QUIZZES 6-11 – Flashcards

Which of the following is consistent with the central beliefs of mercantilism?

Salcia is a country that depends heavily on domestic products. The Salcian government decides on the products that can be imported and ensures that any product that can be produced at home is not imported. A major part of Salcia's trade is concentrated on exporting agricultural produce and textiles. Which of the following influences Salcia's approach to international trade?

Palladia specializes in the production of beef and produces beef more efficiently than any other country. It buys wheat, which it produces less efficiently than beef, from Rhodia, even though it produces wheat more efficiently than Rhodia. Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia?

Consider two countries Daria and Atlantis. Daria is a major producer of wheat and rice while Atlantis specializes in the production of fertilizers and manufacturing equipment. Engaging in free trade benefits both countries since Daria is an agrarian nation and Atlantis lacks arable land. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it. Which of the following is an inaccurate assumption on which this conclusion is based?

Argonia and Selenia have specialized in the production of industrial equipment and pharmaceuticals respectively. Argonia exports industrial equipment to Selenia, which in turn exports chemicals and medicines to Argonia. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates:

According to the Porter's Diamond theory, a successful international trade strategy is possible even if one of the factors is not present, as long as all the other factors are significantly favorable.

Which of the following theories of international trade call for the most specific role of government in international trade

Sentoria is an island nation in the Pacific Ocean. Its geographical location is advantageous since it has access to a variety of aquatic life forms and also a number of freshwater sources that provide for fisheries. The lack of arable land drives local demand for seafood. The competition in the domestic fishing industry is fierce and enables Sentoria to be one of the major exporters of seafood. Which of the following theories of international trade best explains Sentoria's dominance as an exporter of seafood?

Meitneria and Seaboria specialize in the production of heavy machinery and textiles respectively. While Meitneria doesn't produce textiles, Seaboria is not as technologically advanced as Meitneria. In this situation, according to the Heckscher-Ohlin theory:

Which of the following theories of international trade call for the most comprehensive role of government in international trade

Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia?

The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from exports. Which of the following theories prohibits such international trade?

Which of the following is most likely to be an objective of export tariffs?

Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001?

Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997?

Which of the following is a provision of the Uruguay Round Agreement?

One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that:

The threat of antidumping action:

Which of the following is true regarding the difference between GATT and WTO?

Which of the following is a loophole in antidumping laws that is being exploited by many countries to pursue protectionism?

Which of the following best indicates the motive for foreign firms to engage in dumping?

Which of the following statements is true about import quotas?

One of the reasons why protectionist pressures arose around the world during the 1980s was:

Myra is a firm producing premium handbags for women. These bags are manufactured and patented in the country of Ceria. Manufacturers in the country of Argonia create counterfeit Myra bags and sell them in the local markets of Argonia. These bags are sold at almost similar prices to the original in other countries. Which of the following is likely to happen?

Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance?

Which of the following best explains the reason for the rise in protectionist pressures around the world during the 1980s?

Which of the following identifies an attribute of tariffs?

Which of the following supports the economic case for regional economic integration?

Which of the following is true with regard to the Asia-Pacific Economic Cooperation (APEC)?

Which of the following is an expected consequence of the implementation of the North American Free Trade Agreement?

Which of the following is true of the criteria to qualify for membership to the European Union?

Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?

Which of the following is true of the European Free Trade Association (EFTA)?

Which of the following is a major consideration that underlay the establishment of the European Community?

Which of the following is a significant impact of the North American Free Trade Agreement (NAFTA)?

Which of the following is the economic level corresponding to the least integration?

Which of the following is a factor that resulted in the establishment of the European Union (EU)?

Which of the following is true of Alexander Yeats's criticism of the Andean Pact?

Which of the following is the goal of the Caribbean Single Market and Economy?

An argument against the North American Free Trade Agreement centered on the fear that ratification would result in:

Which of the following is true of the provisions of the North American Free Trade Agreement?

Which of the following is a threat facing the emergence of single markets?

True or False: Like PPP, the international Fisher effect is not a good predictor of short-run changes in spot exchange rates.

The nominal interest rate is 9 percent in Brazil and 6 percent in Japan. Applying the international Fisher effect, the Brazilian real should:

Which one of the following exchange rate theories has a better prediction track record in the short run?

An American company imports laptop computers from Japan. The company knows that after a shipment arrives, it must pay in yen to the Japanese supplier within 30 days. In a particular exchange, the American company must pay the Japanese supplier ×150,000 for each computer at the current dollar/yen spot exchange rate of $1 = ×110. The company intends to resell the computers the day they arrive for $1,600 each but it does not have the funds to pay the Japanese supplier until the computers have been sold. Which of the following will happen if the exchange rate after 30 days is $1 = ×90?

The currency of the country of Venadia falls sharply in value against the currency of Lutetia, a neighboring country. Which of the following is a consequence of this exchange rate movement?

The yen/dollar exchange rate is ×120 = $1 in London and ×123 = $1 in New York at the same time. What is the net profit if a dealer takes $1,000,000 to purchase ×123,000,000 in New York and engages in arbitrage by selling it in London?

Robben Inc. converts $1,000,000 into euros when the exchange rate is $1 = €0.75. After three months, the company converts this back into dollars when the exchange rate is $1 = €0.80. Which of the following is the outcome of this transaction?

Steven converted $1,000 to ×105,000 for a trip to Japan. However, he spent only ×50,000. During this period, the value of the dollar weakened against the yen. Considering a current exchange rate of $1 = ×100, how many dollars did Steven spend on the trip?

A U.S. company that imports laptop computers from Japan knows that in 30 days it must pay in yen to a Japanese supplier when a shipment arrives. The company will pay the Japanese supplier ×150,000 for each computer, and the current dollar/yen spot exchange rate is $1 = ×110. The importer can sell the computers the day they arrive for $1,600 each. However, the importer will not have the funds to pay the Japanese supplier until the computers have been sold. The importer enters into a 30-day forward exchange transaction with a foreign exchange dealer at $1 = ×105. Which of the following will happen if the exchange rate after 30 days is $1 = ×90?

The interest rate on borrowings in Rhodia is 2 percent and the interest rate on bank deposits in Maritia is 7.5 percent. In this scenario, a carry trade would be to:

In response to the global financial crisis of 2008-2009, the International Monetary Fund began to:

The objective of establishing the World Bank was to:

Which of the following is an implication of a currency crisis?

Which of the following is one of the reasons for the rapid rise in the value of the dollar between 1980 and 1985 despite a large trade deficit?

All International Monetary Fund (IMF) loan packages come with conditions attached. Which of the following is prevented due to these policies of the IMF?

Which of the following is a reason why Great Britain and the United States could finance their deficits by borrowing private money since the early 1970s?

Which of the following is a great strength of the gold standard?

Which of the following is a characteristic of the floating exchange rate regime?

Which of the following is a reason for the emergence of the gold standard?

Which of the following explains the rise of the dollar against most major currencies in the late 1990s, even though the United States was still running a significant balance-of-payments deficit?

Which of the following statements is true about a currency board system?

According to the agreement reached between the International Monetary Fund and the South Korean government in 1997, in return for funding, the South Koreans were required to:

Under a fixed exchange rate regime, what would be the result if a country rapidly increased its money supply by printing currency?

In a floating exchange rate, the relative value of a currency:

Which of the following statements is true about the gold standard?