CFA各科试题集及解答--QUIZ 6

CFA各科试题集及解答--QUIZ 6六 Investment Tools: Economics: Global Economic Analysis1.A: Gaining from International Trade Question ID: 12842Which of the following will determine the pattern of international trade?Comparative advantage. A.Profit margin advantage. B.Absolute advantage. C.Lowest total cost advantage. D.AComparative advantage is the ability to produce a good at a lower opportunity cost than otherscan produce it.Question ID: 12844Which of the statements about absolute advantage is TRUE? Absolute advantage:refers to the lowest opportunity cost to produce a product. A.is when both trading partners benefit. B.is when a nation trades for goods for which they are the high-opportunity C. cost producer.is when a nation can produce more output with the same resources than D. any other nation.DBy definition.Question ID: 12801Which type of advantage determines the pattern of trade in the world?Absolute advantage. A.Comparative advantage. B.Advantages due to tariffs and quotas. C.Economic advantage. D.BComparative advantage is the ability to produce a good at a lower opportunity cost than otherscan produce it. According to the law of comparative advantage,trading partners are bothbetter off if they specialize in the production of goods for whichthey are the low-opportunitycost producer and trade for goods for which they are the high-opportunity cost producer.Question ID: 12807The table below outlines the possible tradeoffs of producing unitsof wine and wheat for bothCountry A and Country B.Country A Country Bwine wheat wine wheat0 8 0 56 units 4 4 units 312 0 10 0Using the table above, the law of comparative advantage suggests that:Country A would not gain from trade, because it has an absolute advantage A. in the production of both goods.neither country would gain from trade, even if the costs for transporting the B. products were zero.both countries would gain if Country A traded wheat for Country B's wine. C.both countries would gain if Country A traded wine for Country B's wheat. D.CCountry A has an absolute advantage in both wheat and wine becauseit can produce more ofboth than country B. Country B has a comparative advantage in producing wine because it canproduce either 5 wheat or 10 wine which is a ratio of 1 to 2 whereas country A can produce 8 wheat or 12 wine which is a ratio of 1 to 1.5. Because of country B's comparative advantage in producing wine both countries would benefit if A used its absolute advantage in producing wheat in exchange for B's comparative advantage in wine.Question ID: 12805The law of comparative advantage explains why a nation will benefit from trade when it:exports goods for which it is a high-cost producer, while importing those for A. which it is a low-cost producer.exports more than it imports. B.imports more than it exports. C.exports goods for which it is a low-cost producer, while importing those for D. when it is a high-cost producer.DComparative advantage is the ability to produce a good at a lower opportunity cost than others can produce it. When trading partners specilize in producing products for which they have a comparative advantage, costs are minimized, output is greater, and both trading partners benefit.Question ID: 12856Which of the following is least likely to affect exchange rates? Differential:spending by firms. A.inflation rates. B.interest rates. C.income growth. D.AThe main determinant of exchange rates is the supply and demand for a currency, which is determined by the difference between the two countries in their: income growth, inflation rates, and interest rates.Question ID: 24992Country A has a comparative advantage in the production of Product F. Assume the current world price is greater than the domestic market-clearing price. If the world price is allowed to prevail in the domestic market, which of the following with respect to Product F is TRUE?The quantity supplied is lower. A.The quantity demanded is higher. B.Revenues of producers are lower. C.The quantity supplied is higher. D.DAt prices above the domestic equilibrium price, the domesticquantity demanded will be lower,and the quantity supplied will be higher.Question ID: 12855A country permits free international trade, and the world marketprice for corn is higher thanthe domestic price would be if the economy were closed. What is the likely impact of the open economy on the price of corn in the domestic market and quantity of corn supplied to the non-domestic market?Price QuantityA. lower lowerPrice QuantityB. lower higherPrice QuantityC. higher higherPrice QuantityD. high lowerCThe direct impact of the open economy on the price of corn in the domestic market is likely to be a higher price due to the greater total demand for the corn. The quantity of corn supplied to the non-domestic market is also likely to be higher because the world economy issupplyingcorn to the market.Question ID: 24994Which of the items below is NOT a reason why nations adopt trade restrictions? To:protect industries that are highly sensitive to national security. A.prohibit foreign firms from increasing market share by sellingproducts B. below cost.protect industries in which they have a comparative advantage. C.protect industries while they are developing. D.CIf a particular country enjoys a comparative advantage in aparticular industry, no protection isneeded.Question ID: 12857Which of the following arguments for trade restrictions have loweror questionable validity?Tariffs are used to prohibit foreign firms from selling products in the country A. at below cost in an attempt to gain market share.Some industries are highly sensitive to national security and their products B. should, therefore, remain in the country.Infant industries should be protected for a time while they develop and C. reduce costs.Trade restrictions create domestic jobs. D.DThe reading states that while all other explanations are partially correct, "Trade restrictionscreate domestic jobs" is at best of questionable validity.Question ID: 24996The anti-dumping argument in favor of trade restrictions is the argument the restrictionsshould be imposed to:discourage foreign firms from engaging in price competition. A.prevent foreign firms from dumping unwanted products in domestic B. markets.discourage foreign firms from exporting products of inferior quality.C.prevent foreign firms from selling their product below cost. D.DThe anti-dumping argument is that restrictions should be used to prohibit foreign firms fromincreasing market share by selling products below cost. Question ID: 12861Who is the ultimate loser when trade restrictions are established?Foreign producers. A.Foreign governments. B.Domestic consumers. C.Domestic producers. D.CConsumers lose due to the higher prices of goods.Question ID: 12863If the U.S. auto producers were prohibited from exporting their products abroad, which ofthe following would most likely occur?Auto prices in the US would rise. A.The incomes of US auto makers would rise. B.U.S. consumers would gain at the expense of foreign producers. C.Auto prices in the U.S. will fall, but U.S. citizens would have less foreign D. exchange with which to purchase foreign assets abroad.DIf U.S. auto producers could not export their products abroad their price would fall because demand would be reduced.? With the decreased demand and associated decreased production in autos this could have a ripple effect through the economy of one or more of the following: less dollars flowing into the U.S. because of decreased exports, decreasedproduction in the large auto industry could be a factor leading to a recession,? decreasing prices would limit salaries for auto workers.?All of these factors would inhibit the purchase of foreign products by U.S. citizens.?Question ID: 12865Who benefits from a quota?The government. A.Foreign producers. B.Foreign consumers. C.Domestic producers. D.DQuotas restrict the supply of imported goods, which increases the price domestically benefiting domestic producers.Question ID: 12866Which of the following is NOT a valid reason why nations adopt trade restrictions? Nations adopt trade restrictions to:protect national defense. A.prevent firms from selling products in a country at below cost. B.protect infant industries. C.protect jobs. D.DIn the long run, trade restrictions cannot protect the net number of jobs in a country. The number of jobs protected by import restrictions will be offset by the number of jobs lost in the import/export industry.Import/export firms will be unable to sell the overpriced domestic product abroad or import and sell the lower priced restricted foreign-made product.Question ID: 24999Which of the following reasons for a nation to adopt trade restrictions is the least valid? The:anti-dumping argument. A.national defense argument. B.job protection argument. C.infant industry argument. D.CThe number of jobs protected by import restrictions will be offset by jobs lost in the in the import/export industries. In the long run, trade restrictions cannot protect the net number ofjobs in a country.Question ID: 12867"Import quotas will create jobs, increasing the employment level of a nation." Economic analysis indicates that this statement is in the:Short Run Long RunA. false trueShort Run Long Run B.true falseShort Run Long RunC. true trueShort Run Long RunD. false falseBThe argument that trade restrictions protect jobs is of questionable validity. First, trade restrictions prevent trading partners from developing the purchasing power needed to buy import goods from the protected country, thus depressing the country's own export industry. Second, the higher price of the protected domestic goods dampens domestic purchasing power, taking sales away from other domestic products. Third, the jobs that would have been created in the import industry are never created.The number of jobs protected by import restrictions will be offset by jobs lost in the import/export industry.Question ID: 12806The following table illustrates the domestic prices of items of similar quality - shoes,watches, and electric motors - in the United States and Israel.United States IsraelItem (dollars) (pounds)Shoes 20 40Watches 40 90Electric Motors 80 300Assuming that the exchange rate for the Israeli pound is 2.50 perU.S. dollar and that transportation costs are zero, which goods will the U.S. tend to export to Israel?Shoes, watches, and electric motors. A.Shoes and watches only. B.Shoes only. C.Electric motors only. D.DThe key to this question is to convert the Israeli pound to dollars. 40/2.5 = $16 shoes, 90/2.5 = $36 watches, 300/2.5 = $120 electric motors, the electric motors are the only item that can be sold at a higher price in Israel than the U.S. therefore it would be the only product exported from the U.S. to Israel.Question ID: 12858Which of the following is NOT a valid reason for a country to adopt trade restrictions?To prohibit foreign firms from selling products in a country atbelow cost in A. an attempt to gain market share.To create jobs and protect the net number of jobs within a country. B.To protect infant industries. C.For national security reasons. D.BIn the long run, trade restrictions cannot increase or protect thenet number of jobs in a country. Trade restrictions prevent trading partners from developing the purchasing power needed to buy your import goods thereby depressing your export industry reducing those jobs that would have been created through increased exports.Question ID: 12803The following chart indicates the production possibilities of food and drink per day in Country A and Country B.Units of Output Per DayCountry A Country BFood 9 5Drink 7 5Which of the following statements is TRUE?Mutual gains could be realized from trade if A specialized in drink A. production and B specialized in the food production.Since B workers can produce more of food and drink than A workers,no B. gains from trade are possible.B is the low-cost producer of both food and drink. C.Mutual gains could be realized from trade if A specialized in food D. production and B specialized in drink production.DMutual gains could be realized from trade if A specialized in food production and B specialized in drink production. The reason centers on comparative advantage. Country A must give up th 7/9unit of drink toproduce one unit of food. Country B must give up 1 unit of drink to produce one unit of food. Therefore, the opportunity cost of producing food is greater for B than for A. If B produces 5 units of drink and A produces 9 units of food, each country can have 4.5 units of food and 2.5 units of drink and they will both benefit compared to other possible combinations of production.Question ID: 12808The table below outlines the possible tradeoffs of producing beer and cheese for Germany and Holland.Germany HollandCheese Beer Cheese Beer0 10 0 65 0 4 0Which of the following statements is TRUE?Germany would not gain from trade, because it has an absolute advantage A. in the production of both goods.Neither country would gain from trade. B.Both countries would gain if Germany traded beer for Holland's cheese. C.Both countries would gain if Germany traded cheese for Holland's beer. D.CQuestion ID: 12809Why does trading with low-wage countries not depress wage rates in high-wage countries?Comparative advantage and worker productivity determine who should produce what, given other factors of production. A high-wage country withhigher worker productivity in one sector can produce those goods more A.efficiently than the low-wage country and trade with a low-wage countrythat has higher worker productivity in another sector.The law of supply and demand for labor will provide a floor below whichwages cannot fall in either country and therefore, neither country's workers B.lose in terms of their respective wages.Because low wage countries buy products from high wage countries C. thereby increasing demand for workers and maintaining the wage level.Because if the wage rates were to start falling, the government of the highwage country would impose tariffs on the products of the low wage country D.to prevent the wages from falling.AQuestion ID: 12868Which of the following is a reason why trade with low-wage countries does NOT depresswage rates in high-wage countries?When each country produces goods for which it has a comparative A. advantage, both countries benefit.Low-wage countries have an advantage in high tech manufacturing. B.High hourly wage rates mean high per unit labor costs. C.High-wage countries have an advantage in labor-intensive goods. D.AWhen both countries produce the goods in which they have an advantage, total output and theavailability of goods will increase.Question ID: 12860Who benefits least from tariffs?The domestic government. A.Domestic producers. B.Domestic consumers. C.The foreign government. D.CA tax imposed on imports is called a tariff, which benefits domestic producers and domestic governments. Domestic consumers lose through higher prices, less choice of products, and lower quality products.1.B: International Finance and the Foreign Exchange MarketQuestion ID: 12871In a floating exchange rate system, if there is an excess demand for: British pounds by the Belgians, Belgians will lower their interest rates so as A. to enable their citizens to borrow more easily in orderto buy British goods.Swiss francs by Germans, Germans will sell marks and buy francs.This will B. cause the mark to depreciate relative to the franc.Italian liras by Spaniards, Italians will lower their interest ratesso as toenable Spaniards to buy Italian goods on credit and satisfy their demand for C.Italian products.German goods by Americans, Americans will have to sell more goods to D. Germans so as to be able to buy more German goods.BIn a floating exchange rate system, exchange rates between countries are based on the demand and supply of currencies relative to each other.If Germans demand francs, they will sell marks and buy francs in exchange, thus depressing their own currency. The franc will appreciate relative to the mark. Other choices are incorrect because they are not based on thesupply and demand argument underlying floating exchange rates.Question ID: 25000In a flexible exchange rate system, exchange rates are determined by: supply and demand in the market for the currency. A.governmental fiat. B.trade restrictions. C.the total value of the country's gold reserves. D.AExchange rates are determined by supply and demand. Britishimporters needing dollars to purchase U.S. goods will buy U.S. dollars and sell British pounds. British exporters needing to convert dollars to pounds will sell dollars and buy pounds.Question ID: 12870A U.S. tourist planning to visit Germany exchanges $500 for German marks at a rate of $.65/DM, but her trip is cancelled. When she exchanges her marks for dollars, she receives $577. How many DM did she receive when making the initial change, what was the DM/$ exchange rate, and what was the $/DM exchange rate?Marks Received DM/$ Exchange Rate $/DM Exchange Rate A. 325 1.09DM/$ $1.15/DMMarks Received DM/$ Exchange Rate $/DM Exchange Rate B. 549 0.65DM/$ $0.65/DMMarks Received DM/$ Exchange Rate $/DM Exchange Rate C. 769 1.54DM/$ $0.75/DMMarks Received DM/$ Exchange Rate $/DM Exchange Rate D. 811 1.62DM/$ $1.47/DMC$500 x 1DM/$.65 = 769 marks1/.65 = 1.54 DM/$$577/769DM = $0.75/DMQuestion ID: 12880The factor most likely to cause a nation's currency to appreciate on the foreign exchange market is:an increase in the nation's foreign investment (assets purchasedfrom A. foreigners).an increase in real interest rates in other countries. B.an increase in exports relative to imports. C.rapid domestic inflation. D.CDemand for foreign currencies comes from demand for things produced by foreigners. The supply of U.S. dollars on the foreign exchange market comes from non-Americans buying things from Americans. If imports decrease and exports increase there will be an increased demand for a nation's currency because foreign countries will be purchasing more goods from abroad, thus appreciating the country's currency.Question ID: 12874Which of the following is least likely to cause a domestic currency to depreciate?A high inflation rate. A.Faster growth of imports relative to exports. B.Domestic real interest rates are less than those abroad. C.Slow growth of income relative to one's trading partners. D.DSlow growth of income relative to one's trading partners will cause imports to lag behind exports. When the demand for a country's exports increases the demand for their currency also increases causing their currency to appreciate.Question ID: 12876Under a system of flexible exchange rates, which one of thefollowing is more likely to cause a nation's currency to appreciate on the foreign exchange market?A decrease in domestic interest rates. A.An increase in foreign interest rates. B.A domestic inflation rate lower than the nation's trading partners.C.A domestic inflation rate higher than the nation's trading partners.D.CIf a nation's trading partners prices are increasing twice as fast as the domestic country A, then foreign citizens will increase their demand for A's goods. This increased demand will appreciate country A's currency making country A's goods more expensive offsetting the effects of inflation.Question ID: 12888If incomes in U.S. are rapidly increasing compared to those in Mexico, how will the value of the U.S. dollar and Mexican peso move relative to each other?U.S. dollar Peso A. appreciate depreciateU.S. dollar Peso B. depreciate appreciateU.S. dollar Peso C. no change no changeU.S. dollar Peso D. depreciate no changeBRapid growth of U.S. incomes relative to incomes in Mexico will stimulate imports from Mexico causing an increased demand for the peso. The increased demand for pesos will cause the peso to appreciate relative to the dollar.Question ID: 12887Which of the following would cause a nation’s currency to depreciate?Slow growth of income relative to one’s trading partners. A.Domestic real interest rates that are lower than those of other countries. B.Discouraging imports and encouraging exports. C.A rate of inflation that is lower than that of one’s trading partners. D.BOther factors that will cause a nation's currency to depreciate are: rapid growth of incomerelative to one's trading partners that stimulates imports relative to exports and a rate ofinflation that is higher than that of one's trading partners.Question ID: 12886Which of the following factors does NOT affect foreign exchange rates?Differential inflation rates. A.Income growth. B.Real interest rates. C.The government sets a price floor for the price of wheat. D.DBy definition.Question ID: 25001In balance of payments accounting, the net inflow of debt and equity investment funds intothe country appears in the:official reserve account. A.current account. B.capital account. C.current account adjusted for capital depreciation. D.CThe capital account measures the flow of debt and equity investment funds into and out of thecountry.Question ID: 12890What is the difference between the balance of merchandise trade and the balance of payments?The value of goods, services, and unilateral transfer is included in thebalance of merchandise trade, while the balance of payments includes A.both current accounts and capital account transactions.The value of goods imported and exported is included in the balance ofmerchandise trade, while the balance of payments includes onlycapital B.account transactions.Only the value of goods imported and exported is included in the balance ofmerchandise trade, while the balance of payments includes the value of all C.payments to and receipts from other nations.Balance of merchandise trade and balance of payments are different terms D. used to describe the same international exchange transactions.CBy definition.Question ID: 25002If a nation is running a deficit in the current account, the sum of the capital account and the official reserve account must be zero. A.positive. B.in deficit. C.negative. D.BThe balance of payments equation is: Current account balance +capital account balance + official reserve account balance = 0 If the current account balance is in deficit, the others must be positive for the sum of these balances to be zero.Question ID: 25004An unanticipated shift to a federal government surplus would cause the capital account tomove to:deficit and the current account to move to deficit. A.surplus and the current account to move to deficit. B.deficit and the current account to move to surplus. C.surplus and the current account to move to surplus. D.CAn unexpected shift to a larger budget surplus would cause a decrease in aggregate demand and a reduction in domestic interest rates. This reduced demand discourages imports, which moves the current account toward surplus. The lower interest rates will encourage domesticinvestment to leave the country and discourage foreign investors form investing in the U.S. The capital account will move toward deficit.Question ID: 25003An unexpected increase in the growth rate of the money supply would: have no effect on exchange rates in the short run. A.cause real interest rates and aggregate employment to increase. B.cause real interest rates to fall, causing a depreciation of the dollar. C.cause real interest rates to rise, causing an appreciation of the dollar. D.Cp>Unanticipated shifts to an expansionary monetary policy would lead to a more rapid economic growth, an unexpected increase in inflation, and lower real interest rates. The more rapid economic growth would lead to an increase in demand for imports. The higher rate of inflation makes domestic goods more expensive, reducing exports. Lower real interest rates reduce foreign investment. These factors increase the demand for foreign currencies and reduce the demand for the dollar, causing the dollar to depreciate.Question ID: 12892An unanticipated shift to an expansionary monetary policy will NOT lead to?more rapid economic growth, an accelerated inflation rate, and lower real A. interest rates.more expensive domestic products, which reduces exports. B.reduced foreign investment. C.an appreciating domestic currency. D.DAn unanticipated expansionary monetary policy will lead to all ofthe others except an appreciating domestic currency. Higher inflation will increase domestic products prices and make them unattractive to foreigners. As a result foreigners will reduce their demand for domestic products and will not demand the domestic currency as much as before. Coupled with declining foreign investment, which will also lead to reduced demand for the domestic currency the domestic currency valuewill fall relative to other currencies.Question ID: 25005Current account deficits are:not an indication of a nation's economic health. A.usually accompanied by a deficit in the capital account. B.an indication that the economy is growing rapidly. C.the result of a country importing less than it exports. D.AA current account deficit occurs when a country imports more than it exports, and it is not an indication of economic health. There is no requirement that the current account balance be zero, in surplus or in deficit.Question ID: 25006A current account surplus:is not an indication of a nation's economic health. A.is an indication of the strength of the economy. B.occurs when a country exports less than it imports. C.is an indication of significant foreign investment in the domestic market. D.AA current account surplus occurs when a country exports more than it imports, and it is not an indication of economic health. There is no requirement that the current account balance be zero, in surplus or in deficit.Question ID: 12894Which of the following statements is TRUE?A nation's current account surplus or deficit is a good measure of the health A. of its economy.Capital inflows from foreigners are not bad even if the foreigners buy up B. domestic real estate, domestic industries and own other productive assets.Running a deficit in the current account balance simply means a country C. imports more than it exports, but a country can do this only for a short time.Countries that run current account deficits also run capital account deficits. D.B。