Quiz 135: Level 1: Economics in a Global Context
Correct Answer B.
The rate is determined by calculating the inverse rate of BAD/SLV and then multiplying the value by BAD/PLT.
- Japan has an absolute advantage in the production of both radios and televisions.
- Both countries will gain if Japan focuses on the production of radios and the United States on the production of televisions.
- Both countries will gain if the United States focuses on the production of televisions and Japan on the production of radios.
Correct Answer A.
Although Japan has the absolute advantage in the production of both products (i.e., it can produce both products more cheaply in terms of man‐hours), the United States has comparative advantage in the production of radios. If the United States switched its workers to producing radios and Japan switched its workers to producing televisions, there would be an expansion in total output and both countries would gain.
The USD/EUR exchange rate was $1.2 USD/EUR in January 2014. It changed to 0.88 USD/EUR in January 2015. Which of the following is most accurate in this context?
- The US dollar has depreciated.
- The euro has appreciated.
- The US dollar has appreciated.
Correct Answer C.
The US dollar has appreciated as only $0.88 is required to purchase one euro in 2015.
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