1) Suppose interest rates rise in the United States, but they don't rise in other nations. As a result of this change, which of the following is true?

I. The demand for the U.S. dollar will increase

II. The demand for the U.S. dollar will decrease

III. U.S. exports will decrease as a result of the changing value of the U.S. dollar.

IV. U.S. exports will increase as a result of the changing value of the U.S. dollar.

a) I only.

b) I and IV only.

c) I and III only.

d) II and IV only.

e) II and III only.

2) In the circular flow diagram

businesses buy goods and services from the product market.

households buy goods and services from the product market.

businesses provide goods and services to the factor market.

households buy goods and services from the factor market.

businesses buy goods and services from the factor market.

3) When the production possibilities curve increases, a corresponding

increase would take place with aggregate demand.

decrease would take place with aggregate demand.

decrease would take place with short run aggregate supply.

decrease would take place with long run aggregate supply.

increase would take place with long run aggregate supply.

4)A decrease in savings in the United States would

decrease investment causing economic growth to decrease.

decrease capital investment causing economic growth to decrease.

increase investment causing economic growth to decrease.

increase capital investment causing economic growth to decrease.

increase capital investment causing economic growth to increase.

5) If the government institutes an effective price ceiling on potato chips, then there will be a(n)

decrease in demand for and an increase in supply of potato chips.

increase in supply of potato chips.

increase in quantity supplied of potato chips.

increase in demand for potato chips.

increase in quantity demanded for potato chips.

6) If the United States trades with other nations according to comparative advantage, then

1. Americans would enjoy a higher standard of living.
2. there would be a loss of jobs in import industries.
3. there would be a greater variety of goods.

a) I only

b) II only

c) III only

d) I and II only

e) I and III only

7) All of the following are arguments in favor of tariffs and quotas except

the infant industry argument.

the low transition cost argument.

the national security argument.

the environmental standards argument.

the dumping argument.

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Answers to Macroeconomics and Trade Questions 1 Impact of Rising Interest Rates in the US Answer C I and III only Explanation When interest rates rise in the US compared to other countriesUS dollar be... View the full answer