ECON 110 exam 2

What will world prices of commodities lead nations to do what?

If the price of a commodity is higher outside of an economy than inside, domestic firms have and incentive to do what? Conversely?

What determines the exchange rate for currencies?

What does dollar depreciation do to the price of imported goods?

If the purpose of a tax is to promote change in choice, where should the tax be placed?

Define: Producer Surplus

Does international trade always leave everyone better off?

Define: Exports

Define: Imports

Define: Net Exports

What leads to the existence of foreign exchange markets?

Define: Exchange Rate

If the dollar appreciate relative to yen, what happens?

If a countries currency appreciates, how will this impact said country’s exports?

If a country is running a trade surplus and said country’s currency appreciates, what will happen to the surplus?

Without international trade, where do the limits of a country’s consumption sit?

Assuming imports are available. As the world price decreases, what happens to domestic production and consumption?

Does trade between economies impact the price and supply of goods within that economy?

What is the demand for a currency derived from?

Currency appreciation and depreciation impact buying power where?

Who is negatively impacted by currency appreciation

Define: Commodity Tax

Define: Market Subsidy

Define: Price Ceiling

Define: Price Floor

Define: Restriction on Entry

Define: Prohibited Market

Define: Ad valorem Commodity tax

Define: Specific Commodity Tax

How do commodity taxes impact the supply demand curve?

If the purpose of a tax is to generate revenue for the government, where should the government tax?

Define: Consumer Surplus

Define: Dead Weight Burden

Define: Tax Incidence

Who pays the tax burden if the commodity is perfectly inelastic?

What problem results from rationing?