1、CH161.How does an increase in the real exchange rate affect exports and imports?A) Exports increase; imports decrease.B) Exports decrease; imports increase.C) Exports increase; imports change ambiguously.D) Exports change ambiguously; imports decrease.2.Which one of the following statements is the m
2、ost accurate?A)For asset markets to remain in equilibrium, a rise in domestic output must be accompanied by a depreciation of domestic currency, all else equal.B) For asset markets to remain in equilibrium, a fall in domestic output must be accompanied by a depreciation of foreign currency, all else
3、 equal.C) For asset markets to remain in equilibrium, a rise in domestic output must be accompanied by an appreciation of domestic currency, all else equal.D) For asset markets to remain in equilibrium, a fall in domestic output must be accompanied by an appreciation of domestic currency, all else e
4、qual.3.Current account is given by the equation:A)CA=IM-EX (measured in terms of domestic output). B)CA=IM-EX (measured in terms of foreign output). C)CA=EX-IM (measured in terms of domestic output). D)CA=EX-IM (measured in terms of foreign output).4.The real exchange rate, q, is defined asA) the pr
5、ice of the foreign basket in terms of the domestic one.B) the price of the domestic basket in terms of the foreign one.C) the price of the foreign basket.D) the price of the domestic basket.5.If the representative basket of European goods and services costs 40 euros, the representativeU.S. basket co
6、sts $50, and the dollar/euro exchange rate is $0.90 per euro, then the price of the European basket in terms of U.S. basket isA) (0.9 $/euro) (40 euro per a European basket)/(50 $/U.S. basket).B) (0.9 $/euro) (50 $/U.S. basket)/(40 euro per a European basket).C) (40 euro per a European basket)/(50 $
7、/U.S. basket) (0.9 $/euro). D) (50 $/U.S. basket).6.Which one of the following statements is the most accurate?A) An increase in disposable income improves the current account.B) An increase in disposable income does not affect the current account.C) An increase in disposable income worsens the curr
8、ent account.D) An increase in income worsens the current account.7.Disposable income is defined as:A) Y-C.B) Y-T.C) C-T.D) I-C.8.A countrys domestic currencys real exchange rate, q, is best described byA) the price of similar goods in the same market.B) the price of the domestic basket in terms of t
9、he foreign one.C) the price of a domestic basket.D) the price of the foreign basket in terms of the domestic basket.9.The current account increases when:A) real exchange rate decreases.B) real exchange rate increases.C) disposable income increases.D) exports fall.10.What is the best way to describe
10、aggregate demand?A) quantity required to satisfy equilibriumB) exports decrease; imports increaseC) amount of a countrys goods and services demanded by household and firms throughout the worldD) individuals demand11. How does a rise in real income affect aggregate demand?A) Y i mplies Yd implies Im
11、i mplies CA i mplies AD , but Y i mplies Yd i mplies C i mplies AD by m oreB) Y implies Yd implies Im i mplies CA i mplies AD , but Y i mplies Yd i mplies C i mplies AD by m oreC) Y i mplies Yd implies Im implies CA i mplies AD , and Y i mplies Yd i mplies C i mplies AD D) Y implies Yd implies Im i
12、mplies CA implies AD , but Y implies Yd implies C implies AD by less12.Which one of the following statements is the most accurate?A) A rise in domestic real income raises aggregate demand for home output.B) A rise in domestic real income decreases aggregate demand for home output because of the incr
13、ease demand for import.C) A rise in domestic real income keeps aggregate demand for home output at the same level.D) It is difficult to tell whether a rise in domestic real income affects positively or negatively aggregate demand for home output.13.In the short-run, any rise in the real exchange rat
14、e, EP /P, will causeA) an upward shift in the aggregate demand function and a reduction in outputB) an upward shift in the aggregate demand function and an expansion of outputC) a downward shift in the aggregate demand function and an expansion of outputD) an downward shift in the aggregate demand f
15、unction and a reduction in output14.In the short-run, any fall in EP /P, regardless of its causes, will causeA) an upward shift in the aggregate demand function and an expansion of outputB) an upward shift in the aggregate demand function and a reduction in outputC) a downward shift in the aggregate
16、 demand function and an expansion of outputD) an downward shift in the aggregate demand function and a reduction in output15.The DD schedule shows all combinations of which 2 variables so that the output market is in equilibrium?A) imports and exportsB) exports and the exchange rateC) foreign prices
17、 and the exchange rateD) output and the exchange rate16.Which of the following does not affect the position of the DD curve?A) monetary policyB) government spendingC) taxesD) export Demand17.How is the AA schedule derived?A) The AA schedule has a positive slope because an increase in output leads to
18、 a depreciation of the currency.B) The AA schedule has a negative slope because an increase in output leads to a decrease in the domestic interest rate.C) The AA schedule has a negative slope because an increase in output leads to an increase in the domestic interest rate and a domestic currency app
19、reciation.D) The AA schedule has a positive slope because an increase in the money supply leads to an increase in the domestic interest rate.18.In the short-run, a temporary increase in the money supplyA) shifts the AA curve to the right, increases output and depreciates the currency.B) shifts the A
20、A curve to the left, increases output and depreciates the currency.C) shifts the AA curve to the left, decreases output and depreciates the currency.D) shifts the AA curve to the left, increases output and appreciates the currency.19.Which of the following have to be in equilibrium for the economy t
21、o be in equilibrium?A) the money market onlyB) the goods market onlyC) the output and assets marketsD) the savings and investment markets20.In the short run:A) monetary expansion causes the CA increase & fiscal expansion causes the CA to decrease.B) monetary expansion causes the CA to decrease & fis
22、cal expansion causes the CA to decrease.C) monetary expansion causes the CA to increase & fiscal expansion causes the CA to increase.D) monetary expansion causes the CA to decrease & fiscal expansion causes the CA to increase.C C C A A C B D B C A A B D D A C A C ACh9Judging by the changes in the he
23、ight of tariff rates in major trading countries, the world has been experiencing a greatA) trade liberalization.B) surge of protectionism.C) lack of progress in the trade-policy area.D) move towards regional integration.E) None of the above. Answer: AThe World Trade Organization (WTO) was organized
24、as a successor to theA) IMF.B) UN.C) UNCTAD.D) GATT.E) the World Bank. Answer: DThe WTO was established by the of multilateral trade negotiations.A) Kennedy RoundB) Tokyo RoundC) Uruguay RoundD) Dillon RoundE) None of the above. Answer: CA trade policy designed to alleviate some domestic economic pr
25、oblem by exporting it to foreign countries is know as a(n)A) international dumping policy.B) countervailing tariff policy.C) beggar thy neighbor policy.D) trade adjustment assistance policy.E) None of the above. Answer: CTrade theory suggests that Japan would gain from a subsidy the United States pr
26、ovides its grain farmers if the gains to Japanese consumers of wheat products more than offsets the losses to Japanese wheat farmers. This would occur as long as JapanA) is a net importer in bilateral trade flows with the United States.B) is a net importer of wheat.C) has a comparative advantage in
27、wheat.D) has an absolute advantage in producing wheat.E) None of the above. Answer: BThe World Trade Organization provides for all of the following exceptA) the usage of the most favored nation clause.B) assistance in the settlement of trade disagreements.C) bilateral tariff reductions.D) multilater
28、al tariff reductions.E) None of the above. Answer: CWhich organization determines procedures for the settlement of international trade disputes?A) World BankB) World Trade OrganizationC) International Monetary OrganizationD) International Bank for Reconstruction and DevelopmentE) The League of Natio
29、ns Answer: BThe optimum tariff isA) the best tariff a country can obtain via a WTO negotiated round of compromises.B) the tariff, which maximizes the terms of trade gains.C) the tariff, which maximizes the difference between terms of trade gains and terms of trade loses.D) not practical for a small
30、country due to the likelihood of retaliation.E) not practical for a large country due to the likelihood of retaliation. Answer: EThe optimum tariff is most likely to apply toA) a small tariff imposed by a small country.B) a small tariff imposed by a large country.C) a large tariff imposed by a small
31、 country.D) a large tariff imposed by a large country.E) None of the above. Answer: BThe prohibitive tariff is a tariff thatA) is so high that it eliminates imports.B) is so high that it causes undue harm to trade-partner economies.C) is so high that it causes undue harm to import competing sectors.
32、D) is so low that the government prohibits its use since it would lose an important revenue source.E) None of the above. Answer: AThe existence of marginal social benefits which are not marginal benefits for the industry producing the import substitutesA) is an argument supporting free trade and non
33、-governmental involvement.B) is an argument supporting the use of an optimum tariff.C) is an argument supporting the use of market failures as a trade-policy strategy.D) is an argument rejecting free trade and supporting governmental involvement.E) None of the above. Answer: DThe domestic market fai
34、lure argument is a particular case of the theory ofA) the optimum, or first-best.B) the second best.C) the third best.D) the sufficing principle.E) None of the above. Answer: BThe difficulty of ascertaining the right second-best trade policy to followA) reinforces support for the third-best policy a
35、pproach.B) reinforces support for increasing research capabilities of government agencies.C) reinforces support for abandoning trade policy as an option.D) reinforces support for free-trade options.E) None of the above. Answer: DThe reason protectionism remains strong in the United States is thatA)
36、economists can produce any result they are hired to produce.B) economists cannot persuade the general public that free trade is beneficial.C) economists do not really understand how the real world works.D) the losses associated with protectionism are diffuse, making lobbying by the public impractica
37、l.E) None of the above. Answer: DIt is argued that special interest groups are likely to take over and promote protectionist policies, which may lead to a decrease in national economic welfare. This argument leads toA) a presumption that in practice a free trade policy is likely to be better than al
38、ternatives.B) a presumption that trade policy should be shifted to Non-Governmental Organizations, so as to limit taxpayer burden.C) a presumption that free trade is generally a second-best policy, to be avoided if feasible alternatives are available.D) a presumption that free trade is the likely eq
39、uilibrium solution if the government allows special interest groups to dictate its trade policy.E) None of the above. Answer: AThe median voter modelA) works well in the area of trade policy.B) is not intuitively reasonable.C) tends to result in biased tariff rates.D) does not work well in the area
40、of trade policy.E) None of the above. Answer: DThe fact that trade policy often imposes harm on large numbers of people, and benefits only a few may be explained byA) the lack of political involvement of the public.B) the power of advertisement.C) the problem of collective action.D) the basic imposs
41、ibility of the democratic system to reach a fair solution.E) None of the above. Answer: CProtectionism tends to be concentrated in two sectorsA) agriculture and clothing.B) high tech and national security sensitive industries.C) capital and skill intensive industries.D) industries concentrated in th
42、e South and in the Midwest of the country.E) None of the above. Answer: AThe strongest political pressure for a trade policy that results in higher protectionism comes fromA) domestic workers lobbying for import restrictions.B) domestic workers lobbying for export restrictions.C) domestic workers lo
43、bbying for free trade.D) domestic consumers lobbying for export restrictions.E) domestic consumers lobbying for import restrictions. Answer: AThe average tariff rate to data on dutiable imports in the United States is approximatelyA) 5 % of the value of imports.B) 15% of the value of imports.C) 20 %
44、 of the value of imports.D) 25% of the value of imports.E) more than 25% of the value of imports. Answer: AToday U.S. protectionism is concentrated inA) high tech industries.B) labor-intensive industries.C) industries in which Japan has a comparative advantage.D) computer intensive industries.E) cap
45、ital-intensive industries. Answer: BThe quantitative importance of U.S. protection of the domestic clothing industry is best explained by the fact thatA) this industry is an important employer of highly skilled labor.B) this industry is an important employer of low skilled labor.C) most of the expor
46、ters of clothing into the U.S. are poor countries.D) this industry is a politically well organized sector in the U.S.E) None of the above. Answer: DThe simple model of competition among political parties long used by political scientists tends to lead to the practical solution of selecting theA) opt
47、imal tariff.B) prohibitive tariff.C) zero (free-trade) tariff.D) the tariff rate favored by the median voter.E) None of the above.Answer: DThe General Agreement on Tariffs and Trade and the World Trade Organization have resulted inA) the establishment of universal trade adjustment assistance policie
48、s.B) the establishment of the European Union.C) the reciprocal trade clause.D) reductions in trade barriers via multilateral negotiations.E) None of the above. Answer: DCountervailing duties are intended to neutralize any unfair advantage that foreign exporters might gain because of foreignA) tariff
49、s.B) subsidies.C) quotas.D) Local-Content legislation.E) None of the above. Answer: BIn 1980 the United States announced an embargo on grain exports to the Soviet Union in response to the Soviet invasion of Afghanistan. This embargo was mainly resisted byA) U.S. grain consumers of bread.B) U.S. grain producers.C) foreign grain producers.D) U.S. communists.E) None of the above. Answer: BAn issue never confronted effectively by GATT, but considered an important issue for WTO is that ofA) the promotion of freer W
