WGU C211: Additional Study - 4th Attempt OA Quizzes and Answers 2023

A trade _____ is an economic condition in which a nation imports more than it exports. - Correct answer-deficit The _____ theory viewed international trade as a zero-sum game. - Correct answermercantilism Which of the following is a classical theory of international trade? - Correct answerComparative advantage theory The _____ theory is based on the assumption that the wealth of the world is fixed. - Correct answer-mercantilism Factor endowment is _____. - Correct answer-the extent to which different countries possess various factors of production Which of the following describes the maturing stage in the product life cycle theory? - Correct answer-The demand and ability to produce the product grow in developed nations. Which of the following is true of the strategic trade theory? - Correct answer-It provides direct policy advice. Import quotas are a type of _____. - Correct answer-nontariff barrier In the context of NTBs, _____ are bureaucratic rules that make it harder to import foreign goods. - Correct answer-administrative policies _____ are politically motivated trade sanctions against foreign countries to signal displeasure. - Correct answer-Trade embargoes Which of the following methods is directly derived from the theory of purchasing power parity (PPP)? - Correct answer-The Big Mac index Which of the following is true of quantitative easing? - Correct answer-It depreciates the currency that is being printed. A clean floating exchange rate policy is a government policy to _____. - Correct answerallow a currency's value to fluctuate according to the foreign exchange rate _____ have specified upper or lower bounds within which the exchange rate is allowed to fluctuate. - Correct answer-Target exchange rates The bandwagon effect is an example of the way _____ directly affects foreign exchange rates. - Correct answer-investor psychology The post-Bretton Woods system is a system of flexible exchange rate regimes with _____. - Correct answer-no official common denominator If the forward rate of the euro per dollar is higher than the spot rate, the euro has a _____. - Correct answer-forward discount The ____ is defined as the difference between the offer price and the bid price in a foreign exchange. - Correct answer-Spread Which of the following is an advantage of a weak US dollar? - Correct answer-Foreign tourists enjoy lower prices in the US _____ is the difference between two cultures along identifiable dimensions. - Correct answer-Cultural distance Which of the following is true of modes of entry? - Correct answer-Equity modes are indicative of relatively larger, harder-to-reverse commitments. Which of the following characterizes an MNE from a non-MNE? - Correct answer-It enjoys OLI advantages. _____ are the most basic non-equity mode of entry, capitalizing on economies of scale in production concentrated in the home country and providing better control over distribution. - Correct answer-Direct exports Which of the following is a disadvantage of licensing and franchising? - Correct answerLittle control over marketing A disadvantage of acquisitions is _____. - Correct answer-High development costs In _____, clients pay contractors to design and construct new facilities and train personnel. - Correct answer-Turnkey Projects A greenfield operation refers to _____. - Correct answer-a wholly owned subsidiary created by building a new factory and offices from scratch In the LLL framework, _____ refers to an emerging MNE's ability to identify and bridge gaps in its market. - Correct answer-linkage If a firm produces nothing, which of the following costs will be zero? - Correct answerVariable cost Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced? - Correct answer-$35 A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100, - Correct answer-average variable cost is $3 If marginal cost is rising, - Correct answer-marginal product must be falling Total cost is the - Correct answer-market value of the inputs a firm uses in production A difference between explicit and implicit costs is that - Correct answer-implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do Which of the following expressions is correct? - Correct answer-accounting profit = economic profit + implicit costs Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband? - Correct answer-38 Bouquets Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends that Ms. Joplin increase her production. The consultant must have concluded that , at her current level of production, Ms. Joplin's - Correct answermarginal revenue exceeds her marginal cost Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs (fuel, flight attendants, etc.) amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should - Correct answer-continue flying until the lease expires and then drop the run The short-run supply curve for a firm in a perfectly competitive market is - Correct answer-the portion of its marginal cost curve that lies above its average variable cost A firm that shuts down temporarily has to pay - Correct answer-its fixed costs but not its variable costs The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average - Correct answer-total cost Free entry means that - Correct answer-no legal barriers prevent a firm from entering an industry Which of the following firms is the closest to being a perfectly competitive firm? - Correct answer-A grain farmer in Illinois Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue of the 200th unit will be - Correct answer-$12 The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which - Correct answer-profit is maximized Which of the following would be most likely to have monopoly power? - Correct answerA local cable TV provider If the distribution of water is a natural monopoly, then - Correct answer-multiple firms would likely each have to pay large fixed costs to develop their own network of pipes Monopoly firms face - Correct answer-downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is a monopolist and maximizing his profit, which of the following statements is true? - Correct answer-The price of Bob's bison burgers will exceed Bob's marginal cost A firm cannot price discriminate if - Correct answer-it operates in a competitive market A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it - Correct answer-can prevent children from buying the lower-priced tickets and selling them to adults Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in - Correct answerperfect price discrimination The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as - Correct answer-arbitrage Which of the following is not one of the ways that antitrust laws promote competition? - Correct answer-Antitrust laws allow the government to shut down a firm if the government believes the firm has monopoly power. In order for antitrust laws to raise social welfare, the government must - Correct answerbe able to determine which mergers are desirable and which are not Which of the following is an example of public ownership of a monopoly? - Correct answer-U.S. Postal Service One characteristic of an oligopoly market structure is - Correct answer-firms in the industry have some degree of market power A similarity between monopoly and monopolistic competition is that in both market structures - Correct answer-sellers are price makers rather than price takers Product differentiation in monopolistically competitive markets ensures that, for profitmaximizing firms, - Correct answer-price will exceed marginal cost In the short run, a firm operating in a monopolistically competitive market - Correct answer-produces an output where marginal revenue equals marginal cost, and the price is determined by demand Which of the following conditions is characteristic of a monopolistically competitive firm in both the short run and the long run? - Correct answer-P MC In monopolistically competitive markets, economic losses - Correct answer-suggest that some existing firms will exit the market Monopolistic competition is considered inefficient because - Correct answer-price exceeds marginal cost Critics of advertising argue that in some markets advertising may - Correct answerdecrease elasticity of demand allowing firms to charge a larger markup over marginal cost Professional organizations and producer groups have an incentive to - Correct answerrestrict advertising in order to reduce competition on the basis of price Which of the following statements is correct? - Correct answer-Brand names may help consumers if they provide information about the quality of a product when acquiring such information is difficult. If a certain market were a monopoly, then the monopolist would maximize its profit by producing 4,000 units of output. If, instead, that market were a duopoly, then which of the following outcomes would be most likely if the duopolists successfully collude? - Correct answer-One duopolist produces 2,400 units of output and the other produces 1,600 units of output An oligopolist will increase production if the output effect is - Correct answer-greater than the price effect If one firm left a duopoly market where the firms did not cooperate then - Correct answer-price would rise and quantity would fall Two suspected drug dealers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of marijuana and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison. If you both confess, you will each get 5 years." If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana. If each suspected drug dealer follows a dominant strategy, what should he/she do? - Correct answer-Confess regardless of the partner's decision The Sherman Antitrust Act - Correct answer-restricted the ability of competitors to engage in cooperative agreements A central issue in the Microsoft antitrust lawsuit involved Microsoft's integration of its Internet browser into its Windows operating system, to be sold as one unit. This practice is known as - Correct answer-Tying Which of the following policies can the Fed follow to increase the money supply? - Correct answer-Reduce the interest rate on reserves A problem that the Fed faces when it attempts to control the money supply is that - Correct answer-the Fed does not control the amount of money that households choose to hold as deposits in banks Which of the following both increase the money supply? - Correct answer-A decrease in the discount rate and a decrease in the interest rate on reserves In the special case of the 100-percent-reserve banking, the money multiplier is - Correct answer-1 and banks do not create money Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits? - Correct answer-$4,937.5 billion In a system of 100-percent-reserve banking, - Correct answer-banks do not influence the supply of money Which of the following is correct? - Correct answer-The Federal Reserve has 12 regional banks. The Board of Governors has up to 7 members who serve 14-year terms. Which of the following is included in M2 but not in M1? - Correct answer-Savings deposits The set of items that serve as media of exchange includes - Correct answer-demand deposits Money is - Correct answer-the most liquid asset but an imperfect store of value Which of the following lists is included in what economists call "money"? - Correct answer-Cash With respect to their impact on aggregate demand for the U.S. economy, which of the following represents the correct ordering of the wealth effect, interest-rate effect, and exchange-rate effect from most important to least important? - Correct answer-Interestrate effect, exchange-rate effect, wealth effect In recent years, the Federal Reserve has conducted policy by setting a target for the - Correct answer-federal funds rate Liquidity preference theory is most relevant to the - Correct answer-short run and supposes that the interest rate adjusts to bring money supply and money demand into balance. If the Fed increases the money supply, - Correct answer-the interest rate decreases, which tends to raise stock prices. If the Fed conducts open-market purchases, the money supply - Correct answerincreases and aggregate demand shifts right. Changes in the interest rate - Correct answer-shift aggregate demand if they are caused by fiscal or monetary policy, but not if they are caused by changes in the price level. If the MPC = 4/5, then the government purchases multiplier is - Correct answer-5 Suppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would - Correct answer-shift aggregate demand right by a larger, equal, or smaller amount than the increase in government expenditures. Assume the MPC is 0.625. Assume there is a multiplier effect and that the total crowding-out effect is $12 billion. An increase in government purchases of $30 billion will shift aggregate demand to the - Correct answer-right by $68 billion A significant example of a temporary tax cut was the one announced in 1992 by President George H. W. Bush. The effect of that tax cut on consumer spending and aggregate demand was - Correct answer-likely smaller than if the cut had been permanent Suppose there was a large increase in net exports. If the Fed wanted to stabilize output, it could - Correct answer-decrease the money supply, which will increase interest rates Which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment? - Correct answer-Increase government expenditures During recessions, taxes tend to - Correct answer-fall and thereby increase aggregate demand Import quotas and tariffs produce some common results. Which of the following is not one of those common results? - Correct answer-Equal revenue is always raised for the domestic government. The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began - Correct answer-exporting steel and the price per ton in Russia increased to $1,000. Representative Vazquez cites the "jobs argument" when he argues before Congress in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Representative Vazquez's reasoning is that he ignores the fact that - Correct answer-the gains from trade are based on comparative advantage. If the Korean steel industry subsidizes the steel that it sells to the United States, the - Correct answer-harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel. When a country that imports a particular good imposes a tariff on that good, - Correct answer-consumer surplus decreases and total surplus decreases in the market for that good. The problem with the protection-as-a-bargaining-chip argument for trade restrictions is - Correct answer-if it fails, the country faces a choice between two bad options. A tax on an imported good is called a - Correct answer-tariff Suppose Japan exports cars to Russia and imports wine from France. This situation suggests - Correct answer-Japan has a comparative advantage relative to Russia in