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WorksheetsAP Macro International Review
Total questions: 20
Worksheet time: 36mins
Name
Class
Date
1.
The term __________ is used to describe what those in one country buy from those in other countries.
a)
A. exports
b)
B. imports
c)
C. trade
d)
D. surplus
2.
From an economic perspective, returns on foreign investment are included in the overall measure of trade because financial investments:
a)
A. are a form of trade that takes place in the financial capital market.
b)
B. can also be thought of as payments made by the government.
c)
C. are made by parties in the U.S. economy and foreign investors.
d)
D. have expanded substantially in the U.S. over the last few decades.
3.
Which of the following would most likely be included in the negative side of the current account balance?
a)
A. money earned by Canadian firms in the U.S.
b)
B. money spent by Canadian tourists in the U.S.
c)
C. returns paid to U.S. investors in Southeast Asia
d)
D. European aid sent to the U.S. to fund the Iraq war
4.
In 2010, the country of Vesey exported goods worth $312 billion and services worth $198 billion. It imported goods worth $525 billion and services worth $255 billion. It sent $1.2 billion in famine relief to Africa, and received $3 billion to support its first democratic election efforts. What was the current account balance in Vesey for 2010? Only one of the following statements about trade surplus and capital flow is correct. Which one is it?
a)
A.
$251.2 billion
b)
B.
$270.6 billion
c)
C.
$213.3 billion
d)
D.
$271.8 billion
5.
Only one of the following statements about trade surplus and capital flow is correct. Which one is it?
a)
A. a trade surplus means that there is a net inflow of capital
b)
B. a trade surplus means that there is a net outflow of capital
c)
C. a trade surplus exists if there is a net inflow of capital excluding foreign borrowing and lending
d)
D. a trade surplus exists if there is a net outflow of capital excluding foreign borrowing and lending
6.
Which of the following represents a financial inflow to the U.S. economy?
a)
A. returns paid on U.S. financial investments in Switzerland
b)
B. computer chip imports from Israel
c)
C. oil imports from Canada
d)
D. foreign aid from the U.S. to Ethiopia
7.
A recession tends to make a _____________________.
a)
A. trade surplus smaller
b)
B. trade deficit smaller
c)
C. trade deficit larger
d)
D. both a and b above
8.
Under what circumstances would it most likely be considered beneficial for a government to be a large borrower of foreign investment capital?
a)
A. never as there is no economic merit in a policy of running trade deficits
b)
B. if the inflow of capital is absorbed by greater government borrowing
c)
C. when borrowing larger amounts is based on unconventional macroeconomic wisdom
d)
D. when those funds are invested in a way that sustains economic growth over time
9.
When Mataeo buys Euros through _________________________, he will use his U.S. dollars to pay for them.
a)
A. the foreign exchange market
b)
B. the currency exchange market
c)
C. a floating exchange market
d)
D. foreign currency market
10.
A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies.
a)
A. strengthening; more
b)
B. weakening; less
c)
C. a problem for exporters; less
d)
D. beneficial to importers; more
11.
If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then;
a)
A. the U.S. dollar appreciated against the Canadian dollar.
b)
B. the Canadian dollar weakened against the Canadian dollar.
c)
C. the U.S. dollar strengthened against the Canadian dollar.
d)
D. the Canadian dollar appreciated against the U.S. dollar.
12.
In 2010, $1.00 U.S. bought 8.24 Chinese yuan and in 2012 it bought 6.64 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012?
a)
A. 2010: .12 U.S. dollars; 2012: .15 U.S. dollars
b)
B. 2010: 1.2 U.S. dollars; 2012: 1.5 U.S. dollars
c)
C. 2010: .82 U.S. dollars; 2012: .66 U.S. dollars
d)
D. 2010: .15 U.S. dollars; 2012: .11 U.S. dollars
13.
From a macroeconomic point of view, increases in ____________ are an addition to aggregate demand, while increases in ___________ are a subtraction from aggregate demand.
a)
A. rates of return; exchange rates
b)
B. exchange rates; rates of return
c)
C. exports; imports
d)
D. imports; exports
14.
If the U.S. government uses an expansionary monetary policy to reduce interest rates, then it will:
a)
A. lead to higher imports and lower exports.
b)
B. cause the exchange rate for U.S. currency to depreciate.
c)
C. lower levels of consumption and investment.
d)
D. cause the exchange rate for U.S. currency to appreciate.
15.
A stronger British pound is beneficial for:
a)
A. U.S. exchange students studying in Britain with a U.S. scholarship.
b)
B. British firms selling goods and services in Canada.
c)
C. British investors who have invested money in Australia.
d)
D. exchange students with a British scholarship studying in Canada
16.
The idea behind comparative advantage reflects the possibility that one party:
a)
A. may be able to produce everything relatively more efficiently than another party.
b)
B. may be able to produce something at a lower dollar cost than another party.
c)
C. with an absolute advantage in producing two different may export goods both of those goods to the other party.
d)
D. may be able to produce something at a lower opportunity cost than another party
17.
Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:
a)
A. Canada has a comparative advantage in the production of hockey sticks.
b)
B. Germany has a comparative advantage in the production of hockey sticks.
c)
C. Canada has an absolute advantage in the production of maple syrup.
d)
D. Germany has an absolute advantage in the production of maple syrup.
18.
Trade allows each country to take advantage of _________________ in the other country.
a)
A. economies of scale
b)
B. lower opportunity costs
c)
C. specialization
d)
D. worker productivity
19.
Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
a)
A. Alland has an absolute advantage in producing food but will not trade with Georgeland.
b)
B. Alland has a comparative advantage, but not an absolute advantage, in producing food.
c)
C. Georgeland has both a comparative and absolute advantage in producing clothing.
d)
D. Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.
20.
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then:
a)
A. there are no incentives for Beta to engage in international specialization and trade with Alpha.
b)
B. it is in the interest of Beta to grow oranges and trade for apples.
c)
C. it is in the interest of both countries to specialize and trade with one another.
d)
D. there are no incentives for Alpha or Beta to specialize and trade with one another.
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