Applied International Economics
Chapter Exam Questions
Course Introduction
Applied International Economics explores the practical aspects of economic interactions between countries, focusing on trade policy, exchange rates, international financial markets, and global economic institutions. Students will analyze real-world case studies to understand how international economic theories are applied to solve contemporary global issues such as trade disputes, capital flows, and economic development. The course emphasizes empirical methods and data analysis, equipping students with the skills needed to evaluate the effects of globalization, regional integration, and policy decisions on a country's economic performance and competitiveness in the international arena.
Recommended Textbook
International Economics 15th Edition by Robert Carbaugh
Available Study Resources on Quizplus
17 Chapters
1863 Verified Questions
1863 Flashcards
Source URL: https://quizplus.com/study-set/3500
Page 2
Chapter 1: The International Economy and Globalization
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/69522
Sample Questions
Q1) The first wave of globalization was brought to an end by
A) The Great Depression
B) The Second World War
C) The First World War
D) The Smoot-Hawley Act
Answer: C
Q2) The movement to free international trade is most likely to generate short-term unemployment in which industries?
A) Industries in which there are neither imports nor exports
B) Import-competing industries
C) Industries that sell to domestic and foreign buyers
D) Industries that sell to only foreign buyers
Answer: B
Q3) Foreign ownership of U.S.financial assets
A) Has decreased since the 1960's
B) Has increased since the 1960's
C) Has made the U.S.a net borrower since the late 1980's
D) Both a and c
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Foundations of Modern Trade Theory: Comparative Advantage
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/69523
Sample Questions
Q1) Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions,it could not fully explain the distribution of the gains from trade among trading partners.
A)True
B)False
Answer: False
Q2) Trade between two nations would not be possible if they have:
A) Identical community indifference curves but different production possibilities curves
B) Identical production possibilities curves but different community indifference curves
C) Different production possibilities curves and different community indifference curves
D) Identical production possibilities curves and identical community indifference curves
Answer: D
Q3) Is it possible to add up the preferences of all consumers in an entire nation?
Answer: No.It is impossible to make interpersonal comparisons of satisfaction,and thus it is not possible to add up preferences.
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Sources of Comparative Advantage
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/69524
Sample Questions
Q1) Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no longer manufacture the product?
A) Theory of factor endowments
B) Theory of overlapping demands
C) Economies of scale theory
D) Product life cycle theory
Answer: D
Q2) Linder's theory of overlapping demand provides an explanation of:
A) Product life cycle theory
B) Factor endowment model
C) Economies of large-scale production
D) Intra-industry trade
Answer: D
Q3) Intra-industry trade can be explained by product differentiation,economies of scale,seasons of the year,and transportation costs.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Tariffs
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/69525
Sample Questions
Q1) A tariff can be thought of as a tax on imported goods.
A)True
B)False
Q2) The offshore assembly provision in the U.S.
A) Provides favorable treatment to U.S.trading partners
B) Discriminates against primary product importers
C) Provides favorable treatment to products assembled abroad from U.S.manufactured components
D) Hurts the U.S.consumer
Q3) Refer to Exhibit 4.2.All of the import tariff is shifted to the Canadian consumer via a higher price of motorcycles.
A)True
B)False
Q4) Figure 4.3 represents the domestic market for gasoline in the United States.What is the producer surplus in this market?
A) 60 gallons of gasoline
B) $120
C) $60
D) $3
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Nontariff Trade Barriers
Available Study Resources on Quizplus for this Chatper
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/69526
Sample Questions
Q1) The sugar import quotas of the U.S.government have tended to increase the market price of sugar,thus reducing the costs to the government of maintaining sugar price supports for domestic growers.
A)True
B)False
Q2) If the U.S.demand for Korean steel is price elastic,an export subsidy granted to Korean steel firms will increase Korea's export revenue.
A)True
B)False
Q3) To the extent that a local content requirement forces firms to locate production in a high-cost nation,product price rises and consumer surplus falls.
A)True
B)False
Q4) What is the price-based definition of dumping?
Q5) An effective Buy American law results in deadweight welfare losses for the United States in the form of the protective effect and consumption effect.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Trade Regulations and Industrial Policies
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/69527
Sample Questions
Q1) Economic theory suggests that if France is a net importer of automobiles,whose production is subsidized by the Korean government,the overall welfare of France decreases because of the Korean subsidy.
A)True
B)False
Q2) In 1980 the United States announced an embargo on grain exports to the Soviet Union in response to the Soviet armed invasion of Afghanistan.The embargo was mainly resisted by:
A) U.S.grain consumers and producers of bread
B) U.S.farmers and grain companies
C) Grain producers in foreign countries
D) Grain consumers in foreign countries
Q3) The World Trade Organization brings into the multilateral trading system manufactured goods and agricultural products,but not trade in services,intellectual property protection,and investment.
A)True
B)False
Q4) What is the basis for trade adjustment assistance?
Q5) What is the essential idea behind strategic trade policy?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Trade Policies for the Developing Nations
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/69528
Sample Questions
Q1) A primary goal of international commodity agreements has been the:
A) Maximization of members' revenues via export taxes
B) Nationalization of corporations operating in member nations
C) Adoption of tariff protection against industrialized nation sellers
D) Moderation of commodity price fluctuations when markets are unstable
Q2) During periods of weak demand,the Organization of Petroleum Countries has implemented production (export)quotas to ensure that excess oil supplies be kept off the market.
A)True
B)False
Q3) Hong Kong and South Korea are examples of developing nations that have recently pursued industrialization policies.
A) Import substitution
B) Export promotion
C) Commercial dumping
D) Multilateral contract
Q4) Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?
Q5) What are some major trade problems faced by developing nations?
Q6) Are economic downturns helpful to cartels?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Regional Trading Arrangements
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/69529
Sample Questions
Q1) Suppose that the United Kingdom and Italy abolish all tariffs on each other's goods and all restrictions on movements of factors of production between them.They also implement a common protectionist policy toward other countries.This is an example of a (an):
A) Free-trade area
B) Customs union
C) Common market
D) Economic union
Q2) A common market
A) Allows the imposition of common external trade barriers against non-members
B) Represents less economic integration than a free trade area
C) Does not permit free movement of goods among member nations
D) Does not allow free movement of factors of production among nations
Q3) In 1989 Canada and the United States agreed to implement a (an)____ over a ten year period.
A) Customs union
B) Common market
C) Free trade area
D) Economic union
Q4) Who were the losers in the U.S.as a result of NAFTA?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: International Factor Movements and
Multinational Enterprises
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/69530
Sample Questions
Q1) Foreign direct investment would occur if Mobile Inc.of the United States acquired sufficient common stock in a foreign oil company to assume voting control.
A)True
B)False
Q2) Most multinational corporations have a low ratio of foreign sales to total sales,usually 5 percent or less.
A)True
B)False
Q3) By establishing transplant factories in the United States,Japanese automakers were able to avoid export restrictions imposed by the Japanese government,but not import restrictions imposed by the U.S.government.
A)True
B)False
Q4) Foreign-owned companies in the United States operate under more strict antitrust,environmental,and other regulations than U.S.-owned companies.
A)True
B)False
Q5) What are guest workers?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Balance of Payments
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/69531
Sample Questions
Q1) The "goods and services" account of the balance of payments shows the monetary value of international flows associated with transactions in goods,services,and unilateral transfers.
A)True
B)False
Q2) The balance of international indebtedness is a record of a country's international:
A) Investment position over a period of time
B) Investment position at a fixed point in time
C) Trade position over a period of time
D) Trade position at a fixed point in time
Q3) Concerning the balance of payments,a current-account deficit results in a worsening of a country's net foreign investment position.
A)True
B)False
Q4) All of the following are debit items in the balance of payments,except:
A) Capital outflows
B) Merchandise exports
C) Private gifts to foreigners
D) Foreign aid granted to other nations
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Foreign Exchange
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/69532
Sample Questions
Q1) Suppose the exchange rate between the Japanese yen and the U.S.dollar is 100 yen per dollar.A Japanese stereo with a price of 60,000 yen will cost:
A) $60
B) $600
C) $6000
D) None of the above
Q2) Consider Table 11.1.Comparing Tuesday to the previous Monday,by Tuesday the dollar had:
A) Depreciated against the pound
B) Appreciated against the pound
C) Not changed against the pound
D) None of the above
Q3) If Citibank quoted bid and offer rates for the Swiss franc at $.4850/$.4854,the bank would be prepared to buy,say,1 million francs for $485,000 and sell them for $485,400.
A)True
B)False
Q4) How is the equilibrium rate of exchange determined?
Q5) Where are foreign currency options traded?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Exchange-Rate Determination
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/69533
Sample Questions
Q1) If U.S.labor productivity growth is 2 percent per annum and Swiss labor productivity growth is 6 percent per annum,the dollar will depreciate against the franc under a system of floating exchange rates.
A)True
B)False
Q2) Refer to Figure 12.1.Should real interest rates in the United States rise relative to real interest rates in Switzerland,there would occur a (an):
A) Increase in the demand for francs--decrease in the supply of francs-depreciation of the dollar
B) Increase in the demand for francs--decrease in the supply of francs-appreciation of the dollar
C) Decrease in the demand for francs--increase in the supply of francs-appreciation of the dollar
D) Decrease in the demand for francs--decrease in the supply of francs-depreciation of the dollar
Q3) In a free market,what determines exchange rates in the long run and the short run?
Q4) What is the asset market approach to exchange rate determination?
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Mechanisms of International Adjustment
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69534
Sample Questions
Q1) Refer to Figure 13.1.The U.S.capital and financial account schedule would shift upward from CA<sub>0</sub> to CA<sub>1</sub> if:
A) U.S.interest rates exceeded foreign interest rates
B) Foreign interest rates exceeded U.S.interest rates
C) Taxes were placed on income earned by U.S.residents from their foreign investments
D) Taxes were placed on income earned by foreign residents from their U.S.investments
Q2) Refer to Figure 13.3.Falling investment profitability in the United States,relative to investment profitability abroad,would shift the U.S.capital and financial account schedule downward from CA<sub>0</sub> to CA<sub>1</sub>,resulting in net financial outflows from the United States.
A)True
B)False
Q3) An "automatic" adjustment mechanism would require a trade-surplus nation to accept price deflation and/or falling income as the cost of increasing imports.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Exchange-Rate Adjustments and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/69535
Sample Questions
Q1) Which approach analyzes a nation's balance of payments in terms of money demand and money supply?
A) Expenditures approach
B) Absorption approach
C) Elasticities approach
D) Monetary approach
Q2) Complete currency pass-through arises when a 10 percent depreciation in the value of the dollar causes U.S.:
A) Import prices to fall by 10 percent
B) Import prices to rise by 10 percent
C) Export prices to rise by 10 percent
D) Export prices to rise by 20 percent
Q3) The absorption approach to currency devaluation deals with the income effects of devaluation while the elasticity approach to devaluation deals with the price effects of devaluation.
A)True
B)False
Q4) How do movements in exchange rates affect domestic costs,in the presence of foreign sourcing?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Exchange-Rate Systems and Currency Crises
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69536
Sample Questions
Q1) Under a floating exchange-rate system,if American exports decrease and American imports rise,the value of the dollar will:
A) Appreciate
B) Depreciate
C) Be officially revalued
D) Be officially devalued
Q2) Which exchange-rate system does not require monetary reserves for official exchange-rate intervention?
A) Floating exchange rates
B) Pegged exchange rates
C) Managed floating exchange rates
D) Dual exchange rates
Q3) Small nations,such as Angola and Barbados,peg their currencies to the U.S.dollar since the prices of many of their traded goods are determined in markets in which the dollar is the key currency.
A)True
B)False
Q4) How can currency boards and dollarization prevent currency crises?
Q5) Which nations use multiple exchange rates the most and why?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Macroeconomic Policy in an Open Economy
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/69537
Sample Questions
Q1) Suppose the United States faces domestic recession and a current account deficit.Should the United States devalue the dollar,one would expect the:
A) Recession to become less severe--deficit to become less severe
B) Recession to become more severe--deficit to become less severe
C) Recession to become less severe--deficit to become more severe
D) Recession to become more severe--deficit to become more severe
Q2) A nation realizes internal balance if economy achieves full employment and price stability.
A)True
B)False
Q3) Refer to Exhibit 16.1.The Federal Reserve might refuse to support the accord on the grounds that when helping to drive the dollar's exchange value downward,it promotes an increase in the U.S.:
A) Rate of inflation
B) Budget deficit
C) Unemployment level
D) Economic growth rate
Q4) What policy instrument should be used when demand-pull inflation exists?
Q5) What is international economic policy coordination?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: International Banking: Reserves, Debt, and Risk
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/69538
Sample Questions
Q1) Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.
A)True
B)False
Q2) "Owned" international reserves consist of:
A) Special drawing rights
B) Oil facility
C) IMF drawings
D) Reciprocal currency arrangements
Q3) Because the value of the SDR is tied directly to the value of the U.S.dollar,a 10 percent dollar depreciation would result in a 10 percent decrease in the SDR's value.
A)True
B)False
Q4) The supply of international reserves consists of owned reserves and borrowed reserves.
A)True
B)False
Q5) How can a bank reduce its exposure to the debt of developing nations?
To view all questions and flashcards with answers, click on the resource link above. Page 19