International Sector Test

Question 1

what happens to exports when a currency apprciates?

Answer 1

exports fall because that good is now more expensive to trading partners

Question 2

what happens to exports when a currency depreciates?

Answer 2

exports rise because now that good is cheaper to trading partners

Question 3

imp>exp

Answer 3

surplus

Question 4

imp

Answer 4

defecit

Question 5

how do you find absolute advantage?

Answer 5

look and see what nation can produce a larger quantity of the selected good

Question 6

how do you calculate comparative advantage?

Answer 6

(when a nations opportunity cost to produce a good is lower than the opportunity cost for the other nation to produce said good) Output Other Over
or
Input Other Over

Question 7

how do you find the terms of trade?

Answer 7

(make the chart) it needs to be in between the two opportunity costs for the goods

above exporting nations production cost, and below importing nations production cost

Question 8

how do you know if nations are better off after trade?

Answer 8

if total production rises then a nation is better off

Question 9

how do monetary and fiscal policies affect exchange rates?

Answer 9

these policies affect interest rates and that impacts the demand for currencies

Question 10

current account deficit

Answer 10

when the imports that a country has exceeds its exports

Question 11

current account surplus

Answer 11

when the exports that a country has exceeds it’s imports