Chapters 5 & 7 Quiz

Which of the following best describes the idea behind calculating a price index?

 

Keeping the contents of a "basket of goods" the same but letting the prices of these goods change.

What authority does the World Trade Organization have?

 

The World Trade Organization has the authority to resolve disputes between countries regarding the enforcement of trade agreements.

The table below shows the production of all goods by the nation of Lemonaidia in 2013 and 2014 with their respective prices.

	2013 Output	2013 Prices	2014 Output	2014 Prices
Lemonade	200 glasses	$1.00 per glass	200 glasses	$1.00 per glass
Cookies	100 cookies	$2.00 per cookie	90 cookies	$2.50 per cookie

What was real GDP in 2014 using 2013 prices?

380

Which of the following transactions would add to the value of U.S. GDP?

 

A grocery store purchases new freezers made in the United States.

Which of the following is not one of the standard arguments for restricting imports?

 

preventing an outflow of gold

Suppose that Great Britain and France each specializes according to its own comparative advantage, so that Great Britain produces fish and France produces wine. Then they engage in trade. This means that:

 

each nation can consume more of both goods than they could under conditions of autarky.

GDP is a measure of both:

 

income and output.

Many of the commonplace items that you use everyday are manufactured in Asia. If the Heckscher-Ohlin model applies, what would account for this?

 

Asian countries are abundant in low-skilled labor, and so items can be manufactured there at a relatively low opportunity cost.

According to the Heckscher-Ohlin model, a country will export those goods:

 

that are intensive in its relatively abundant factors.

Between 2020 and 2022 annual inflation was 4.4%. Which of the following is a reason we may not need to be so worried about this rise in prices?

 

Wages rose by more during that time.

Which of the following is the main goal of "price stability?"

 

Keeping the inflation rate low and stable.

If during 2010, the Republic of Sildavia recorded investment spending of $3 billion, government purchases of $3 billion, consumer spending of $7 billion, imports of $5 billion, government transfers of $1 billion, and exports of $3 billion. In billions of dollars, what was Sildavia's GDP in 2010?

11

The United States has a comparative advantage in the production of aircrafts, because this task is intensive in the use of:

 

human capital.

The table below shows the production of all goods by the nation of Lemonaidia in 2013 and 2014 with their respective prices.

	2013 Output	2013 Prices	2014 Output	2014 Prices
Lemonade	200 glasses	$1.00 per glass	200 glasses	$1.00 per glass
Cookies	100 cookies	$2.00 per cookie	90 cookies	$2.50 per cookie

What was real GDP in 2013 using 2013 prices?

400

Which of the following is NOT a commonly used price index?

 

Financial Price Index (FPI)

Which of the following statements best describes the effects of trade?

 

All countries benefit when each country specializes according to its own comparative advantage.

The table below shows the production of all goods by the nation of Lemonaidia in 2013 and 2014 with their respective prices.

	2013 Output	2013 Prices	2014 Output	2014 Prices
Lemonade	200 glasses	$1.00 per glass	200 glasses	$1.00 per glass
Cookies	100 cookies	$2.00 per cookie	90 cookies	$2.50 per cookie

What was nominal GDP in 2014?

425

If a country imports a good for which the world price is below its domestic price:

 

consumers will gain and producers will lose.

Autarky is a situation in which a country:

 

does not trade.

The effect of a tariff is to:

 

increase both the price paid by consumers and the price received by producers.

Real GDP per capita is:

 

not a sufficient measure of human welfare in a country.

Between 2020 and 2022 the U.S. experienced annual inflation of 4.4% according to the CPI. Which of the following CPI components was primarily responsible for this high level of inflation?

 

Rising transportation prices.

In the United States, growing international trade has:

 

increased the wages of highly educated workers.

When the world price of a good exceeds the domestic price, a country is MOST likely to:

 

export the good.

Which group of people would be most likely to support a tariff imposed on cotton imported into the United States?

 

cotton growers in the United States