Chapter 1

Question 1

Who is the author of the International economics reference?

Answer 1

Paul R. Krugman

Question 2

What Is International Economics About?

Answer 2

-International trade topics

-International finance topics

-International trade versus finance

-about how nations interact

Question 3

International trade topics

Answer 3

Gains from trade, explaining patterns of trade, effects of government policies on trade

Question 4

International finance topics

Answer 4

Balance of payments, exchange rate determination, international policy coordination and capital markets

Question 5

how nations interact ?

Answer 5

Through trade of goods and services, flows of money, and investment.

Question 6

This is an old subject, but continues to grow in importance as countries become tied more to the international economy.

Answer 6

International economics

Question 7

T or F

Nations are now more closely linked than ever before.

Answer 7

T

Question 8

U.S. exports and imports as shares of gross domestic product have been on a ____________ trend.

Answer 8

long-term upward

Question 9

International trade has roughly______ in importance compared to the economy as a whole in the past 50 years.

Answer 9

tripled

Question 10

Both imports and exports fell in what year due to the ______

Answer 10

2009, recession.

Question 11

Compared to the United States, other countries are even more tied to _______

Answer 11

international trade.

Question 12

Other countries’ imports and exports as a share of GDP are substantially _____

Answer 12

higher

Question 13

The __________, due to its size and diversity of resources, relies less on international trade than almost any other country.

Answer 13

United States

Question 14

What is the no. 1 export product of the Philippines.

Answer 14

Electronic products

Question 15

_______is probably the most important insight in international economics.

Answer 15

gains from trade

Question 16

Countries selling goods and services to each other almost always generates _____

Answer 16

Mutual benefits.

Question 17

Gains from trade

Answer 17

1. When a buyer and a seller engage in a voluntary transaction, both can be made better off.
2. How could a country that is the most (least) efficient producer of everything gain from trade?
3. Trade benefits countries by allowing them to export goods made with relatively abundant resources and imports goods made with relatively scarce resources.
4. When countries specialize, they may be more efficient due to larger-scale production.
5. Countries may also gain by trading current resources for future resources (international borrowing and lending) and due to international migration.

Question 18

Norwegian consumers import ______ that they would have a hard time producing.

Answer 18

oranges

Question 19

How could a country that is the most (least) efficient producer of everything gain from trade?

Answer 19

Countries use finite resources to produce what they are most productive at (compared to their other production choices), then trade those products for goods and services that they want to consume.

Countries can specialize in production, while consuming many goods and services through trade.

Question 20

Trade benefits countries by allowing them to export goods made with_______ resources and imports goods made with ________resources.

Answer 20

relatively abundant, relatively scarce

Question 21

When countries _________, they may be more efficient due to larger-scale production.

Answer 21

specialize

Question 22

Countries may also gain by trading current resources for future resources and due to international migration.

Answer 22

(international borrowing and lending)

Question 23

______ is predicted to benefit countries as a whole in several ways, but trade may harm particular groups within a country.

Answer 23

Trade

Question 24

_________________can harm the owners of resources that are used relatively intensively in industries that compete with imports.

Answer 24

International trade

Question 25

Trade may therefore affect the _________ within a country.

Answer 25

distribution of income

Question 26

The _______describes who sells what to whom.

Answer 26

pattern of trade

Question 27

Differences in ______and ______explain why Brazil exports coffee and Saudi Arabia exports oil.

Answer 27

climate , resources

Question 28

Why some countries export certain products can stem from differences in:

Answer 28

Labor productivity Relative supplies of capital, labor and land and their use in the production of different goods and services

Question 29

Policy makers affect the amount of trade through

Answer 29

tariffs: quotas: export subsidies:

Question 30

a tax on imports or exports

Answer 30

tariffs:

Question 31

a quantity restriction on imports or exports,

Answer 31

quotas:

Question 32

a payment to producers that export,

Answer 32

export subsidies:

Question 33

are often chosen to cater to special interest groups, rather than to maximize national welfare.

Answer 33

Trade policies

Question 34

Governments tend to adopt _______, then negotiate them down in exchange for reduction in trade barriers of other countries.

Answer 34

tariffs

Question 35

Exchanging risky assets such _______can benefit all countries by diversification that reduces the variability of income – another source of gains from trade.

Answer 35

as stocks and bonds

Question 36

Most international trade involves .

Answer 36

monetary transactions

Question 37

Many ________have important consequences for international trade.

Answer 37

monetary events

Question 38

Governments measure the value of exports and imports, as well as the value of financial assets that flow into and out of their countries.

Answer 38

Balance of Payments

Question 39

, where countries import more than they export in value, may be offset by net inflows of financial assets.

Answer 39

Trade deficits

Question 40

measures the balance of funds that central banks use for official international payments.

Answer 40

The official settlements balance, or the balance of payments,

Question 41

All three values are measured in the

Answer 41

government’s national income accounts.

Question 42

are an important financial issue for most governments.

Answer 42

Exchange rates

Question 43

measure how much domestic currency can be exchanged for foreign currency

Answer 43

Exchange rates

Question 44

Exchange rate affect

Answer 44

how much goods denominated in foreign currency (imports) cost in the domestic country. how much goods denominated in domestic currency (exports) cost in foreign markets.

Question 45

T or F Some exchange rates change continually (float) while others are fixed for periods of time.

Answer 45

T

Question 46

In an integrated economy, one country’s economic policies usually affect other countries as well, leading to the need for some degree of policy coordination.

Answer 46

International Policy Coordination

Question 47

where money is exchanged for promises to pay in the future,

Answer 47

Capital markets,

Question 48

Capital Market have special concerns in an international setting:

Answer 48

Currency fluctuations can alter the value paid. Countries, especially developing ones, might default on debt.

Question 49

are arrangements by which individuals and firms exchange money now for promises to pay in the future.

Answer 49

Capital markets

Question 50

cope with special regulations that countries impose on foreign investments

Answer 50

International capital markets

Question 51

Special risks of currency fluctuations and national default;

Answer 51

International capital markets

Question 52

Sometimes offer opportunities to evade regulations placed on domestic markets

Answer 52

International capital markets

Question 53

focuses on transactions involving movement of goods and services across nations.

Answer 53

International trade

Question 54

International trade theory (Econ/Trade Chapters 2–8) and policy (Econ/Trade Chapters 9–12)

Answer 54

International trade

Question 55

focuses on financial or monetary transactions across nations.

Answer 55

International finance

Question 56

International monetary theory (Econ Chapters 13–18/Finance Chapters 2-7) and policy (Econ Chapters 19–22/Finance Chapters 8-11)

Answer 56

International finance

Question 57

Increasing international economic connections International Trade International Asset Ownership

Answer 57

Globalization

Question 58

Increasing role of International Organizations in constraining domestic policies

Answer 58

Globalization

Question 59

Increasing cultural homogeneity

Answer 59

Globalization

Question 60

Increased domestic economic growth caused by expanded international connections Potential harm?

Answer 60

Environmental concerns

Question 61

A loose coalition of groups opposed to globalization

Answer 61

The Anti-Globalization movement

Question 62

The Anti-Globalization movement concerns

Answer 62

Environmental damage Loss of domestic labor protections Erosion of domestic sovereignty