Quiz 11 - For study purposes

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EC 207 – Intro to Macro Economics
Quiz 11 – In class Quiz on Chapters 33 and 34
12/13/2007
Professor Festa

1) _______When nations specialize according to their comparative advantage
a) total production and consumption in the world increases
b) consumption rises in one country but falls in all others
c) Total world production rises but total consumption in the world declines.
d) Poor people suffer

2)_______If there are two goods and two countries, then one country can have
a) a comparative advantage in only one good
b) a comparative advantage in both goods
c) a higher opportunity cost of producing both goods
d) a lower opportunity cost of producing both goods.

3) ______ The ability to produce a good or service at a lower opportunity cost than other producers is
a) absolute advantage
b) the quota system
c) intellectual property
d) comparative advantage.



Product
United States
Mexico
Computers
8
3
Bicycles
2
6




Refer to the above table for 4-5

4) Referring to the above table, what is the cost of producing (opportunity cost) one bicycle in the United States________? What is the opportunity cost of producing one bicycle for Mexico
a. 4 computers, 0.5 computers
b. 0.25 computers, 2 computers
c. 2.67 bicycles, 0.33 computers
d. 0.375 computers, 3 bicycles.


5) ______Referring to question 4, which of the following would be a correct statement
a) The United States has a comparative advantage in bicycles
b) The United States has a comparative advantage in computers
c) Mexico has a comparative advantage in computers
d) Mexico has a comparative advantage in both goods.

6)_______The balance of trade is
a)The difference between exports and imports
b)The value of all goods and services produced
c) A measure of real asset flows
d) The amount of currency central banks hold


7) _________When the value of exports exceeds the value of imports then
a) changes in productivity will occur
b) international trade is in balance
c) the country is running a deficit
d) the country is running a surplus

8) ________ A record of all transactions between households, firms and the government of one country and the rest of the world is the
a) a balance of trade
b) balance of payments
c) international monetary fund
d) government budget

9) _______Which of the following would be considered a positive contribution to the capital account from the US perspective
a) US purchase of a Nokia Cell Phone
b) US purchases of Nokia stock
c) A Swedish purchases of US Dell stock
d) A Swedish purchase of a US Dell computer

10) _______Which of the following would cause an appreciation in the US dollar, all else equal?
a) The federal reserve unexpectedly raises interest rates
b) The federal reserve unexpectedly lowers interest rates
c) US demand for Swiss Clocks surges, causing imports to rise
d) Foreign demand for Dell computers falls, causing exports to fall.


Answers:
A
A
D
A
B
A
D
B
C
A