Question

The principle of comparative advantage essentially states that

A)total output of an economic system is greatest when each

good is produced by those who have the lowest opportunity cost of producing the

good.

B)specialization can reduce output rather than increase

it.

C)there are some goods for which the opportunity costs of

production are the same regardless of who produces them.

D)some goods have high opportunity costs and low absolute

costs.

Question

If Kami can produce 40 wireless earbuds or 30 cellphones during

a month's time, while Sally can produce 10 wireless earbuds or 20 cellphones,

then it is correct to state that

A)Kami has a comparative advantage in producing wireless

earbuds.

B)Sally has a comparative advantage in producing both

wireless earbuds and cellphones.

C)Sally has an absolute advantage in wireless earbuds.

D)Kami has a comparative advantage in producing both

wireless earbuds and cellphones.

Question

Country A can product 100 units of Good X in a day and 40 units

of Good Y while Country B can produce 50 units of Good X and 40 units of Good

Y.

A)These countries will not trade since Country A has a

comparative advantage in the production of both goods.

B)These countries should trade since Country B has a

comparative advantage in the production of Good X and Country A has a

comparative advantage in the production of Good Y.

C)These countries should trade since Country A has a

comparative advantage in the production of Good X and Country B has a

comparative advantage in the production of Good Y.

D)These countries will not trade since Country A will

always be able to take advantage of Country B.

Question

Dumping is

A)international price discrimination.

B)selling goods produced with government approval.

C)collusive behavior among producers in different

countries.

D)international monopolistic pricing.

Question

A system of accounts that measures the transactions of goods,

services, income, and financial assets between domestic households, businesses,

and governments and residents of the rest of the world during a specific time

period is the

A)balance of trade.

B)capital account.

C)balance of payments.

D)current account.

Question

Checking exchange rates, you find $1 equals 0.75 euros. Then the

price of 1 euro is

A)$0.80.

B)$1.33.

C)$7.5.

D)$0.75.

Question

When the dollar price of a British pound is $0.75, it is correct

to state that an American traveling in England will receive ________ pounds per

dollar.

A)1.33

B)0.75

C)75

D)1.25

Question

The term "flexible exchange rates" refers to

A)the increase in the exchange value of one nation's

currency in terms of another nation.

B)a situation in which exchange rates are allowed to

fluctuate in the open market in response to changes in supply and demand.

C)a nation in which households, firms, and governments buy

and sell national currencies.

D)the decrease in the exchange value of one nation's

currency in terms of another nation.

Question

Suppose that the current exchange rate between the dollar and

peso is $1 equals 11 pesos. If the exchange rate changes to $1 equals 9 pesos,

which of the following is TRUE?

A)The dollar appreciates, and U.S. exports become cheaper.

B)The peso appreciates and U.S. imports from Mexico become

cheaper.

C)The peso depreciates and U.S. imports from Mexico become

cheaper.

D)The dollar appreciates but the peso values of U.S.

exports stay the same.