1. Dumping may occur when foreign companies charge low prices to drive domestic producers out of business. (1 Point) True False 2. Australian tourists planning a trip to the United States would be happy if the U.S. dollar depreciated. (1 Point) True False 3. If the exchange rate changes from 1.50 Canadian dollars per U.S. dollar to 1.67 Canadian dollars per U.S. dollar, we say that the Canadian dollar has appreciated against the U.S. dollar. (1 Point) True False 4. The Euro is the official currency of Denmark. (1 Point) True False 5. Norway is a member of the European Union. (1 Point) True False 6. The exchange rate is 0.75 US dollars (USD) per 1.00 Canadian dollar (CAD) when the price of a Big Mac in New York is 3.00 USD and the price of a Big Mac in Toronto is 4.00 CAD. If the price of a Big Mac in Toronto increases to 5.00 CAD but the price of the Big Mac in New York remains at 3.00 USD, the Canadian dollar will be expected to appreciate against the US dollar in the near future. (1 Point) True False 7. A Big Mac costs 4.00 Canadian dollars (CAD) in Toronto and 3.00 US dollars (USD) in New York. What is the predicted exchange rate? Express your answer as the number of CAD per one USD. For example, an answer of 2.00 CAD per 1.00 USD would be entered simply as 2.00. (1 Point) Enter your answer 8. Which of the following is an example of a tariff? (1 Point) A tax of 10% of the value of each Honda purchased in Japan. A limit on the total number of Hondas that can be imported from Japan. A regulation specifying that each imported Honda must meet certain emission exhaust guidelines. A tax of $500 on each Honda imported from Japan. 9. According to The Economist magazine, the concept of purchasing power parity implies that the (1 Point) Big Mac is a poor value. cost of a Big Mac cannot be predicted across countries because it is only one product. Big Mac should cost more in countries that are large beef consumers because the demand for hamburgers is greater. Big Mac should cost about the same in all countries. 10. A currency depreciates when (1 Point) the price of that currency rises in the currency exchange markets. the economy of that country is growing too rapidly. it becomes less valuable relative to other currencies. foreigners make an agreement with each other to increase competition for that currency. WDJMMVFU 11. The fear domestic producers express regarding dumping is that (1 Point) Oit violates international environmental protection regulations. O the low prices of imports will drive them out of business, eventually leaving the foreign competition free to raise prices. it can lead to a trade war, which would force many foreign and domestic businesses into bankruptcy. Oby lowering the prices of imports, it reduces the revenues government can raise when it imposes tariffs. 12. Tariffs are not designed to result in the (1 Point) increase of revenues for the government. increase of the price of the imported commodity. prohibition of the importation of foreign-made commodities. O protection of domestic workers from the full impact of international competition. 13. The infant industry argument states that (1 Point) some industries need protection because foreign companies price lower than the domestic price. some industries need permanent government protection because otherwise they can never be competitive in the international economy. government should promote competition in order to support industries that lower prices to consumers. Osome industries need government protection to provide time to reorganize, grow, or establish themselves. 14. Suppose the US economy slides into recession and the rest of the world's economies do not. What will likely happen? [ (1 Point) The US dollar will appreciate relative to other world currencies.. The US dollar will not change value. The US dollar will depreciate relative to other world currencies. The US dollar will appreciate and then depreciate relative to other world currencies. 15. Which of the following agreements served as the immediate predecessor to the World Trade Organization (WTO)? [ (1 Point) Central American Free Trade Agreement (CAFTA) North American Free Trade Agreement (NAFTA) European Union (EU) General Agreement on Tariffs and Trade (GATT)