Question 1(3 points)

The best description of how a fixed exchange rate market determines the value of currency is _______________.

a

the value is set by a certain amount of gold which can be redeemed at any time

b

the value of a currency is allowed to fluctuate with changes in supply and demand

c

the value of a currency is fixed at a set rate by the government

d

the value is allowed to fluctuate based only on the actions of the government

Question 2(3 points)

The best description of how a flexible exchange rate market determines the value of currency is _______________.

a

the value is set by a certain amount of gold which can be redeemed at any time

b

the value of a currency is allowed to fluctuate with changes in supply and demand

c

the value of a currency is fixed at a set rate by the government

d

the value is allowed to fluctuate based only on the actions of the government

Question 3(3 points)

If the US dollar has depreciated relative to the Japanese Yen, this means that _______________.

a

the dollar will buy less in the US and more in Japan

b

the dollar will buy more in the US and more in Japan

c

the dollar will buy more in Japan than the peso will buy in the US

d

the dollar will buy less in Japan than the peso will buy in the US

Question 4(3 points)

If the US dollar has appreciated relative to the Japanese Yen, this means that _______________.

a

the dollar will buy less in the US and less in Japan

b

the dollar will buy more in the US and less in Japan

c

the dollar will buy more in Japan than the peso will buy in the US

d

the dollar will buy less in Japan than the peso will buy in the US

Question 5(3 points)

Since 2012, the value of the US dollar relative to most world currencies has _______________.

a

remained the same

b

depreciated

c

stayed fixed

d

appreciated

Question 6(3 points)

Currency is bought and sold in what type of market?

a

Fixed Exchange

b

Flexible Exchange

c

Variable Exchange

d

Foreign Exchange

Question 7(3 points)

If US imports increase and net exports decrease, then what change happened?

a

US money has appreciated and foreign money has depreciated

b

US money has depreciated and foreign money has appreciated

c

US money has appreciated and foreign money has appreciated

d

US money has depreciated and foreign money has depreciated

Question 8(3 points)

What does it mean to have an appreciated currency in the foreign exchange market?

a

The currency is weak

b

The currency can buy a lot of foreign products (imports)

c

Causes capital flight

d

Price level and real GDP output increase

Question 9(3 points)

All of the following occur when a buyer in the US wishes to purchase a car from Japan, except:

a

The supply curve for the US Dollar shifts to the right

b

The demand curve for the yen shifts to the right

c

The USD appreciates

d

The Yen appreciates

Question 10(3 points)

What does it mean to have a depreciated currency in the foreign exchange market?

a

The currency is weak

b

The currency can buy a lot of foreign products (imports)

c

Occurs when interest rates are high

d

Price level and real GDP output decrease

Question 11(3 points)

If US exports increase and net exports increase, then what change happened?

a

US money has appreciated and foreign money has depreciated

b

US money has depreciated and foreign money has appreciated

c

US money has appreciated and foreign money has appreciated

d

US money has depreciated and foreign money has depreciated

Question 12(3 points)

In the Foreign Exchange Market, what occurs when a buyer in the US wants to buy perfume from France?

a

The demand curve for USD increases.

b

The USD appreciates

c

The Euro appreciates

d

The supply curve for euros shifts to the right.

Question 13(3 points)

If country A has an opportunity cost of 3 pots in the production of 1 sandal, and country B has an opportunity cost of 6 pots in the production of 1 sandal, then _______________.

a

the countries should definitely not trade

b

country A should not trade, but country B should

c

the countries should trade if the terms of trade were 5 pots for 1 sandal

d

the countries should trade if the terms of trade were 2 pots for 1 sandal

Question 14(3 points)

The opportunity cost of a choice is best described as _______________.

a

the additional or extra cost of a decision

b

the alternative you gave up when making the decision

c

the difference in the marginal benefits

d

the actual cost of whatever you are doing

Question 15(3 points)

Adam Smith believed that _______________ will lead to a world where more products will be produced.

a

opportunity costs

b

terms of trade

c

specialization

d

absolute advantage

Question 16(3 points)

What economist believed that all trading between nations should be based on comparative advantage?

a

Adam Smith

b

David Ricardo

c

Milton Friedman

d

John Maynard Keynes

Question 17(3 points)

What is the key to comparative advantage?

a

The country that makes everything better should never trade

b

The country that has the lowest opportunity cost should specialize

c

Specialization is too expensive

d

Trade does not lead to growth of a nation

Question 18(3 points)

The lowest opportunity cost for producing robots is _______________.

Hint: Remember to use the "other goes over" method first, then choose the lowest number to determine the comparative advantage (lowest opportunity cost).PizzaRobotsJoe1060Bob2040

a

Bob's 40 robots

b

Joe's opportunity cost of 1/6 of a robot

c

Bob's opportunity cost of of a robot

d

There is not enough information since the terms of trade are not given

Question 19(3 points)

Who has the absolute advantage in the production of pizza?PizzaRobotsJoe1060Bob2040

a

Joe

b

Bob

c

neither Joe or Bob

d

Joe because his opportunity cost is only 6 robots

Question 20(3 points)

Use the graph below to answer the question: Who has the absolute advantage in the production of salt shakers?

a

Zebra

b

Fox

c

Both Zebra and Fox

d

Neither Zebra nor Fox

Question 21(3 points)

Use the graph below to answer the question: Who has the absolute advantage in the production of pens?

a

Zebra

b

Fox

c

Both Zebra and Fox

d

Neither Zebra nor Fox

Question 22(3 points)

Use the graph below to answer the question: According to comparative advantage, who should produce pens and who should produce salt shakers?

a

Zebra should produce salt shakers and Fox should produce pens

b

Fox should produce both salt shakers and pens

c

Zebra should produce both salt shakers and pens

d

Zebra should produce pens and Fox should produce salt shakers

Question 23(3 points)

The primary difference between a tariff and a quota is _______________.

a

only a tariff will increase the price of imported goods

b

a tariff will provide revenue for the government, while the quota will not

c

only a quota will increase the price of imported goods

d

a quota is used on domestic goods while a tariff is used on foreign goods

Question 24(3 points)

Which of the following is NOT an argument for applying trade restrictions?

a

to maintain quality and safety standards of imports

b

to protect strategic industries

c

to protect infant industries

d

to help consumers

Question 25(3 points)

All of the following occur when a buyer in the US wishes to purchase a car from Japan, except:

a

The supply curve for the US Dollar shifts to the right

b

The demand curve for the yen shifts to the right

c

The USD appreciates

d

The Yen appreciates

Question 26(3 points)

What nation is the largest US trading partner?

a

Canada

b

Mexico

c

China

d

Russia

Question 27(3 points)

What state exports the most goods and services in the US?

a

Alabama

b

New York

c

Michigan

d

Texas

Question 28(3 points)

What trade practice did China engage in regarding exporting hangers to the United States?

a

Export subsidies

b

Import quotas

c

Dumping

d

Tariffs

Question 29(3 points)

A tariff is a tax placed on _______________.

a

goods produced domestically

b

exports only

c

exports and imports

d

imports only

Question 30(3 points)

Export subsidies are used to _______________.

a

hurt domestic consumers

b

hurt domestic producers by increasing the cost of production

c

help foreign producers who produce the same item as a domestic producer

d

help domestic producers compete with foreign producers

Question 31(5 points)

The trade organizations that you studied in this unit included the WTO, the IMF, and NAFTA. Select one and describe what the organization accomplishes in the world of trade.

Your answer:

Question 32(5 points)

Protectionist or Free Trade? Imagine that you are the US Trade Representation for our nation. Take a position and present two reasons why you would adopt either a protectionist trade policy or a free trade policy.

chart for question 18

Question 18 (3 points) The lowest opportunity cost for producing robots is Hint: Remember to use the "other goes over" method first, then choose the lowest number to determine the comparative advantage (lowest opportunity cost). Pizza Robots Joe 10 60 Bob 20 40Question 19 (3 points) Who has the absolute advantage in the production of pizza? Pizza Robots Joe 10 60 Bob 20 40Question 20 (3 points) Use the graph below to answer the question: Who has the absolute advantage in the production of salt shakers? 50 Zebra Pens 10 Fox 25 50 Salt ShakersQuestion 21 (3 points) Use the graph below to answer the question: Who has the absolute advantage in the production of pens? 50 Zebra Pens 10 Fox 25 50 Salt ShakersQuestion 22 (3 points) Use the graph below to answer the question: According to comparative advantage, who should produce pens and who should produce salt shakers? 50 Zebra Pens 10 Fox 25 50 Salt Shakers