International Economics_Chap01

An important insight of international economics is that when countries sell goods and services to each other,

• the exchange is almost always mutually beneficial.

• one country always benefits at the expense of the other.

• it only benefits the low wage country.

• it only benefits the high wage country.

The gravity model of international trade predicts that trade between two nations is larger when

• the larger of two nations

• the closer the nations

• the more open are the two nations

• all of above

Which of the following statements is TRUE?

• Trade is mutually beneficial when countries exchange goods and services.

• Trade is harmful if large disparities exist between countries in productivity.

• Trade is harmful if large disparities exist between countries in wages.

• Trading with less-advanced, lower-wage countries will drag down a country's standard of living.

which of followings is not the subject matter of international finance?

• the foreign exchange markets

• the balance of payments

• basics and gains from trade

• policies to adjust balance of payment disequilibria

International economics deals with:

• the flows of goods, services, payments among nations

• policies directed at regulating the flows of goods, services, payments among nations

• the effects of policies on welfare of the nations

• all of above

Who sells what to whom...

• is not a valid concern of international economics.

• is not considered important for government foreign trade policy since such decisions are made in the private competitive market.

• is determined by political rather than economic factors.

• has been a major preoccupation of international economics.

International economics can be divided into two broad sub-fields: .....

• macro and micro.

• developed and less developed.

• international trade and international money.

• monetary and barter.

International trade analysis focuses on....

• the real transactions that involve a physical movement of goods or a tangible commitment of economic resources in the international economy.

• the monetary side of the international economy.

• the financial transactions such as foreign purchases of U.S. dollars.

• the devaluation of currencies of the international economy.

International monetary analysis focuses on ...

• the real side of the international economy.

• the international investment side of the international economy.

• the issues of international cooperation between Central Banks.

• the monetary side of the international economy, such as currency exchange.

According to Gravity model, we expect the United States to trade less with:

• Canada, Mexico

• Japan, China

• Bangladesh, Nepal

• Germany