8 If a central bank makes a sterilized purchase of foreign assets, then the domestic currency will _____.
(A) appreciate
(B) depreciate
(C) either appreciate, depreciate, or remain constant
(D) not be affected

9 The WTO permits the creation of a regional trade agreement (RTA) _____. (A) only if the RTA is a partial trade agreement (B) when the RTA includes a most-favored nation clause (C) when the RTA leads to more trade creation than trade diversion (D) if all members of the RTA are also members of the WTO

10 The following table shows the production of wheat (bushels per hour) and cloth (yards per hour) for Country A and Country B. In order for both countries to gain from trade, one bushel of wheat must trade for_____. (A) between 1/2 and 2 yards of cloth (B) between 6 and 18 yards of cloth (C) between 1/2 and 3 yards of cloth (D) between 1/3 and 3 yards of cloth

11 In the two-country model of international labor mobility, _____. (A) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries (B) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries (C) the effect of migration is to cause real wages in the two countries to diverge (D) the effect of migration is to cause real wages in the two countries to converge

12 According to the Heckscher-Ohlin model, the source of comparative advantage is a country’s _____. (A) technology (B) factor endowments (C) human capital (D) trade policy

13 If a good is imported into a small country like S from a large country like F, then the imposition of a tariff in Country S _____. (A) lowers the price of the good in S and raises it in F (B) raises the price of the good in S and lowers it in F (C) raises the price of the good in both countries (D) raises the price in Country S and does not affect its price in Country F

14 In the exporting country, an export subsidy in the short run will _____. (A) help consumers and raise the overall economic welfare of the exporting country (B) help consumers but lower economic welfare of the exporting country (C) hurt consumers and lower the overall economic welfare of the exporting country (D) hurt consumers but raise the overall economic welfare of the exporting country

15 The important difference between tariffs and quotas is that tariffs _____. (A) generate tax revenue for the government (B) raise the price of the good (C) help domestic producers (D) stimulate international trade

16 The situation when export-biased growth by poor nations would worsen their terms of trade so much that they would be worse off than if they had not grown at all is called _____. (A) distorted growth (B) immiserizing growth (C) imbalanced growth (D) misalignment growth

17 Which of the following transactions is a debit in a country’s current account? (A) Export of merchandise. (B) Gifts to foreigners. (C) Foreign bond purchases. (D) Export of services.

18 Which of the following is NOT a feature of a common market? (A) Free trade in goods and services between the members. (B) Common external barriers to trade. (C) Substantial coordination of macroeconomic policies among the members. (D) Factor mobility.

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