MBA 680 FINAL EXAM PREP QUESTIONS AND
VERIFIED ANSWER; 100% CORRECT; 2026-
2027 UPDATE
"High-income countries have a price level which is much higher
than the low-income countries". Which of the following is most
likely to explain this price differential? - correct answer-
With the development process of a nation, its productivity in
making traded goods rises much faster than that in making non-
traded goods.
(BLANK) are money-like assets that are held by governments and
that are recognized by governments as fully acceptable for
payments between them. - correct answer- Official
international reserve assets
A country that is saving more than it is investing domestically -
correct answer- has a current account surplus
A country which has a higher ratio of capital to other factors of
production than does the rest of the world is - correct
answer- Relatively capital-abundant
,A negative externality is said to exist if - correct answer-
the social costs exceed the private costs
Absolute purchasing power parity holds for a product bundle if
- correct answer- the law of one price holds for each of
the goods in the bundle
According to the assignment rule, which of the following policy
mixes is appropriate for a country with excessively low
unemployment, a balance of payments surplus, and fixed
exchange rates? - correct answer- Expansionary fiscal
policy and expansionary monetary policy
According to the assignment rule, which of the following policy
mixes is appropriate for a country with high inflation, a balance
of payments surplus, and fixed exchange rates? - correct
answer- Contractionary fiscal policy and expansionary
monetary policy
According to the assignment rule, which of the following policy
mixes is appropriate for a country with high unemployment, a
balance of payments deficit, and fixed exchange rates? -
correct answer- Expansionary fiscal policy and
contractionary monetary policy
,According to the Stopler-Samuelson theorem, a price change
that reduces a country's production of its exportable product
would - correct answer- reduce the returns to the factor
of production used intensively in the export industry
Action to reverse the effect of official intervention on the
domestic money supply is called - correct answer-
sterilization
An example of the specificity rule in action is - correct
answer- taxing the production of a product whose
production creates a great deal of pollution
As the world moves toward freer trade: - correct answer-
production of capital- and skill-intensive products expands in
industrialized countries and shrinks in developing countries.
Assume further technology and tastes are the same in the US
and the rest of the world. This information indicates that the US
- correct answer- is relatively capital-abundant
, Assume that Country X produces two goods (Sugar and shoes) -
and that the possibility curve is "bowed" out. As the country
produces more sugar the opportunity cost of sugar in terms of
shoes forgone will - correct answer- Increase
Assume that the British government is committed to maintaining
a fixed exchange rate at $1.90 per pound. In the Autumn-winter
period, what type of intervention must British monetary
authorities engage in? - correct answer- Buy 20 billion
pounds at $1.90
Assume that the economy was initially at Point A. Which of the
following could have caused the economy to move to and
remain at Point B? - correct answer- Expansionary fiscal
policy with sterilization
Assume you are a Chinese exporter and expect to receive
$250,000 at the end of 60- days. You can remove the risk of loss
due to a devaluation of the dollar by - correct answer-
selling dollars in the 60-day forward exchange market
Assume you are an American importer who must pay 500,000
euros at the end of 90 days when you receive 1,000 cases of
French wine at your warehouse in NY. Suppose that you have
not covered this transaction in the forward market. In which of
VERIFIED ANSWER; 100% CORRECT; 2026-
2027 UPDATE
"High-income countries have a price level which is much higher
than the low-income countries". Which of the following is most
likely to explain this price differential? - correct answer-
With the development process of a nation, its productivity in
making traded goods rises much faster than that in making non-
traded goods.
(BLANK) are money-like assets that are held by governments and
that are recognized by governments as fully acceptable for
payments between them. - correct answer- Official
international reserve assets
A country that is saving more than it is investing domestically -
correct answer- has a current account surplus
A country which has a higher ratio of capital to other factors of
production than does the rest of the world is - correct
answer- Relatively capital-abundant
,A negative externality is said to exist if - correct answer-
the social costs exceed the private costs
Absolute purchasing power parity holds for a product bundle if
- correct answer- the law of one price holds for each of
the goods in the bundle
According to the assignment rule, which of the following policy
mixes is appropriate for a country with excessively low
unemployment, a balance of payments surplus, and fixed
exchange rates? - correct answer- Expansionary fiscal
policy and expansionary monetary policy
According to the assignment rule, which of the following policy
mixes is appropriate for a country with high inflation, a balance
of payments surplus, and fixed exchange rates? - correct
answer- Contractionary fiscal policy and expansionary
monetary policy
According to the assignment rule, which of the following policy
mixes is appropriate for a country with high unemployment, a
balance of payments deficit, and fixed exchange rates? -
correct answer- Expansionary fiscal policy and
contractionary monetary policy
,According to the Stopler-Samuelson theorem, a price change
that reduces a country's production of its exportable product
would - correct answer- reduce the returns to the factor
of production used intensively in the export industry
Action to reverse the effect of official intervention on the
domestic money supply is called - correct answer-
sterilization
An example of the specificity rule in action is - correct
answer- taxing the production of a product whose
production creates a great deal of pollution
As the world moves toward freer trade: - correct answer-
production of capital- and skill-intensive products expands in
industrialized countries and shrinks in developing countries.
Assume further technology and tastes are the same in the US
and the rest of the world. This information indicates that the US
- correct answer- is relatively capital-abundant
, Assume that Country X produces two goods (Sugar and shoes) -
and that the possibility curve is "bowed" out. As the country
produces more sugar the opportunity cost of sugar in terms of
shoes forgone will - correct answer- Increase
Assume that the British government is committed to maintaining
a fixed exchange rate at $1.90 per pound. In the Autumn-winter
period, what type of intervention must British monetary
authorities engage in? - correct answer- Buy 20 billion
pounds at $1.90
Assume that the economy was initially at Point A. Which of the
following could have caused the economy to move to and
remain at Point B? - correct answer- Expansionary fiscal
policy with sterilization
Assume you are a Chinese exporter and expect to receive
$250,000 at the end of 60- days. You can remove the risk of loss
due to a devaluation of the dollar by - correct answer-
selling dollars in the 60-day forward exchange market
Assume you are an American importer who must pay 500,000
euros at the end of 90 days when you receive 1,000 cases of
French wine at your warehouse in NY. Suppose that you have
not covered this transaction in the forward market. In which of
