3473 prac solns midl

3473 prac solns midl - PART I MULTIPLE CHOICE Circle the correct answer(total 20 marks 2 marks each 1 In a nation's balance of payments which one

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PART I: MULTIPLE CHOICE. (total 20 marks; 2 marks each) Circle the correct answer. 1. In a nation's balance of payments, which one of the following items is always recorded as a positive entry? a. Changes in foreign currency reserves. b. Imports of goods and services. c. Military foreign aid supplied to allied nations. d. Purchases by foreign travelers visiting the country. ANSWER: D 2. If a British business buys US government securities, how will this be entered in the balance of payments? a. It will appear in the trade account as an import. b. It will appear in the trade account as an export. c. It will appear in the capital account as a decrease in US assets held by foreigners. d. It will appear in the capital account as an increase in US assets held by foreigners. ANSWER: D 3. If Britain’s labor productivity in the production of umbrellas is greater than the rest of the world’s labor productivity in umbrellas, we would say that Britain has a(n) _______ in the production of umbrellas. a. comparative advantage b. absolute advantage c. opportunity cost d. superiority ANSWER: B Table 3.4 In the United States In the France Labor hours to make: 1 gallon of Wine 4.00 1.00 1 pound of Cheese 1.00 2.00 4. Refer to table 3.4. The opportunity cost of cheese in France is _______ and the opportunity cost of cheese in the United States is ________. a. 1 gallon of wine; 0.5 gallons of wine b. 2 gallons of wine; 1 gallon of wine c. 2 gallons of wine; 0.25 gallons of wine d. 0.5 gallons of wine; 4 gallons of wine
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ANSWER: C 5. Constant cost production possibility curves lead to _______ specialization. Increasing cost production possibility curves lead to _______ specialization. a. no; partial b. complete; no c. complete; partial d. partial; complete ANSWER: C 6. Refer to figure 4.1. In autarky Canada will produce at point _____ and consume at point ____. a. S 1 ; C 1 b. S 0 ; C 0 c. S 1 ; C 0 d. S 0 ; C 1 ANSWER: B 7. Refer to figure 4.1. After the opening up of international trade, Canada will export _____ units of wheat and import _______ units of cloth. a. 0; 0 b. 20; 80. c. 20; 5. d. 60; 15. Figure 4.1 Wheat Cloth Canada . . . C 0 C 1 S 0 S 1 International Price = 0.25W/C Price = 1W/C 105 80 60 25 50 I 1 I 2 65
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ANSWER: B 8. Which of the following is not true about trade? a. Trade will cause expansion in the export-oriented sector. b. Trade will cause contraction in the import-competing sector. c. Trade occurs because of similarities in the availability of factor inputs across countries and differences in the proportions of those factors that are used in producing different products. d. None of the above. ANSWER: C 9. The opening of trade between a land-abundant country and a labor-abundant country should lead to: a. Higher rents and wages in both countries. b.
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This note was uploaded on 02/05/2012 for the course ECON 4140 taught by Professor A during the Spring '11 term at York University.

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3473 prac solns midl - PART I MULTIPLE CHOICE Circle the correct answer(total 20 marks 2 marks each 1 In a nation's balance of payments which one

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