ECN 306 Exam 1 Study Guide Questions
with All Solved Solutions 2026-2027
Updated.
The characteristic of nations that differentiates them from regions and that allows them the
freedom to decide what policies they will pursue is: - Answer sovereignty
Increasing tariffs generally has what effect on the country imposing the tariffs: - Answer The
country imposing the tariff generally has a net economic loss as a result of the tariff.
In the mid 2000's, what was the result of the decline in the U.S. tire production and the increase
in the importation of tires? - Answer The number of tire production workers in the US
declined.
Immigration that is the result of people moving from country to country seeking employment
has what economic effect? - Answer Immigrants are benefited because they find higher paying
jobs that they could have found without migrating, and countries to which they immigrate are
benefitted as a result of an increased work force and increased economic activity.
Temporary trade barriers to protect against surges of imports from specific countries, if such
surges are causing significant harm to a domestic industry, are called: - Answer safeguards
The value of one country's currency expressed in terms of another country's currency is the: -
Answer international valuation rate
In the early part of the 21st century, what did the Chinese government do to bring stability to
the value of the Chinese yuan? - Answer It bought U.S. dollars and sold yuan.
Why have so many states enacted laws in recent years to limit immigration? - Answer
Congress has enacted laws specifically granting authority to states to deal with immigration.
One of the first signs the financial crisis that appeared in 2007 was: - Answer the rising default
rate of sub-prime mortgages and the losses on securities that were backed by those mortgages.
In the context of international currency regulations a "crawling peg" is a(n) - Answer policy in
which the government allows small changes in the exchange rate value of the country's
currency.
, The most important economic policies that countries can control involve: - Answer movement
of production resources, taxing and spending, and money and exchange.
Possibly the most important difference between domestic and international trade is that
international transactions often involve: - Answer use of different currencies.
Who controls the supply of a particular currency? - Answer The central bank of the country
that issued the currency.
What is the primary factor that affects both international trade flows of goods and services and
international financial flows? - Answer exchange rates
When considering factor mobility, how can land be mobile? - Answer Land can be put to
different productive uses.
What does classical economics say about factor mobility? - Answer Factors of production are
not mobile across national boundaries.
With regard to migration, where are people more likely to move? - Answer Within their own
country.
With respect to financial capital, "home bias" means a preference to invest in: - Answer one's
own country
One thing that international economics and economics in general have in common is that both:
- Answer deal with challenges of scarce resources.
What factor has the most profound effect of discouraging the mobility of financial capital
internationally? - Answer the preference for investors to invest in their own countries
Why do countries trade? - Answer Demand and supply conditions differ between countries, so
price differ between countries if there is no international trade. Trade begins as someone
conducts arbitrage to earn profits from the price difference between previously separated
markets. A product will be exported from countries where its price was lower without trade to
countries where its price was higher.
How does trade affect production and consumption in each country? - Answer The move from
no trade to a free-trade equilibrium changes the product price from its no trade value to the
free-trade equilibrium international price or world price. The price change in each country
results in changes in quantities consumed and produced. In the country importing the product,
trade rises the quantity consumed and lowers the quantity produced of that product. In the
with All Solved Solutions 2026-2027
Updated.
The characteristic of nations that differentiates them from regions and that allows them the
freedom to decide what policies they will pursue is: - Answer sovereignty
Increasing tariffs generally has what effect on the country imposing the tariffs: - Answer The
country imposing the tariff generally has a net economic loss as a result of the tariff.
In the mid 2000's, what was the result of the decline in the U.S. tire production and the increase
in the importation of tires? - Answer The number of tire production workers in the US
declined.
Immigration that is the result of people moving from country to country seeking employment
has what economic effect? - Answer Immigrants are benefited because they find higher paying
jobs that they could have found without migrating, and countries to which they immigrate are
benefitted as a result of an increased work force and increased economic activity.
Temporary trade barriers to protect against surges of imports from specific countries, if such
surges are causing significant harm to a domestic industry, are called: - Answer safeguards
The value of one country's currency expressed in terms of another country's currency is the: -
Answer international valuation rate
In the early part of the 21st century, what did the Chinese government do to bring stability to
the value of the Chinese yuan? - Answer It bought U.S. dollars and sold yuan.
Why have so many states enacted laws in recent years to limit immigration? - Answer
Congress has enacted laws specifically granting authority to states to deal with immigration.
One of the first signs the financial crisis that appeared in 2007 was: - Answer the rising default
rate of sub-prime mortgages and the losses on securities that were backed by those mortgages.
In the context of international currency regulations a "crawling peg" is a(n) - Answer policy in
which the government allows small changes in the exchange rate value of the country's
currency.
, The most important economic policies that countries can control involve: - Answer movement
of production resources, taxing and spending, and money and exchange.
Possibly the most important difference between domestic and international trade is that
international transactions often involve: - Answer use of different currencies.
Who controls the supply of a particular currency? - Answer The central bank of the country
that issued the currency.
What is the primary factor that affects both international trade flows of goods and services and
international financial flows? - Answer exchange rates
When considering factor mobility, how can land be mobile? - Answer Land can be put to
different productive uses.
What does classical economics say about factor mobility? - Answer Factors of production are
not mobile across national boundaries.
With regard to migration, where are people more likely to move? - Answer Within their own
country.
With respect to financial capital, "home bias" means a preference to invest in: - Answer one's
own country
One thing that international economics and economics in general have in common is that both:
- Answer deal with challenges of scarce resources.
What factor has the most profound effect of discouraging the mobility of financial capital
internationally? - Answer the preference for investors to invest in their own countries
Why do countries trade? - Answer Demand and supply conditions differ between countries, so
price differ between countries if there is no international trade. Trade begins as someone
conducts arbitrage to earn profits from the price difference between previously separated
markets. A product will be exported from countries where its price was lower without trade to
countries where its price was higher.
How does trade affect production and consumption in each country? - Answer The move from
no trade to a free-trade equilibrium changes the product price from its no trade value to the
free-trade equilibrium international price or world price. The price change in each country
results in changes in quantities consumed and produced. In the country importing the product,
trade rises the quantity consumed and lowers the quantity produced of that product. In the
