Economics Practice Exam Questions

1.  A trade quota:

is an explicit limit on the amount of exports of a good from a country.

is an explicit limit on the amount of imports of a good into a country.
is a tax only on exports.
is a tax only on imports.

2.  An import tariff:

is an explicit limit on the amount of exports of a good from a country.
is an explicit limit on the amount of imports of a good into a country.
is a tax only on exports.
is a tax only on imports.

3.  While an import tariff on a good will both raise the domestic price of that good and its domestic production levels, a quota:

will not raise the domestic price but will increase the amount of the good produced domestically.
will raise the domestic price but will not increase the amount of the good produced domestically.
will both raise the domestic price and increase the amount of the good produced domestically.
will neither raise the domestic price nor increase the amount of the good produced domestically.

4.  If the dollar price of the German mark increases, then:

the German Mark has appreciated while the U.S. dollar has depreciated.
the German Mark has depreciated while the U.S. dollar has appreciated.
both the German Mark and the U.S. dollar have depreciated.
both the German Mark and the U.S. dollar have appreciated.

5.  An exchange rate measures:

the price at which one can exchange one good for another good.
the price at which one can exchange one resource for another resource.
the discounted price one received when returning defective goods for exchange.
the price at which one can exchange one currency for another currency.

6.  Consider the following two statements:

The U.S. dollar will depreciate when U.S. Demand for foreign goods increases.
The U.S. dollar will depreciate in the present if the public believes that the U.S. dollar will depreciate in the future.

both statements are true.
both statements are false.
I is true while II is false.
I is false while II is true.