible before modern computers became available.
C)   economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
D)   dynamic overshooting asset pricing models are a recent theoretical development.
E)   the exchange rate never fluctuates.F) B) and D)
G) All of the above

Question 13

Theories of international economics from the 18th and 19th Centuries are

Accepted Answer

A)   not relevant to current policy analysis.
B)   only of moderate relevance in today's modern international economy.
C)   highly relevant in today's modern international economy.
D)   the only theories that actually relevant to modern international economy.
E)   not well understood by modern mathematically oriented theorists.F) A) and B)
G) A) and C)

Question 14

International economics can be divided into two broad sub-fields

Accepted Answer

A)   macro and micro.
B)   developed and less developed.
C)   monetary and barter.
D)   international trade and international money.
E)   static and dynamic.F) A) and B)
G) None of the above

Question 15

Because the Constitution forbids restraints on interstate trade

Accepted Answer

A)   the U.S. may not impose tariffs on imports from NAFTA countries.
B)   the U.S. may not affect the international value of the $ U.S.
C)   the U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State.
D)   the U.S. may not impose export duties.
E)   the U.S. may not disrupt commerce between Florida and Hawaii.F) A) and B)
G) C) and E)

Question 16

The balance of payments has become a central issue for the United States because

Accepted Answer

A)   when the balance of payments is not balanced, society is unbalanced.
B)   the U.S. economy cannot grow when the balance of payments is in deficit.
C)   the U.S. has run huge trade deficits in every year since 1982.
D)   the U.S. never experienced a surplus in its balance of payments.
E)   the U.S. once ran a large trade surplus of about $40 billion.F) A) and D)
G) A) and C)

Question 17

After World War II, the United States has pursued a broad policy of

Accepted Answer

A)   strengthening "Fortress America" protectionism.
B)   removing barriers to international trade.
C)   isolating Iran and other members of the "axis of evil."
D)   protecting the U.S. from the economic impact of oil producers.
E)   restricting trade of manufactured goods.F) A) and B)
G) A) and C)

Question 18

The euro, a common currency for most of the nations of Western Europe, was introduced

Accepted Answer

A)   before 1900.
B)   before 1990.
C)   before 2000.
D)   in order to snub the pride of the U.S.
E)   in order to fix currencies in terms of the U.S dollar.F) A) and C)
G) A) and E)

Question 19

The benefits of international trade are derived from trade in

Accepted Answer

A)   tangible goods only.
B)   intangible goods only.
C)   goods but not services.
D)   services but not goods.
E)   anything of value.F) B) and C)
G) None of the above

Question 20

The international financial crisis of 2007 was the result of

Accepted Answer

A)   failure of the Euro currency.
B)   runaway inflation in the U.S.
C)   a deep global recession.
D)   the collapse of global currency markets.
E)   defaults on U.S. mortgage-backed securities.F) A) and B)
G) A) and C)

Exam 1: Introduction

A fundamental problem in international economics is how to produce

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The balance of payments has become a central issue for the United States because

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The study of exchange rate determination is a relatively new part of international economics, since

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Which of the following does NOT belong?

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After World War II, the United States has pursued a broad policy of

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"Trade is generally harmful if there are large disparities between countries in wages."

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The distinction between international trade and international money is not entirely clear because

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International economics can be divided into two broad sub-fields

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The euro, a common currency for most of the nations of Western Europe, was introduced

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An important insight of international trade theory is that when two countries engage in voluntary trade

Correct AnswerverifiedShow Answer

The United States is less dependent on trade than most other countries because

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Since 1994, trade rules have been enforced by

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The international financial crisis of 2007 was the result of

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International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread. How might you reconcile these two facts?

Correct AnswerverifiedThis question is meant to allo...View AnswerShow Answer

The benefits of international trade are derived from trade in

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Because the Constitution forbids restraints on interstate trade

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Who sells what to whom

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Trade theorists have proven that the gains from international trade

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For almost 70 years international trade policies have been governed

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Theories of international economics from the 18th and 19th Centuries are

Correct AnswerverifiedShow Answer

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This question is meant to allo...
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