MBA 680 EXAMS (1-3) QUESTIONS
AND VERIFIED ANSWERS (LATEST
2025- 2026) 100% CORRECT
_____ purchasing power parity states that the difference
between changes over time in product-price levels in two
countries will be offset by the change in the exchange rate over
this time. - correct answer- Relative
A country's demand for foreign currency is derived from -
correct answer- international transactions entering the
debit side of its balance-of-payments accounts.
A small country is considering imposing a tariff on imported wine
at the rate of $5 per bottle. Economists have estimated the
following based on this tariff amount: The imposition of the tariff
on wine will cause the country's economic well-being to _____
by about - correct answer- fall; $0.5 million.
A statement of the stocks of a country's foreign assets and
foreign liabilities at a point in time represents the country's -
correct answer- international investment position.
, According to the factor-price equalization theorem, free trade
between any two countries equalizes - correct answer-
product prices as well as the prices of individual factors of
production between the countries.
An investment is _____ if it is hedged against exchange-rate risk.
- correct answer- covered
Assume the standard trade model with two countries (Alpha and
Beta), two goods (food and drink), and two factors of production
(land and labor). Further assume that Alpha is relatively labor-
abundant and drink is relatively labor-intensive. Which of the
following is most likely to happen in the long run following the
opening of free trade between the countries? - correct
answer- The workers in Alpha will be better off but the
landowners will be worse off.
Assume the standard trade model with two countries (Alpha and
Beta), two goods (food and drink), and two factors of production
(land and labor). Further assume that Alpha is relatively labor-
abundant and food is relatively land-intensive. According to the
Heckscher-Ohlin theory, Alpha has a comparative advantage in
the production of - correct answer- Drink
AND VERIFIED ANSWERS (LATEST
2025- 2026) 100% CORRECT
_____ purchasing power parity states that the difference
between changes over time in product-price levels in two
countries will be offset by the change in the exchange rate over
this time. - correct answer- Relative
A country's demand for foreign currency is derived from -
correct answer- international transactions entering the
debit side of its balance-of-payments accounts.
A small country is considering imposing a tariff on imported wine
at the rate of $5 per bottle. Economists have estimated the
following based on this tariff amount: The imposition of the tariff
on wine will cause the country's economic well-being to _____
by about - correct answer- fall; $0.5 million.
A statement of the stocks of a country's foreign assets and
foreign liabilities at a point in time represents the country's -
correct answer- international investment position.
, According to the factor-price equalization theorem, free trade
between any two countries equalizes - correct answer-
product prices as well as the prices of individual factors of
production between the countries.
An investment is _____ if it is hedged against exchange-rate risk.
- correct answer- covered
Assume the standard trade model with two countries (Alpha and
Beta), two goods (food and drink), and two factors of production
(land and labor). Further assume that Alpha is relatively labor-
abundant and drink is relatively labor-intensive. Which of the
following is most likely to happen in the long run following the
opening of free trade between the countries? - correct
answer- The workers in Alpha will be better off but the
landowners will be worse off.
Assume the standard trade model with two countries (Alpha and
Beta), two goods (food and drink), and two factors of production
(land and labor). Further assume that Alpha is relatively labor-
abundant and food is relatively land-intensive. According to the
Heckscher-Ohlin theory, Alpha has a comparative advantage in
the production of - correct answer- Drink
