International Economics
Mock Exam
Course Introduction
International Economics explores the principles and dynamics governing economic interactions among countries, including international trade, finance, and the movement of goods, services, and capital. The course examines theoretical frameworks explaining patterns of trade and the impact of trade policies such as tariffs and quotas, as well as the functioning of foreign exchange markets and the implications of exchange rate regimes. Students will analyze the effects of globalization, international economic integration, and current issues such as trade agreements, balance of payments problems, and the roles of international financial institutions. The course equips students with the analytical tools needed to understand the benefits and challenges of economic relations across national borders.
Recommended Textbook
Introduction to International Economics 3rd Edition by Dominick Salvatore
Available Study Resources on Quizplus 16 Chapters
861 Verified Questions
861 Flashcards
Source URL: https://quizplus.com/study-set/3614
Page 2
Chapter 1: Introduction to the Global Economy
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/71745
Sample Questions
Q1) Globalization is inevitable because consumers around the world are demanding different types of commodities.
A)True
B)False
Answer: False
Q2) Globalization ____________:
A)Is inevitable in a world with converging tastes for consumer goods.
B)increases efficiency
C)is often blamed for increasing inequalities in income distribution in the world.
D)All of the above
Answer: D
Q3) When interest rates increase in the United States,capital flows from abroad will:
A)increase
B)decrease
C)no change
D)not be available anymore
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Comparative Advantage
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/71746
Sample Questions
Q1) The analysis of economic forces that justify the existence of trade and its degree between two nations is referred to as:
A)basis for trade
B)losses from trade
C)gains from trade
D)pattern of trade
Answer: A
Q2) The ratio of one commodity price to the price of another commodity is called (the):
A)absolute advantage
B)relative commodity price
C)constant opportunity costs
D)increasing opportunity costs.
Answer: B
Q3) Adam Smith advocated a policy in which:
A)The government regulates all aspects of economic activity
B)The government interferes with economic activity to a moderate level
C)The government keeps regulation of economic activity to a minimum
D)The governments interference in economic activity is completely non-existent
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The Standard Trade Model
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/71747
Sample Questions
Q1) In autarky a nation maximizes its welfare by choosing a point of production
A)on its production frontier,where the community indifference curve is tangent to the production frontier
B)on the production frontier which is on one of the two axes
C)inside the production frontier
D)outside the production frontier
Answer: A
Q2) Why do increasing opportunity costs of production occur?
A)Factors of production are homogeneous
B)Factors of production are being used in the same fixed proportion
C)Factors of production are completely adaptable to every use
D)All factors of production are not equally suited in the production of all commodities
Answer: D
Q3) The marginal rate of transformation is the amount of one commodity that a nation or region must give up to produce each additional unit of another commodity.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: The Heckscher-Ohlin and Other Trade Theories
Available Study Resources on Quizplus for this Chatper
53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/71748
Sample Questions
Q1) Which of the following factors were not considered within the framework of the Leontief paradox?
A)Human capital
B)Physical capital
C)Natural resources
D)Both A & C
Q2) Increasing returns to scale generally exist because of:
A)greater division of labor and labor specialization
B)increased cost of hiring skilled labor
C)less and less expensive factors of production
D)incompatibility of labor and capital
Q3) Which of the following states that free international trade reduces the real income of the nation's relatively scarce factor and increases the real income of the nation's relatively abundant factor?
A)Heckscher-Ohlin theory
B)Stolper-Samuelson theorem
C)Differentiated product theorem
D)None of the above
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Trade Restrictions: Tariffs
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/71749
Sample Questions
Q1) The reduction in the price of the import commodity that results when a large nation imposes an import tariff is attributed to the ____________ and constitutes a __________ of welfare for the nation.
A)consumption effect of the tariff,loss
B)terms of trade effect of the tariff,loss
C)protective effect,gain
D)terms of trade effect,gain
Q2) A defining characteristic of a "large nation" relative to a "small nation" with respect to identifying the welfare effects of a tariff is that the:
A)large nation is sufficiently powerful to influence the world market price of the imported commodity
B)large nation has a higher per capita income than the small nation
C)large nation is a monopsonist in the market for the imported commodity
D)large nation has a higher marginal rate of substitution for the imported commodity than the small nation
Q3) A quota is a tax imposed on a traded commodity when it crosses a national boundary.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Nontariff Trade Barriers and the Political
Economy of Protectionism
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71750
Sample Questions
Q1) The World Trade Organization provides for all of the following except:
A)the use of the most-favored-nation clause
B)assistance in the settlement of trade disputes
C)multilateral tariff reductions
D)bilateral tariff reductions
Q2) In order to avoid outsourcing or offshoring,the national government could provide the firm with trade protection in the form of:
A)a tariff
B)a quota
C)a subsidy
D)this is not allowed by WTO rules
Q3) The World Trade Organization was established by the _______________ of multilateral trade negotiations.
A)Kennedy Round
B)Tokyo Round
C)Uruguay Round
D)Doha Round
Q4) Non-tariff barriers are also known as "new protectionism".
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Economic Integration
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/71751
Sample Questions
Q1) The ____________________ was founded by the Treaty of Rome,signed in March 1957 by West Germany,France,Italy,Belgium,the Netherlands,and Luxembourg,and came into being on January 1,1958.
A)NAFTA
B)European Union (EU)
C)Variable import levies
D)European Economic Area (EEA)
Q2) Which of the following is an economic integration among developing countries?
A)NAFTA
B)EU
C)CARIFTA
D)Benelux
Q3) In September,1993,__________________ signed the North American Free Trade Agreement (NAFTA).
A)the US and Canada
B)the US,Mexico and Central America
C)the US,Canada and Mexico
D)the US,Canada and Greenland
Q4) Why do countries engage in economics integration? Doesn't it have a reduced welfare effect as opposed to free trade?
9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Growth and Development With International Trade
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/71752
Sample Questions
Q1) Which of the following countries is characterized by rapid growth in gross domestic product in industrial production and manufactured exports?
A)Hong Kong
B)Korea
C)Singapore
D)All of these countries
Q2) If a nation's terms of trade increases from ½ to 1,and consumption increases from a lower indifference curve to a higher one,this nation is experiencing immiserizing growth.
A)True
B)False
Q3) _______________ is the idea that exports of developing countries to developed countries cannot grow rapidly because of the protectionist policies of the developed countries.
A)Seeing the export glass half empty
B)Export pessimism
C)Import substitution
D)Export-led growth
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: International Resource Movements and Multinational Corporations
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71753
Sample Questions
Q1) Direct foreign investments have been greatly facilitated by the rapid advancements in _______________ since the end of World War II.
A)manufacturing technology
B)transportation and communication
C)accounting practices
D)anti-trust legislation
Q2) All of the following are risks associated with stocks,except A)bankruptcy.
B)variability in market value.
C)possibility of lower than anticipated returns.
D)the risk of bank failure.
Q3) Investments in securities with yields that are inversely correlated is known as A)basic Investment theory.
B)risk diversification.
C)vertical integration.
D)horizontal integration.
Q4) Direct investments would not include takeovers by another firm.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Q5) What are the basic reasons for a multinational corporations (MNCs)existence?
Chapter 10: Balance of Payments
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/71754
Sample Questions
Q1) ____________ are balance of payments transactions involving the receipt of payments from foreigners.
A)Debit transactions
B)Credit transactions
C)Accommodating transactions
D)Autonomous transactions
Q2) Which of the following is an example of a capital inflow for the US?
A)A domestic decrease of assets held by foreign investors
B)A reduction in US foreign asset holdings
C)An increase in US foreign asset holdings
D)Importation of goods and services
Q3) ____________ is an example of a debit transaction in the balance of payments.
A)Exports of goods and services
B)Unilateral transfers to foreigners
C)Capital inflows
D)Receipt of a vase as a gift from a foreign country
Q4) The earnings received from abroad for the services of US assets abroad are recorded in the capital account.
A)True
B)False
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: The Foreign Exchange Market and Exchange Rates
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71755
Sample Questions
Q1) Suppose the exchange rate of the British pound is $1.75 per pound while the exchange value of the Swiss franc is $0.667 cents per franc.The cross exchange rate between the pound and the franc is:
A).381 franc per pound
B)1.167 francs per pound
C)Cannot determine
D)2.624 francs per pound
Q2) A ______________ involves an agreement today to buy or sell a specified amount of a foreign currency,for delivery at a specified future date,at a rate agreed upon today.
A)forward transaction
B)spot transaction
C)arbitrage transaction
D)foreign discount with respect to the domestic currency
Q3) A currency that is selling at a forward rate greater than the spot rate is said to be trading at a(n):
A)forward increase
B)forward discount
C)forward transaction
D)forward premium
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
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/71756
Sample Questions
Q1) Absolute purchasing-power parity theory postulates that the percentage change in the exchange rate is equal to the difference in the percentage change in the price level in the two countries.
A)True
B)False
Q2) Which of the following approaches to exchange rate determination postulates that exchange rates are determined in the process of equilibrating or balancing the demand and supply of financial assets in each country?
A)The trade approach to exchange rates
B)The portfolio model of exchange rates
C)The elasticities approach to exchange rates
D)All of the above
Q3) The relative purchasing-power parity theory is potentially more useful than the absolute purchasing-power parity theory because instead of an unrealistic assumption of no transportation costs or trade obstructions,it simply assumes that there are no changes in these factors.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Automatic Adjustments With Flexible and Fixed Exchange Rates
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71757
Sample Questions
Q1) What is the Marshall-Lerner Condition and how is it used?
Q2) The marginal propensity to save is the amount of additional savings associated with each one-dollar increase in income multiplied by the increase in income.
A)True
B)False
Q3) The ________________ explains why it may take up to two years for a currency depreciation to make significant reductions in a nation's trade deficit.
A)J-curve effect
B)pass-through
C)Marshall-Lerner condition
D)multiplier effect
Q4) When depreciation of the US dollar occurs compared to the euro,US residents will find European imports __________,because US residents need _________ dollars to purchase each euro.
A)more expensive; more
B)more expensive; fewer
C)less expensive; more
D)less expensive; fewer
15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Adjustment Policies
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/71758
Sample Questions
Q1) Monetary policy is very effective under a fixed exchange rate policy.
A)True
B)False
Q2) What actions should be taken under the internal-external imbalance of inflation and surplus?
A)Expansionary fiscal policy to correct for excess surplus,and expansionary monetary policy to correct for inflation
B)Expansionary fiscal policy to correct for inflation,and contractionary monetary policy to correct for surplus
C)Contractionary fiscal policy to correct for inflation,and expansionary monetary policy to correct for surplus
D)Contractionary fiscal policy to correct for excess surplus,and contractionary monetary policy to correct for inflation
Q3) What are the effects of running a high budget deficit,as the US does?
A)High interest rates,compared to those abroad
B)Large capital Outflows
C)Overvaluation of the dollar
D)Both A and C
Q4) Describe why monetary policy under a fixed exchange rate system is impotent.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Flexible Versus Fixed Exchange Rates,european
Monetary Systems,and Macroeconomic Policy
Coordination
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71759
Sample Questions
Q1) The system under which the exchange rate is always determined by the forces of demand and supply without any government intervention in foreign exchange markets is a(n):
A)fixed exchange rate system
B)import system
C)freely floating exchange rate system
D)export system
Q2) A(n)______________ should aim at maximizing the benefits from permanently fixed exchange rates and minimizing the costs.
A)optimum currency area
B)adjustable peg system
C)fixed exchange rate system
D)flexible exchange rate system
Q3) Under which system does a nation not concern itself with external balance?
A)flexible exchange rate system
B)fixed exchange rate system
C)managed peg
D)gold standard
17
Q4) What is dollarization? What are some of the benefits and cost that go along with it?
To view all questions and flashcards with answers, click on the resource link above.
Chapter
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/71760
Sample Questions
Q1) Confidence is the knowledge that the balance-of-payments adjustment mechanism is working adequately.
A)True
B)False
Q2) Which agreement,ratified in 1978,recognized the managed float and abolished the official price of gold?
A)The Jamaica Accords
B)The Smithsonian Agreement
C)The European Cooperation Agreements
D)General Agreement to Borrow
Q3) Up to 1957,the U.S.deficits were small and the United States settled most of them in dollars.Nations with surplus were willing to accept dollars for what reason?
A)The U.S.stood ready to exchange dollars for gold at the fixed price of $35 an ounce
B)Dollars could be used as an international currency in bilateral transactions with US only
C)Dollar deposits earned no interest
D)US was going to devalue their currency
To view all questions and flashcards with answers, click on the resource link above.
Page 18