Question 1

If free trade is opened between two countries, then one country must gain at the other country's expense.

Accepted Answer

Free trade allows for both countries to benefit through the exchange of goods and services, leading to increased economic growth and job opportunities. It is not a zero-sum game where one country must gain at the expense of the other. Both countries can experience a win-win situation through free trade.

Question 2

Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds  Which of the following could cause the dollar-pound exchange rates to change as shown in Exhibit 15-7?

Accepted Answer

The answer of Exhibit 15-7 Foreign exchange market for U.S....

Question 3

A nation's trade deficit will expand when its:

Accepted Answer

The answer of A nation's trade deficit will expand when...

Question 4

An appreciation of one's currency means that:

Accepted Answer

The answer of An appreciation of one's currency means that:
...

Question 5

An increase in demand for a nation's currency in the foreign exchange market will:

Accepted Answer

An increase in demand for a nation's currency in the foreign exchange market will cause the nation's currency to appreciate. This means that the currency will increase in value relative to other currencies and become more expensive to buy. This can potentially lead to lower imports and higher exports, as foreign goods become more expensive and domestic goods become cheaper for foreigners to buy.

Question 6

A depreciation in the value of the U.S. dollar would:

Accepted Answer

The answer of A depreciation in the value of the...

Question 7

International trade forces countries to consume a combination of goods that is inside their production possibilities curve.

Accepted Answer

International trade allows countries to consume goods that are outside their production possibilities curve by importing them from other countries. This is based on the principle of comparative advantage, which states that countries should specialize in producing goods that they can produce most efficiently and trade with other countries for goods they cannot produce as efficiently. This leads to a more efficient allocation of resources and increased overall welfare for all participating countries.

Question 8

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

Accepted Answer

The answer of If real interest rates in the United...

Question 9

A depreciation of one's currency means that:

Accepted Answer

Depreciation of a currency means that it now requires more of this currency in exchange for one unit of another currency. This means that the currency has lost value compared to other currencies. This makes imports more expensive for the country, as it takes more of the local currency to buy the same amount of foreign currency needed to purchase imports. However, it can make exports more competitive, as it requires less foreign currency to buy the same amount of local currency needed to purchase exports.

Question 10

Which of the following changes in the exchange rate represents an appreciation of the dollar?

Accepted Answer

The answer of Which of the following changes in the...

Question 11

A strong U.S. dollar is one that has:

Accepted Answer

A strong U.S. dollar is one that has appreciated. This means that the value of the dollar has increased in comparison to other currencies, making it more valuable in international transactions. While a strong dollar can make imports cheaper, it can also hurt U.S. exporters as their goods become more expensive for foreign buyers.

Question 12

If the dollar appreciates:

Accepted Answer

The answer of If the dollar appreciates:
...

Question 13

A depreciation of one's currency means that:

Accepted Answer

The answer of A depreciation of one's currency means that:
...

Question 14

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

A nation's currency is likely to appreciate if its domestic prices are stable while its trading partners are experiencing inflation. This is because the nation's goods become relatively cheaper and more attractive to foreign buyers, increasing demand for the nation's currency to purchase these goods.

Question 15

Trade can increase the consumption possibilities of nations.

Accepted Answer

Trade allows nations to access a wider variety of goods and services at lower costs, which can increase their overall consumption possibilities. Through trade, nations can specialize in producing goods and services that they have a comparative advantage in, and trade for goods and services that they lack such advantage in. This can lead to higher productivity, greater efficiency and lower costs, resulting in more goods and services being produced for consumption.

Question 16

An appreciation in the U.S. dollar benefits which of the following groups of people?

Accepted Answer

The answer of An appreciation in the U.S. dollar benefits...

Question 17

Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds  Exhibit 15-7 shows a situation in which:

Accepted Answer

The answer of Exhibit 15-7 Foreign exchange market for U.S....

Question 18

Which of the following changes in the exchange rate represents a depreciation of the dollar?

Accepted Answer

The answer of Which of the following changes in the...

Question 19

Opening trade between nations enables each nation's consumption possibilities to go beyond the confines of its own production possibilities curve.

Accepted Answer

By engaging in trade with other nations, a country can import goods that it cannot produce domestically and export goods it can produce efficiently, thereby increasing the consumption possibilities beyond what can be achieved by relying solely on domestic production.

Question 20

A weak U.S. dollar is one that has:

Accepted Answer

The answer of A weak U.S. dollar is one that...

Quiz 18: International Trade and Finance

If free trade is opened between two countries, then one country must gain at the other country's expense.

Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds Which of the following could cause the dollar-pound exchange rates to change as shown in Exhibit 15-7?

A nation's trade deficit will expand when its:

An appreciation of one's currency means that:

An increase in demand for a nation's currency in the foreign exchange market will:

A depreciation in the value of the U.S. dollar would:

International trade forces countries to consume a combination of goods that is inside their production possibilities curve.

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

A depreciation of one's currency means that:

Which of the following changes in the exchange rate represents an appreciation of the dollar?

A strong U.S. dollar is one that has:

If the dollar appreciates:

A depreciation of one's currency means that:

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Trade can increase the consumption possibilities of nations.

An appreciation in the U.S. dollar benefits which of the following groups of people?

Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds Exhibit 15-7 shows a situation in which:

Which of the following changes in the exchange rate represents a depreciation of the dollar?

Opening trade between nations enables each nation's consumption possibilities to go beyond the confines of its own production possibilities curve.

A weak U.S. dollar is one that has: