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Use the following diagram to answer the next question:
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Refer to the diagram. Suppose the U.S. increases its imports from Mexico. All else equal, this would: |
| | A) | shift the demand curve to the left, causing the dollar to depreciate |
| | B) | shift the demand curve to the right, causing the dollar to depreciate |
| | C) | shift the supply curve to the right, causing the dollar to appreciate |
| | D) | shift the supply curve to the left, causing the peso to appreciate |
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| 2 | |
If the U.S. dollar appreciates against other currencies: |
| | A) | currency speculators will sell dollars |
| | B) | U.S. imports will become more expensive to U.S. consumers |
| | C) | U.S. exports will become more expensive to foreign consumers |
| | D) | the demand for the dollar will fall |
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| 3 | |
For a nation to gain from trade, it must have: |
| | A) | no tariffs or other trade barriers |
| | B) | an absolute advantage in the production of at least one good |
| | C) | an absolute advantage in the production of at least two goods |
| | D) | a comparative advantage in the production of at least one good |
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| 4 | |
One major outcome of the North American Free Trade Agreement is: |
| | A) | massive investment by Asian companies in Mexico to exploit reduced tariffs |
| | B) | increased unemployment in Mexico |
| | C) | higher living standards in Canada, Mexico, and the U.S. |
| | D) | reduced exports from the U.S. to Mexico and Canada |
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| 5 | |
Consider the following hypothetical exchange rates: $1 = .50 British pounds; 1 French franc = $.20. We can conclude that: |
| | A) | 1 pound = 10 francs |
| | B) | 1 pound = 5 francs |
| | C) | 1 franc = .2 pounds |
| | D) | 1 franc = .05 pounds |
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| 6 | |
A decrease in the U.S. demand for Mexican goods will: |
| | A) | increase the demand for the peso and increase its dollar price |
| | B) | increase the supply of the peso and decrease its dollar price |
| | C) | decrease the supply of the peso and increase its dollar price |
| | D) | decrease the demand for the peso and decrease its dollar price |
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| 7 | |
Use the following diagram to answer the next question:
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Refer to the diagram. At the equilibrium exchange rate: |
| | A) | $1 will buy 20 pesos |
| | B) | $1 will buy 5 pesos |
| | C) | 95 pesos will buy one dollar |
| | D) | 5 pesos will buy one dollar |
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| 8 | |
The United States: |
| | A) | leads the world in the percentage of its GDP that is traded |
| | B) | leads the world in the dollar volume of exports and imports |
| | C) | exports more than it imports |
| | D) | is importing a smaller percentage of its GDP now compared with 40 years ago |
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| 9 | |
A tariff: |
| | A) | raises the price of imported goods, increasing the demand for domestic substitutes |
| | B) | lowers the cost of producing domestic goods |
| | C) | offsets the effect of a quota |
| | D) | raises the price of domestic goods, lowering the demand for them |
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| 10 | |
When traveling in Ireland, you pay the equivalent of $5 for a pint of Guinness priced at 2 pounds. The exchange rate is: |
| | A) | $1 = 2.5 pounds |
| | B) | 1 pound = $.25 |
| | C) | $1 = .4 pounds |
| | D) | 1 pound = $4 |
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