Midterm+-+Econ+13 - Name Midterm Econ 13/IS 13 Fall...

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Name: ___________________________ ID: ___________________ Midterm Econ 13/IS 13 Fall 2010 (Total 250 points) SECTION A: Multiple Choices and True/False (60 points) (Circle the correct answer) 1. When a country allows trade and becomes an importer of a good, (10 points) a. domestic producers gain and domestic consumers lose. b. domestic producers lose and domestic consumers gain. c. domestic producers and domestic consumers both gain. d. domestic producers and domestic consumers both lose. 2. Suppose Mexico imposes a quota on lumber. For the quota to have any effect, it must be the case that: (10 points) a. Mexico is an exporter of lumber. b. the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the quota. c. the world price without the quota is less than the price of lumber without trade. d. the world price without the quota is greater than the price of lumber without trade. 3. When the U.S. and foreign price levels remain the same but the dollar depreciates, the real exchange rate will: (10 points) a. remain the same. b. increase. c. decrease. d. none of the above. 4. Which of the following statements is correct? (10 points) a. If the dollar appreciates against the euro, then the euro also appreciates against the dollar. b. If the dollar appreciates against the euro, then U.S. exports to Europe increase. c. If the dollar depreciates against the euro, America will go bankrupt. d. If the dollar appreciates against the euro, then the euro depreciates against the dollar. 5. Revaluation is the process of lowering the value of a currency under a fixed exchange rate system. TRUE or FALSE (10 points) 6. If the world price of a good is greater than the domestic price in a small country that can engage in international trade, then that country becomes an importer of that good. TRUE or FALSE (10 points) 1
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SECTION B: Problems and Applications (190 points) (You must write your answer in the space provided below each question) 7. In the article “Trouble with Trade”, what’s Krugman main concern with trade ( in the US. a problem caused by trade)? What’s his opinion regarding protectionism? Briefly explain.
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This note was uploaded on 11/23/2010 for the course ECONOMICS Econ 13 taught by Professor Georgesarraf during the Spring '10 term at UC Irvine.

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Midterm+-+Econ+13 - Name Midterm Econ 13/IS 13 Fall...

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