I need help for my ECON homework

Week 7 assignment

Please submit your answers electronically (to your assignment folder). This assignment is worth 100 points.

Chapter 20: International Trade

1. The United States has a trade deficit in (goods, services) _______ and a trade surplus in (goods, services) ________.

2. Nations tend to trade among themselves because the distribution of economic resources among them is (even, uneven) _______, the efficient production of various goods and services necessitates (the same, different) _______ technologies or combinations or resources, and people prefer (more, less) _______ choices in products.

3. The basic argument for free trade based on the principle of (bilateral negotiations, comparative advantage) ______ is that is results in a (more, less) _______ efficient allocation of resources and a (lower, higher) _______ standard of living.

4. Excise taxes on imported products are (quotas, tariffs) _______, whereas limits on the maximum amount of a product that can be imported are import (quotas, tariffs) _______. Tariffs applied to a product not produced domestically are (protective, revenue) _______ tariffs, but tariffs designed to shield domestic producers from foreign competition are (protective, revenue) _______ tariffs.

5. Nations erect barriers to international trade to benefit the economic positions of (consumers, domestic producers) _______ even though these barriers (increase, decrease) _______ economic efficiency and trade among nations and the benefits to that nation are (greater, less) _______ than the costs to it.

6. Using trade barriers to permit diversification for stability in an economy is not necessary for (advanced, developing) _______ economies such as in the United States, and there may be great economic costs to forcing diversification in (advanced, developing) ________ nations.

Questions 7 through 10 refer to the following tables.

Japan Production Possibilities Table
	Production alternatives
Product	A	B	C	D	E	F
Computers	0	4	8	12	16	20
Perfume	40	32	24	16	8	0

France Production Possibilities Table
	Production alternatives
Product	A	B	C	D	E	F
Computers	0	3	6	9	12	15
Perfume	60	48	36	24	12	0

7. The data in the tables show that production in

A. Both Japan and France are subject to increasing opportunity costs

B. Both Japan and France are subject to constant opportunity costs

C. Japan is subject to increasing opportunity costs and France to constant opportunity costs

D. France is subject to increasing opportunity costs and Japan to constant opportunity costs

8. If Japan and France engage in trade, the terms of trade will be

A. Between 2 and 4 units of perfume for 1 computer

B. Between 1/3 and ½ computers for 1 perfume

C. Between 3 and 4 computers for 1 perfume

D. Between 2 and 4 computers for 1 perfume

9. Assume that prior to specialization and trade Japan and France choose production possibility C. Now if each specializes according to its comparative advantage, the resulting gains from specialization and trade will be

A. 6 computers

B. 8 computers

C. 6 computers and 8 units of perfume

D. 8 computers and 6 units of perfume

10. Each nation produced only one product in accordance with its comparative advantage, and the terms of trade were set at 3 units of perfume for 1 computer. In this case, Japan could obtain a maximum combination of 8 computers and

A. 12 units of perfume

B. 24 units of perfume

C. 36 units of perfume

D. 48 units of perfume

11. What happens to a nation’s imports or exports of a product when the world price of the product rises above the domestic price?

A. Imports of the product increase

B. Imports of the product stay the same

C. Exports of the product increase

D. Exports of the product decrease

12. What happens to a nation’s imports or exports of a product when the world price of the product falls below the domestic price?

A. Imports of the product increase

B. Imports of the product decrease

C. Exports of the product increase

D. Exports of the product stay the same

13. Which is the likely result of the United States using tariffs to protect its high wages and standard of living from cheap foreign labor?

A. An increase in U.S. exports

B. A rise in the U.S. real GDP

C. A decrease in the average productivity of U.S. workers

D. A decrease in the quantity of labor employed by industries producing the goods on which tariffs have been levied

14. What international agency is charged with overseeing trade liberalization and with resolving disputes among nations?

A. World Bank

B. United Nations

C. World Trade Organization

D. International Monetary Fund

Questions 15 through 17 are based on the following table which shows the domestic supply and demand schedule for nation A. The first column of the table is the price of a product. The second column is the quantity demand domestically (Qdd). The third column is the quantity supplied domestically (Qsd). The fourth column is the quantity demanded for imports (Qdi). The fifth column is the quantity of exports supplied (Qse).

Nation A
Price	Qdd	Qsd	Qdi	Qse
$3.00	100	300	0	200
2.50	150	250	0	100
2.00	200	200	0	0
1.50	250	150	100	0
1.00	300	100	200	0

15. At a price of $2.00, there (will, will not) _______ be a surplus or shortage and there (will, will not) _______ be exports or imports.

16. At a price of $3.00, there will be a domestic (shortage, surplus) _______ of _______ units. This will be eliminated by (exports, imports) _______ of _______ units.

17. At a price of $1.00, there will be a domestic (shortage, surplus) _______ of _______ units. This will be eliminated by (exports, imports) _______ of _______ units.

18. Compare and contrast the economic effects of a tariff with the economic effect of an import quota on a product.

Chapter 21: The Balance of Payments, Exchange Rates, and Trade Deficits

19. The balance of payments of a nation records all payments (domestic, foreign) _______ residents make to and receive from (foreign, domestic) _______ residents. Any transaction that earns foreign exchange for that nation is a (debit, credit) ______, and any transaction that uses up foreign exchange is a (debit, credit) _______. A debit is shown with a (+, -) _______ sign, and a credit is shown with a (+,-) _______ sign.

20. If a nation has a deficit in its balance of goods, its exports of goods are (great, less) _______ than its imports of goods. If a nation has a surplus in its balance of services, its exports of services are (greater, less) _______ than its imports of service. If a nation has a deficit in its balance on goods and services, its exports of these items are (great, less) _______ than its imports of them.

21. The current account is equal to the balance on goods and services (plus, minus) _______ net investment income and net transfers. When investment income received by U.S. individuals and businesses from foreigners is greater than investment income Americans pay to foreigners, then net investment income is a (negative, positive) _______ number; when transfer payments from the United States to other nations are greater than transfer payments from other nations to the United States, then net transfers are a (negative, positive) _______ number.

22. If foreign exchange rates float freely and a nation has a balance-of-payments deficit, that nation’s currency in the foreign exchange markets will (appreciate, depreciate) _______ and foreign currencies will (appreciate, depreciate) ________ compared to it. As a result of these changes in foreign exchange rates, the nation’s imports will (increase, decrease) _______, its exports will (increase, decrease) _______, and the size of its deficit will (increase, decrease) _______.

23. Under a fixed-exchange-rate system, a nation with a balance-of-payments deficit might attempt to eliminate the deficit by (taxing, subsidizing) ________ imports or by (taxing, subsidizing) _______ exports. The nation might use exchange controls and ration foreign exchange among those who wish to (export, import) _______ goods and services and require all those who (export, import) _______ goods and services to sell the foreign exchange they earn to the (businesses, government) ________.

24. U.S. residents demand foreign currencies to

A. Produce goods and services exported to foreign countries

B. Pay for goods and services imported from foreign countries

C. Receive interest payments on investments in the United States

D. Have foreigners make real and financial investments in the United States

25. Which statement is correct about a factor that causes a nation’s currency to appreciate or depreciate in value?

A. If the supply of a nation’s currency decreases, all else equal, that currency will depreciate

B. If the supply of a nation’s currency increases, all else equal, that currency will depreciate

C. If the demand for a nation’s currency increases, all else equal, that currency will depreciate

D. If the demand for a nation’s currency decreases, all else equal, that currency will appreciate

26. If a nation had a balance-of-payments surplus and exchange rate floated freely, the foreign exchange rate for its currency would

A. Rise, its exports would increase, and its imports would decrease

B. Rise, its exports would decrease, and its imports would increase

C. Fall, its exports would increase, and its imports would decrease

D. Fall, its exports would decrease, and it imports would increase

27. Floating exchange rates

A. Tend to correct balance-of-payments imbalances

B. Reduce the uncertainties and risks associated with international trade

C. Increase the world’s need for international monetary reserves

D. Tend to have no effect on the volume of trade

Questions 28 through 31 are based on the following table, which shows supply and demand schedules for the British pound.

Quantity of pounds supplied	Price	Quantity of pounds demanded
400	$5.00	100
360	4.50	200
300	4.00	300
286	3.50	400
267	3.00	500
240	2.50	620
200	2.00	788

28. If the exchange rates are flexible, what will be the rate of exchange for the pound?

29. If the exchange rates are flexible, what will be the rate of exchange for the dollar?

30. How many pounds will be purchased in the market?

31. How many dollars will be purchased in the market?

32. How can flexible foreign exchange rates eliminate balance-of-payments deficits and surpluses?

33. Explain what is meant by a managed floating system of foreign exchange rates.