The international institution that serves as a lender of last resort is called the
A) IBRD.
B) WTO.
C) IMF.
D) World Bank.
E) GATT.
Question 2 - The law of one price should hold well for
A) differentiated products.
B) any individual goods traded internationally.
C) homogeneous goods.
D) All of the above.
Question 3 - Monopoly powers given to domestic utility companies to create economies-of-scale might unintentionally
A) be an obstacle to increased international trade.
B) be useful for the creation of a comparative advantage for the domestic country.
C) not be used for rent-seeking behaviors.
D) be a positive externality for the world as a whole.
E) None of the above.
Question 4 - Suppose Mexico can produce 5 autos or 10 corn. Suppose the United States can produce 4 autos or 20 corn. If opportunity costs are constant for both countries, then
A) the United States has a comparative advantage in corn production.
B) Mexico has a comparative advantage in corn production.
C) the United States cannot gain from trade with Mexico.
D) the United States has a comparative advantage in auto production.
Question 5 - Refer to above figure. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it would choose to produce at which point in the diagram above? Suppose the PA/PB at point a was equal to 1.
Given this information, in which good (A or B) does Albania enjoy a comparative advantage? Now that the Cold War is over, Albania is interested in obtaining economic welfare gains from trade. The relevant international relative price is PA/PB = 2. Albania would therefore choose to produce at which point (a, b, or c)? Given this additional information, in which good does Albania enjoy a comparative advantage?
Question 6 - Explain the relationship between relative prices and the slope of a country's production possibilities frontier.
What will be an ideal response?
Question 7 - What agreement has been reached to reduce the moral hazard problem and what does it require?
What will be an ideal response?
Question 8 - If the dollar appreciates against the Canadian dollar at a faster rate than the Canadian inflation rate exceeds the U.S. rate, then the U.S. dollar appears
A) depreciated.
B) overvalued.
C) undervalued.
D) None of the above.
Quick Reply
