Need help with the followingmultiple choice 1. As a result of international trad
ID: 1196662 • Letter: N
Question
Need help with the followingmultiple choice
1. As a result of international trade,
a. the gain to producers in the importing country exceeds the loss to consumers in the importing country
b. the loss to producers in the importing country is less than the gain to consumers in the importing country caused by a decrease in price
c. the loss to producers in the importing country exceeds the gain to consumers in the importing country caused by an increase in price
d. the loss to producers in the importing country is equal to the gain to consumers in the importing country because price increases and equilibrium quantity decreases
e. the loss to producers in the importing country is equal to the gain to consumers in the importing country because price decreases and equilibrium quantity increases
2) If the U.S. dollar appreciates, it means that
a. the value of the U.S. dollar has decreased
b. the value of foreign exchange has increased
c. fewer U.S. dollars are required to purchase foreign exchange
d. more U.S. dollars are required to purchase foreign exchange
e. exports will fall immediately
3) Today's exchange rate system can be described as
a. a fixed exchange rate system
b. a freely floating exchange rate system
c. a freely floating exchange rate system
d. a flexible exchange rate system
e. a managed float
4) Which of the following would be represented as a debit in the U.S. balance of payments?
a. U.S. purchase of cars from Italy
b. U.S. sale of beef to Israel
c. U.S. government receives transfers from foreign governments to support U.S. expenses incurred in Europe
d. U.S. residents receive gifts of money from friends abroad
e. income received by U.S. resident from overseas investment
5) If the U.S. dollar depreciates in the foreign exchange market, American exports will be __________ and American imports will be __________.
a. More expensive; more expensive
b. Cheaper; cheaper
c. Less expensive; less expensive
d. Less expensive; more expensive
e. There will be no change
Explanation / Answer
1.As a result of international trade, the loss to producers in the importing country is equal to the gain to consumers in the importing country because price increases and equilibrium quantity decreases. This makes the imported product costly due to various taxes implemented on it due to import duty. This reduces the revenues of local producers. The customer has to pay more in order to achieve a good quality product.
2. If the U.S. dollar appreciates, it means that the value of foreign exchange has increased. This indicates that the currency of U.S.holds strong in the international market. This is an advantage to the U.S. as the national wealth would increase with time.
3. Today's exchange rate system can be described as a fixed exchange rate system. This is in the hands of the government to increase their assets in order to make their currency hold strong position in the market. In case of inflation, the exchange rate becomes floating where the value of exchange rate depends upon the international market trends.
4. The option represented as a debit in the U.S. balance of payments is the U.S. purchase of cars from Italy. On the import of any foreign goods or products there is a heavy import duty levied. This increases the cost of the product and would affect the balance of payments.
5.If the U.S. dollar depreciates in the foreign exchange market, American exports will be less expensive and American imports will be less expensive. The depriciation often gives an impact on any sort of foreign exchange in the form of export or import. The demand decreases and so does the supply of the products exchanged. The production slows down causing heavy loses.
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