1. The basis for the Bretton Woods international monetary system was
A. a freely flexible system of exchange rates.
B. a completely fixed system of exchange rates.
C. the gold standard.
D. an adjustable peg system of exchange rates.
2. The international agency that lends money to developing countries for economic development projects is the
A. International Monetary Fund (IMF). B. World Trade Organization (WTO). C. World Bank. D. World Credit Union.
3. In the absence of unexpected shocks, the economy will tend to experience
A. positive growth with mild amounts of inflation.
B. positive, noninflationary growth.
C. positive growth with mild amounts of deflation.
D. no changes in output or prices.
4. As of the year 2006, which one of the following countries had thelargest share of total world exports?
A. Japan
B. Germany
C. China
D. United States
5. An economy's infrastructure refers to its
A. financial and banking institutions.
B. land and natural resources.
C. surplus supplies of unskilled labor.
D. public capital goods, such as roads, schools, and power facilities.
6. As it relates to international trade, dumping![]()
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A. is defined as selling more goods than allowed by an import quota.
B. is the practice of selling goods in a foreign market at less than cost.
C. constitutes a general case for permanent tariffs.
D. is a form of price discrimination illegal under U.S. antitrust laws.
7. A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that
A. wage rates and labor productivity are directly related.
B. wage rates and labor productivity are inversely related.
C. labor costs and product prices are not related.
D. there's no discernible relationship between wage rates and labor productivity.
8. Which one of the following statements about foreign trade is correct?
A. In recent years, the United States has exported more services abroad than it has imported.
B. In recent years, the United States has fallen to third behind Japan and Germany in the list of leading export nations (absolute volume basis).
C. In recent years, the United States has had a small goods trade surplus with Japan.
D. In recent years, the United States has had a large goods trade surplus with the rest of the world.
9. Which one of the following is not included in the current account of a nation's balance of payments?
A. Its goods exports
B. Its goods imports
C. Its purchases of real assets abroad
D. Its net investment income
10. A market in which the money of one nation is exchanged for the money of another nation is a
A. foreign exchange market.
B. resource market.
C. bond market.
D. stock market.
11. In terms of aggregate supply, a period in which nominal wages and other resource prices are unresponsive to price-level changes is called the
A. long run.
B. very long run.
C. immediate market period.
D. short run.
12. The mainstream view of macro instability is that
A. changes in technology and resource availability are the two main sources of fluctuations of real GDP.
B. bursts of innovation put the economy on an unsustainable growth path, eventually producing recession.
C. changes in the money supply directly cause changes in aggregate demand and thus cause changes in real GDP.
D.changes in investment shift the aggregate demand curve and thus cause changes in real GDP.
13. If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation,
A. the Phillips Curve is likely to shift inward.
B. stagflation is likely to occur.
C. a deflationary spiral is likely to occur.
D. an inflationary spiral is likely to occur.
14. Monetarists believe the private economy is inherently
A. unstable and the public sector should be small.
B. stable and that the government sector should be small.
C. unstable and the public sector should be large.
D. stable, but that the public sector should be large.
15. As distinct from reductions in the price level, reductions in the rate of inflation are referred to as
A. disinflation.
B. deflation.
C. stagflation.
D. dollar depreciation.
16. A government may be able to reduce the international value of its currency by
A. increasing its domestic interest rates.
B. selling foreign currencies in the foreign exchange market.
C. buying its currency in the foreign exchange market.
D. selling its currency in the foreign exchange market.
17. In international financial transactions, what are the only two things that individuals and firms can exchange?
A. Services and manufactured goods
B. Preexisting assets and currently produced goods and services C. Currency and real assets
D. Currency and currently produced goods and services
18. Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will
A. neither export nor import copper.
B. import copper.
C. have a domestic surplus of copper.
D. export copper.
19. When most consumers and firms reduce spending only because they expect other consumers and firms to reduce spending, and a recession results,
A. a coordination failure has occurred.
B. an adverse aggregate supply shock has occurred.
C. a real-business-downturn has occurred.
D. a self-correction has occurred.
20. The exchange rate system currently used by the industrially advanced nations is
A. a fixed rate system.
B. the Bretton Woods system.
C. the managed float.
D. the gold standard. End of exam