Question 1

In order to increase the foreign-exchange value of the Canadian dollar, the Bank of Canada could:

Accepted Answer

A)   increase the money supply in Canada.
B)   lower interest rates.
C)   reduce the tariffs on imports.
D)   purchase Canadian dollars on foreign-exchange markets.

Question 2

If Canada restricts the entry of certain products into the country:

Accepted Answer

A)   consumers benefit; however, producers do not benefit.
B)   our GDP increases because the money stays in Canada.
C)   consumers pay higher prices.
D)   None of the above is necessarily correct.

Question 3

Which of the following statements from the opponents of adopting the U.S. dollar for Canada is false?

Accepted Answer

A)   Canadian exports were aided by the decline in the foreign-exchange value of the Canadian dollar during the Asian crisis
B)   Canadians would not be free to cross the border to accept employment
C)   Canadian interest rates would have decreased in recent years to maintain the fixed exchange rate
D)   higher interest rates would have hampered the increase in economic activity

Question 4

In the example in the text, Canada specialized in the production of wheat and Mexico specialized in the production of radios. As a result of specialization:

Accepted Answer

A)   wages increased in Mexico.
B)   land was in greater demand in Mexico.
C)   land prices fell in Canada.
D)   wages increased in Canada.

Question 5

Which of the following list of items appears in Canada's current account?

Accepted Answer

A)   exports, imports, interest, and short-term investment
B)   travel interest, dividends, freight, and shipping
C)   travel long-term investment, dividends, and immigrants' funds
D)   exports, imports, long-term investment, and travel

Question 6

If Canada specializes in wheat production and Mexico specializes in the production of radios, then:

Accepted Answer

A)   radio prices will rise in Canada and fall in Mexico.
B)   radio prices will fall in both Canada and Mexico.
C)   radio prices will fall in Canada and rise in Mexico.
D)   radio prices will rise in both Canada and Mexico.

Question 7

Which of the following is least likely to be classified as a non-tariff barrier?

Accepted Answer

A)   countervailing duties
B)   government procurement practices
C)   technical barriers to trade
D)   customs valuations

Question 8

If the demand for Canadian dollars on foreign-exchange markets equals the supply of Canadian dollars on these markets, and if Canada has a surplus on its capital account, then:

Accepted Answer

A)   the balance of payments must have a surplus.
B)   the balance of payments must have a deficit.
C)   the current account must have a deficit.
D)   the current account must have a surplus.

Question 9

In international trade situations, countries tend to specialize in products:

Accepted Answer

A)   that cost the most, so as to minimize opportunity cost.
B)   that can be produced with a relatively abundant resource.
C)   that can be produced with a relatively scarce resource.
D)   that can be produced more cheaply than in other countries.

Question 10

As a result of specialization in trade:

Accepted Answer

A)   land values tend to fall.
B)   workers' wages everywhere increase.
C)   product prices in both countries fall.
D)   the total output of goods and services produced in the two countries involved increases.

Question 11

If Sheila Jones is the best doctor in town and also the best typist, she should:

Accepted Answer

A)   share her medical practice with another doctor in order to split her time between the two jobs.
B)   hire a typist and concentrate on her medical practice.
C)   fire her present typist and do both jobs herself.
D)   not enough information provided in order to answer the question

Question 12

The United States is Canada's major trading partner. Canada's second-largest trading partner is:

Accepted Answer

A)   China.
B)   Japan.
C)   Mexico.
D)   United Kingdom.

Question 13

Which of the following does not make international trade distinct from domestic trade?

Accepted Answer

A)   political considerations play a vital role in international trade
B)   each country has its own currency
C)   different languages and customs play a role in international trade
D)   the distances for goods to travel is greater in situations of international trade

Question 14

The infant-industry argument for tariff protection assumes:

Accepted Answer

A)   that parents of infants in most cases cannot afford higher prices for clothing.
B)   that the protected industry is an essential industry to the country.
C)   that the protected industry will eventually achieve economies of scale.
D)   that wages in the protected industry are too high already.

Question 15

Canada's leading export in dollar terms is:

Accepted Answer

A)   wheat.
B)   passenger autos and chassis.
C)   lumber and sawmill products.
D)   crude petroleum.

Question 16

If Canada specializes in wheat production and Mexico specializes in the production of radios, then:

Accepted Answer

A)   wheat prices will rise in Canada and fall in Mexico.
B)   wheat prices will fall in Canada and rise in Mexico.
C)   wheat prices will rise in both Canada and Mexico.
D)   wheat prices will fall in both Canada and Mexico.

Question 17

Which of the following cannot be considered a barrier to international trade?

Accepted Answer

A)   different countries have different currencies
B)   countervailing duties
C)   tariffs
D)   quotas

Question 18

When Canada imposes a tariff on imported shoes:

Accepted Answer

A)   the supply of shoes increases in Canada.
B)   the demand for shoes increases in Canada.
C)   the demand for shoes decreases in Canada.
D)   the supply of shoes decreases in Canada.

Question 19

In the textbook example involving Canada and Mexico, Canada:

Accepted Answer

A)   specialized in the product that could not be produced in Mexico.
B)   specialized in the product for which it had the highest opportunity cost.
C)   specialized in the product for which it had the highest price.
D)   specialized in the product for which it had the lowest opportunity cost.

Question 20

An appreciation of the Canadian dollar would:

Accepted Answer

A)   encourage Canadians to purchase more foreign products.
B)   increase Canada's exports to other countries.
C)   increase the number of Canadian dollars that could be purchased with a British pound.
D)   mean that the supply of Canadian dollars on foreign-exchange markets exceeds the demand.

Exam 9: International Economics

Which of the following does not make international trade distinct from domestic trade?

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The United States is Canada's major trading partner. Canada's second-largest trading partner is:

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Canada's leading export in dollar terms is:

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Which of the following cannot be considered a barrier to international trade?

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The infant-industry argument for tariff protection assumes:

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An appreciation of the Canadian dollar would:

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If the demand for Canadian dollars on foreign-exchange markets equals the supply of Canadian dollars on these markets, and if Canada has a surplus on its capital account, then:

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When Canada imposes a tariff on imported shoes:

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If Canada specializes in wheat production and Mexico specializes in the production of radios, then:

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In the textbook example involving Canada and Mexico, Canada:

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If Canada restricts the entry of certain products into the country:

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In international trade situations, countries tend to specialize in products:

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In order to increase the foreign-exchange value of the Canadian dollar, the Bank of Canada could:

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If Sheila Jones is the best doctor in town and also the best typist, she should:

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In the example in the text, Canada specialized in the production of wheat and Mexico specialized in the production of radios. As a result of specialization:

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Which of the following statements from the opponents of adopting the U.S. dollar for Canada is false?

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Which of the following list of items appears in Canada's current account?

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As a result of specialization in trade:

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Which of the following is least likely to be classified as a non-tariff barrier?

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If Canada specializes in wheat production and Mexico specializes in the production of radios, then:

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