1. Which of the following statements is not true?
a. Exporters commonly complain that they are being mistreated because the currency of their country is too strong.
b. Outsourcing means that an MNC has initiated the exporting of its products.
c. Sometimes, trade policies are used to punish countries for various actions.
d. All of the above are true.
2. Country Y is Country X's sole trading partner. Which of the following would increase the current account of Country X?
a. Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on imports from Country X.
b. The central banks of Country X and Country Y reduce the money supply to increase interest rates.
c. The currency of Country X depreciates against the currency of Country Y.
d. The currency of Country Y depreciates against the currency of Country X.
3. The United States typically has a balance-of-trade deficit in its trade with ____.
a. China
b. Japan
c. A and B
d. none of the above
4. A large reduction in the current account deficit will place ____ pressure on the home currency value, other things being equal.
a. upward
b. downward
c. no
d. upward or downward (depending on the size of the deficit)