International Economic & Trade Exam

From 1950 to 2015...

• The U.S. economy roughly tripled in size

• U.S. imports roughly tripled in size

• The share of U.S trade in the global economy roughly tripled in size

• U.S. imports roughly tripled as compared to U.S exports

• U.S. exports roughly tripled in size

The United States is less dependent on trade than most other countries because...

• the United States is a relatively large country with diverse resources

• the United States is a 'Superpower'

• the military power of the United States makes it less dependent on anything

• the United States invests in many other countries

• many countries invest in the United States

An important insight of international trade theory is that when two countries engage in voluntary trade...

• one country always benefits at the expense of the other

• it is almost always beneficial to both countries

• it only benefits the low wage country

• it only benefits the high wage country

• it is almost never beneficial to both countries

If there are large disparities in wage levels between countries, then...

• trade is likely to be harmful to both countries

• trade is likely to be harmful to the country with the high wages

• trade is likely to be harmful to the country with the low wages

• trade is likely to be harmful to neither country

• trade is likely to have no effect on either country

The benefits of international trade are derived from trade in...

• tangible goods only

• intangible goods only

• goods but not services

• services but not goods

• anything of value

International economics _______ use the same fundamental methods of analysis as other branches of economics, because ______

• does not, the level of complexity of international issues is unique

• does not, the interactions associated with international economic relations is highly mathematical

• does not, international economics takes a different perspective on economic issues

• does not, international economic policy requires cooperation with other countries

• does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by...

• Adam Smith

• David Hume

• David Ricardo

• Eli Heckscher

• Lerner and Samuelson

After World War II, the United States has pursued a broad policy of...

• strengthening 'Fortress America' protectionism.

• removing barriers to international trade

• isolating Iran and other members of the 'axis of evil'

• protecting the U.S. from the economic impact of oil producers

• restricting trade of manufactured goods

The balance of payments has become a central issue for the United States because...

• when the balance of payments is not balanced, society is unbalanced

• the U.S. economy cannot grow when the balance of payments is in deficit

• the U.S. has run huge trade deficits every year since 1982

• the U.S. never experienced a surplus in its balance of payments

• the U.S. once ran a large trade surplus of about $40 billion

The study of exchange rate determination is a relatively new part of international economics, since...

• for much of the past century, exchange rates were fixed by government action

• the calculations required for this were not possible before modern computers became available

• economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time

• dynamic overshooting asset pricing models are a recent theoretical development

• the exchange rate never fluctuates