Question 1

International economics deals with:

Accepted Answer

International economics deals with all of these aspects - the flow of goods, services, and payments among nations, policies directed at regulating the flow of goods, services, and payments, and the effects of policies on the welfare of the nation. It is a broad field that encompasses multiple areas of study and analysis.

Question 2

Which of the following statements with regard to international economics is true?

Accepted Answer

International economics is a relatively old field that has been studied for centuries. The earliest recorded theories of international trade date back to the 18th century, with the contributions of Adam Smith, David Ricardo, and others.

Question 3

Which of the following products are not produced at all in the United States?

Accepted Answer

Coffee, tea, and cocoa are not produced in the United States.

Question 4

In the study of international economics:

Accepted Answer

In the study of international economics, the typical approach is to first understand the bases for trade (why nations trade), then examine the balance of payments (to understand a country's financial and economic status in the international context), and often start with the simpler two-nations case before moving on to more complex scenarios involving many nations. Therefore, none of the provided options accurately describe the standard approach in international economics studies.

Question 5

The opening or expansion of international trade usually affects all members of society:

Accepted Answer

While international trade may benefit most members of society by providing increased access to goods and services, cheaper prices, and job opportunities, there are always some who may be negatively affected by the changes. For example, domestic industries may struggle to compete with foreign imports, leading to job losses and economic decline in certain regions. Therefore, while international trade can have a positive impact on society as a whole, it may not benefit everyone equally.

Question 6

Over time,the economic interdependence of nations has:

Accepted Answer

The economic interdependence of nations has grown over time due to increasing globalization, international trade, and investment. Nations rely more on each other for resources, markets, and technology, leading to closer economic ties.

Question 7

An increase in the dollar price of a foreign currency usually:

Accepted Answer

When the dollar price of a foreign currency increases, it means the dollar has depreciated relative to that currency. This makes U.S. goods cheaper for foreign buyers, thus benefiting U.S. exporters by potentially increasing their sales abroad.

Question 8

International trade is most important to the standard of living of:

Accepted Answer

Switzerland's economy is highly reliant on international trade. Its standard of living is significantly influenced by its ability to trade with other countries, as it imports a large portion of its food and raw materials and exports high-value goods like pharmaceuticals, machinery, and financial services.

Question 9

International trade is similar to interregional trade in that both must overcome:

Accepted Answer

Both international and interregional trade must overcome the challenges of distance and space, as goods need to be transported over potentially long distances regardless of whether the trade is happening within a country or between countries.

Question 10

Which of the following is not the subject matter of international finance?

Accepted Answer

The basis and the gains from trade are the subject matter of international trade, not international finance.

Question 11

The gravity model of international trade predicts that trade between two nations is larger

Accepted Answer

According to the gravity model of international trade, the size of the trading partners, their geographical proximity, and the degree of openness in trade policies are all important determinants of the volume of trade between them. Therefore, options A, B, and C all contribute to the larger trade volume between two nations. Thus, the correct answer is D, all of the above.

Question 12

Economic interdependence is greater for:

Accepted Answer

Economic interdependence is greater for small nations because they rely more on other countries for resources and trade.

Question 13

International trade theory refers to:

Accepted Answer

The answer of International trade theory refers to:
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Question 14

Which of the following is not an assumption generally made in the study of international economics?

Accepted Answer

The assumption of perfect international mobility of factors of production (labor and capital) is typically made in the study of international economics. The other three assumptions listed (two nations, two commodities, and two factors of production) are also common in the field.

Question 15

A rough measure of the degree of economic interdependence of a nation is given by:

Accepted Answer

The percentage of a nation's imports and exports to its GDP is a measure of how much its economy depends on trade with other nations. If a nation has a high percentage of imports and exports relative to its GDP, it is likely that its economic well-being is closely tied to global economic conditions and the economic policies of its trading partners. Therefore, C is the best choice as it directly identifies the degree of economic interdependence of a nation. The other options, A and B, do not provide a direct measure of economic interdependence.

Question 16

Economic theory:

Accepted Answer

Economic theory seeks to explain and predict economic events by abstracting from the many details that surround them. Therefore, all of the options are correct.

Quiz 1: Introduction