Macroeconomics_Assessment_VIII - Blackboard Learn Page 3 of...

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Unformatted text preview: Blackboard Learn Page 3 of 10 Question 1 4 out of 4 points Those who simultaneously buy and sell currency to take advantage of exchange rate differences are called Selected Answer: E arbitrageurs Correct Answer: E arbitrageurs Question 2 I 4 out of 4 points Which of the following is NOT a trade barrier? Selected Answer: E Trade-zone Correct Answer: E Trade-zone Question 3 7 4 out of 4 points The foreign exchange rate is the: $7,; Selected Answer: @ the price of one currency in terms of another. Correct Answer: E the price of one currency in terms of another. Question 4 4 out of 4 points The World Trade Organization was established by the of multilateral trade negotiations. Selected Answer: @ Uruguay Round CorrectAnswer: E Uruguay Round Question 5 4 out of 4 points What is a primary reason nations conduct international trade? Selected @ Resources are not equally distributed among all trading nations, so trade is Answer: economically beneficial. ‘ Correct & Resources are not equally distributed among all trading nations, so trade is Answer: economically beneficial. Question 6 4 out of 4 points http://online.columbiasouthern.edu/webapps/assessment/review/review.jsp?attempt_id=_4284177fl1&cours... 4/ 25/ 20 1 1 Blackboard Learn Page 4 of 10 The theory that changes in the exchange rate reflect only changes in the price levels of two countries is called: um...— :F; Selected Answer: E purchasing power parity. CorrectAnswer: E purchasing power parity. Question 7 4 out of4 points If the US. demand for British pounds increases, then: Selected Answer: E the dollar price of a British pound will increase. 2 Correct Answer: Q the dollar price of a British pound will increase. Question 8 4 out of 4 points In economics, the measure of welfare for producers of a good is called Selected Answer: E producersurplus CorrectAnswer: E producersurplus Question 9 4 out of 4 points According to the law of comparative advantage, which of the following statements is TRUE? Selected E Citizens of a nation can benefit by producing the good for which they have a Answer: relative advantage. Correct Answer: @ Citizens of a nation can benefit by producing the good for which they have a relative advantage. Question 10 4 out of 4 points Which of the following is a physical restriction on the number of goods that may be imported during a specific time period? Selected Answer: Import quota CorrectAnswer: % import quota Question 11 5 out of 5 points http://online.columbiasouthern.cdu/webapps/assessment/rcview/review.jsp?attempt_id=_4284177_1&cours... 4/25/201 1 Blackboard Learn Page 5 of 10 price Iii '1 in All an an nu packet calculalnrs Consider the graph above. What is the domestic price when world trade is allowed but no tariff is imposed? Selected Answer: @ 3 Correct Answer: @ 3 Question 12 5 out of 5 points Consider the graph above. What is the equilibrium quantity WITHOUT international trade? :2; Selected Answer: E 60 Correct Answer: E 60 Question 13 0 out of 5 points Consider the graph above. What is the size of the tariff imposed on pocket calculators? i'" Selected Answer: X 5 IF: Correct Answer: 2 Question 14 0 out of 5 points http://online.columbiasouthem.edu/webapps/assessment/review/review.jsp?attempt_id=_4284177_1&cours... 4/25/201 1 Blackboard Learn Page 6 of 10 Consider the graph above. If world trade is allowed and a tariff is imposed, what quantity of pocket calculators will be imported? m Selected Answer: X 80 Correct Answer: @ 40 Question 15 20 out of 20 points http://0nline.columbiasouthern.edu/webapps/assessment/review/review.jsp?attempt_id=_4284177_1&cours... 4/25/201 1 Blackboard Learn Page 7 of 10 ESSAY: Identify and explain three trade restrictions. In your opinion, which method of restricting trade is the most efficient? Selected Answer; Trades are how much of one good exchange for a unit of another good. Most countries have trade barriers that benefit from domestic producers but harm other domestic producers and all domestic consumers which can be restricted due to tariffs, import quotas, and subsidies (limit free trade). A tariff is a tax on imports. As a tariff is imposed, a world price is set at which a good is traded on the world market that is determined by the world demand and world supply for the good. A quota is a legal limit on the quantity of a particular product that can be imported. Once quotas have been granted most countries distribute rights to exporters by rewarding domestic and foreign producers with higher prices, the quota system creates two groups intent on securing and perpetuating these quotas. During subsidies, a country provides export subsidies and imposing fii domestic content requirements. When imposing domestic content requirements only a certain portion of a final good must be produced domestically. In restricting trade the most efficient is tariff. The reason is tariff is least damaging and allows the government to get some revenue and consumer can buy goods if they need them. Also, by the government imposing tariffs to protect the trade industry helps balance between the pursuit of efficiencies and the government's need to ensure low unemployment. Reference List McEachern, W. A., (2010). ECON macro 2, pgs. 263-266. http ://online.columbiasouthern.edu/webapps/assessment/review/review.j sp?attempt_id=_4284 l 77_l &cours. .. 4/25/201 1 Blackboard Learn Page 8 of 10 Question 16 17 out of 20 points Correct [None] Answer: Response Aaron, your analysis does a good job of identifying and describing trade restrictions and the Feedback: impact these policy tools have on the economy. Import tariffs, for example, are often used to protect an infant or fragile industry. Protectionist trade policies can help an industry in the near term but, can also hinder or hurt the industry. Protectionist policies prevent competition which results in increased prices (and costs). http://online.columbiasouthern.edu/webapps/assessment/review/reviewjsp?attempt_id=_4284177_1&cours... 4/25/ 201 1 Blackboard Learn _ Page 9 of 10 ESSAY: Explain the difference between appreciation and depreciation of a nation's currency. How do these changes affect the foreign exchange market? Selected Answer; The exchange rate is the price measured in one’s currency of purchasing one unit of another country. Currency appreciation is a decrease in the number of dollars needed to purchase one unit of foreign exchange in a flexible rate system. An appreciated currency is more expensive and can be exchanged for or can buy a larger amount of foreign currency. By raising the expected return of deposits, the current appreciation of the domestic currency will lower the initial cost of investing in foreign currency. Currency depreciation is an increase in the number of dollars needed to purchase one unit of foreign exchange in a flexible rate system. A depreciated currency is less expensive and can be exchanged for or can buy a smaller amount of foreign currency. By lowering the expected return on deposits in foreign currency, the current depreciation of the domestic currency will raises the initial cost of investing in foreign currency. if; The market for foreign market effects when changing interest rate occurs. When an increase in the interest rate paid on deposits denominated in a particular currency will increase the rate of return on those deposits. This leads to an appreciation of the currency causing a rise in dollar interest rates causes the dollar to appreciate, while a rise in the euro interest rates causes the dollar to depreciate. In the exchange rate, arbitrageurs take advantage of temporary geographic differences by simultaneously purchasing a currency in one market and selling it in another market. The demand and supply of foreign exchanges rises, this is where speculators buys or sell foreign exchange in hopes of profiting from fluctuations in the exchange rate overtime. Reference List McEachern, W. A., (2010). ECON macro 2,pgs. 277-280. Sorrect [None] http://online.columbiasouthern.edu/webapps/assessment/review/review.jsp?attempt_id=_4284l77_1&cours... 4/25/201 1 Blackboard Learn Page 10 of 10 Answer: Monday, April 25, 2&11 2:21:23 PM CDT esponse Aaron, your work does a good job of describing the difference between currency depreciation and FeEdbaCkl appreciation. The use of a specific example (comparing the relative strength of the dollar to the yen) would help strengthen your analysis. OK http://on1ine.columbiasouthern.edu/webapps/assessment/review/reviewjsp?attempt_id=_4284177_1&cours... 4/25/201 1 ...
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This note was uploaded on 11/30/2011 for the course BBA 2401 taught by Professor Akbar,zinia during the Spring '11 term at Columbia Southern University, Orange Beach.

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