ADCP 310 Fall 2010/Week 4 Quiz 1

Name: ______Section: ______Date: ______

For each question, circle only one (1) response. If you change your answer, mark through your other choices, circle your final answer. If more than one (1) answer is circled, the first answer will be graded.

  1. In 2007, trade made up ____ percent of the U.S. economy.
    A.1.3
    B.5.0
    C.12.6
    D.22.7
  1. Which of the following are prominent exports of the U.S.?
    A.Petroleum
    B.Financial services
    C.Clothing
    D.All of the above
  1. Which of the following are prominent imports into the U.S.?
    A.Petroleum
    B.Electrical machinery and audio and video equipment
    C.Motor vehicles
    D.All of the above
  1. In 2007, the trading partner to whom the U.S. shipped the greatest volume of exports was
    A.Mexico.
    B.Canada.
    C.OPEC.
    D.China.
  1. Determining the comparative advantage of a country requires that you look at the economic notion of
    A.opportunity cost.
    B.ceteris paribus.
    C.accounting and economic profit.
    D.external costs.
  1. If it takes one country one unit of labor to produce either a computer or a TV but it takes the other country two units of labor to produce a computer and only one to produce a TV, then the first country has
    A.a comparative advantage in both goods.
    B.an absolute advantage in both goods.
    C.both a comparative and absolute advantage in both goods.
    D.an absolute and comparative advantage in production of computers.
  1. In the language of international trade, "dumping" is the act of
    A.selling goods of substandard quality.
    B.selling goods cheaper than the competition.
    C.selling goods below cost so as to drive competitors out of business.
    D.producing goods without consideration of their environmental consequences.
  2. Which of the following works to limit trade by explicitly raising prices (i.e. as a tax)?
    A.Tariffs
    B.Quotas
    C.Non-tariff regulatory barriers
    D.Buy "American advertising"
  1. A tariff will typically
    A.increase the price, net of the tariff, that is received by sellers.
    B.reduce the price, net of the tariff, that is received by sellers.
    C.increase the price paid by consumers.
    D.b) and c)
  1. A quota will typically
    A.increase the price received by sellers.
    B.reduce the price received by sellers.
    C.increase the price paid by consumers.
    D.a) and c)
  1. The country with a comparative advantage in production of a good or service is the country with the
    A.absolute advantage in production of that good or service.
    B.absolute advantage in production of some other good or service.
    C.lowest opportunity cost of producing that good or service.
    D.ability to produce the largest quantity of that good or service.
  1. Since 1970, U.S. investment in other countries has
    A.increased by more than foreign investment in the U.S.
    B.increased by less than foreign investment in the U.S.
    C.necessarily increased by exactly the same as foreign investment in the U.S.
    D.increased more than twenty-fold.
  1. Since roughly 1970, the U.S. has moved from being a
    A.net importer of goods and services to being a net exporter of goods and services.
    B.net debtor nation to being a net creditor nation.
    C.net creditor nation to being a net debtor nation.
    D.small net creditor nation to a much larger net creditor nation.
  1. Borrowing from other nations is necessary to finance
    A.more imports than exports.
    B.more exports than imports.
    C.a foreign trade surplus.
    D.a surplus in the current account.
  1. The two fundamental sections of the Balance of Payments accounting system are:
    A.the physical and monetary direct transfers among individuals.
    B.physical investment and ephemeral investment.
    C.aggregate consumption and government spending.
    D.the current account and the capital account.
  2. What "balances" in the Balance of Payments accounting system are:
    A.the physical and monetary direct transfers among individuals.
    B.physical investment and ephemeral investment.
    C.aggregate consumption and government spending.
    D.the current account and the capital account.
  1. Over time, the U.S. current account balance has primarily reflected
    A.the U.S. balance of trade.
    B.the volume of U.S. exports.
    C.the extent of U.S. investment in other countries.
    D.transfers of money home by U.S. citizens working in other countries.
  1. Aside from a statistical discrepancy, any deficit in the current account is matched by
    A.a deficit in the capital account.
    B.a surplus in the capital account.
    C.a surplus in the merchandise trade balance.
    D.the excess of exports over imports.
  1. In the market for a foreign currency, a "strengthening" of the dollar corresponds to a
    A.higher dollar price of foreign currency
    B.lower dollar price of foreign currency
    C.larger demand for the foreign currency
    D.smaller supply of the foreign currency
  1. In the market for a foreign currency, a "weakening" of the dollar corresponds to a
    A.higher dollar price of foreign currency
    B.lower dollar price of foreign currency
    C.smaller demand for the foreign currency
    D.larger supply of the foreign currency
  1. Continuous government intervention in markets for foreign currency is typical of a
    A.fixed exchange rate system
    B.floating exchange rate system
    C.managed float exchange rate system
    D.gold standard
  1. Occasional government intervention in markets for foreign currency is typical of a
    A.fixed exchange rate system
    B.floating exchange rate system
    C.managed float exchange rate system
    D.gold standard
  1. To offset an increased demand for its currency, a government fixing its exchange rate
    A.must sell gold or some other precious metal
    B.must increase the supply of the foreign currency
    C.must increase the supply of its currency
    D.must make it illegal to sell its currency
  1. In the market for euros, a decrease in the relative safety of U.S. investments tends to
    A.increase equilibrium price
    B.increase excess supply
    C.decrease equilibrium price
    D.cause no change in equilibrium price
  1. In the market for yen, a decrease in U.S. real interest rates tends to
    A.cause no change in equilibrium price
    B.increase excess supply
    C.increase demand
    D.decrease equilibrium price
  1. Which of the following purports to be a "free-trade" agreement?
    A.NAFTA
    B.GATT
    C.WTO
    D.USSR
  1. Which of the following purports to be a "free-trade" agreement?
    A.CAFTA
    B.GATT
    C.WTO
    D.USSR
  1. Which of the following is a set of rules outlining when tariffs are appropriate and when they are not?
    A.NAFTA
    B.GATT
    C.WTO
    D.USSR
  1. Which of the following is an organization designed to settle trade disputes?
    A.NAFTA
    B.GATT
    C.WTO
    D.USSR
  1. CAFTA governs
    A.agricultural trade only
    B.trade between the U.S., Canada, and Central America
    C.trade between California and the rest of the U.S.
    D.health food products
  1. Which of the following trade agreements includes Mexico?
    A.NAFTA
    B.CAFTA
    C.GATT
    D.All of these include Mexico
  2. Trade agreements are designed to limit the ability of a country to put on
    A.tariffs only.
    B.quotas only.
    C.tariffs and quotas.
    D.neither tariffs or quotas.
  1. In terms of jobs gained and lost, economists believe that NAFTA has
    A.failed unambiguously in that millions of jobs have fled to Mexico.
    B.succeeded unambiguously in that millions of jobs have been created by free trade.
    C.had little effect on job gains or losses as trade patterns are not easily identifiable with NAFTA.
    D.helped Canada much more than either Mexico or the United States.
  1. Many individuals around the world oppose the WTO because they believe it
    A.unfairly favors the interests of developing countries at the expense of developed countries.
    B.unfairly favors the interests of large corporations at the expense of workers.
    C.encourages imposition of unnecessarily restrictive environmental protection regulations.
    D.prevents young people around the world from entering the workforce as early in life as they choose.
  1. NAFTA has greatly improved cooperation between the U.S. and Mexico in the regulation of
    A.Undocumented Mexican immigrant workers in the U.S.
    B.Mexican banks operating in the U.S.
    C.Pollution created by maquiladoras operating in Mexico along the U.S. border.
    D.Travel by U.S. tourists to Mexican beaches during Spring Break.
  1. The U.S. spends approximately ____ of GDP on health care.
    A.1% (1/100th)
    B.14% (1/6th)
    C.25% (1/4th)
    D.33% (1/3rd)
  1. The government spends ___ of all health care dollars in the U.S.
    A.10%
    B.25%
    C.46%
    D.100%
  1. If the deductible is $500 and the co-payment is 20%, on a covered expense of $1000 the individual will pay _____ and their insurance company will pay ______.
    A.$500, $500
    B.$500, $600
    C.$600, $400
    D.$400, $600

  1. Fee-for-service insurance
    A.is typically more expensive than an HMO covering the same illnesses.
    B.has fewer meddlesome bureaucrats than an HMO.
    C.allows patients to pick their own doctor.
    D.all of the above.
  1. HMO insurance
    A.is less expensive than fee-for-service insurance.
    B.has more meddlesome bureaucrats than fee-for service.
    C.restricts doctor choice to primary care physicians.
    D.all of the above.