Question 1

Country A has a comparative advantage over country B in the production of a good if the opportunity cost of producing the good in country A is less than in country B.

Accepted Answer

A) True 
 B)False

Question 2

The recommendation of early economists such as Smith and Ricardo to the British government was to

Accepted Answer

A) develop a policy that protects strategic domestic industry. 
B) use trade barriers only to protect agricultural industries. 
C) develop a policy to increase trade barriers. 
D) use trade barriers only to protect infant industries. 
E) develop a policy to reduce trade barriers. 
A) develop a policy that protects strategic domestic industry. 
B) use trade barriers only to protect agricultural industries. 
C) develop a policy to increase trade barriers. 
D) use trade barriers only to protect infant industries. 
E) develop a policy to reduce trade barriers.

Question 3

A country should specialize in the production of those goods that use its most abundant factor most intensively.

Accepted Answer

A) True 
 B)False

Question 4

As tariffs were being reduced in the post-World War II period,

Accepted Answer

A) antidumping duties increased in popularity. 
B) voluntary restraint agreements decreased in popularity. 
C) nontariff barriers grew in popularity. 
D) nontariff barriers decreased in popularity. 
E) voluntary import expansion agreements decreased in popularity. 
A) antidumping duties increased in popularity. 
B) voluntary restraint agreements decreased in popularity. 
C) nontariff barriers grew in popularity. 
D) nontariff barriers decreased in popularity. 
E) voluntary import expansion agreements decreased in popularity.

Question 5

The commerce clause of the U.S. Constitution is a clause that

Accepted Answer

A) forbids tariffs and quotas that would hinder trade between the 50 states. 
B) forbids dumping within the nation. 
C) restricts the way in which Congress can sign free trade agreements. 
D) regulates the process of outsourcing American jobs. 
E) regulates foreign investment. 
A) forbids tariffs and quotas that would hinder trade between the 50 states. 
B) forbids dumping within the nation. 
C) restricts the way in which Congress can sign free trade agreements. 
D) regulates the process of outsourcing American jobs. 
E) regulates foreign investment.

Question 6

The average tariff level reached a high of ____ percent in the nineteenth century.

Accepted Answer

A) 80 
B) 20 
C) 40 
D) 60 
E) 90 
A) 80 
B) 20 
C) 40 
D) 60 
E) 90

Question 7

If consumers as a whole benefit from the reduction of trade barriers, then why are businesses able to successfully lobby Congress to impose trade barriers?

Accepted Answer

Even though the benefit to consumers as

Question 8

Production that uses a relatively high level of capital per worker is called

Accepted Answer

A) labor abundant. 
B) capital intensive. 
C) labor intensive. 
D) capital abundant. 
E) labor deepened. 
A) labor abundant. 
B) capital intensive. 
C) labor intensive. 
D) capital abundant. 
E) labor deepened.

Question 9

Revenue tariffs are still common in less-developed countries because

Accepted Answer

A) their governments are unable to collect other forms of taxes from their citizens. 
B) their governments can easily collect them as goods come through a port or one of a few checkpoints. 
C) their governments want foreign exporters to subsidize them. 
D) they raise more money at one time than any other form of taxation would. 
E) they raise money from foreigners rather than from taxing their own citizens. 
A) their governments are unable to collect other forms of taxes from their citizens. 
B) their governments can easily collect them as goods come through a port or one of a few checkpoints. 
C) their governments want foreign exporters to subsidize them. 
D) they raise more money at one time than any other form of taxation would. 
E) they raise money from foreigners rather than from taxing their own citizens.

Question 10

In trade policy, the removal of trade barriers by one country without reciprocal action on the part of other countries is called

Accepted Answer

A) retaliatory threats. 
B) unilateral disarmament. 
C) the infant industry argument. 
D) multilateral negotiations. 
E) the political economy approach. 
A) retaliatory threats. 
B) unilateral disarmament. 
C) the infant industry argument. 
D) multilateral negotiations. 
E) the political economy approach.

Question 11

What is the difference between the effect of a tariff and the effect of a quota?

Accepted Answer

Unlike a tariff, no revenue goes to the

Question 12

Currently, unilateral disarmament is seldom used by developed countries.

Accepted Answer

A) True 
 B)False

Question 13

What problems do quality and performance standards create in terms of foreign trade?

Accepted Answer

Quality and performance standards restri

Question 14

Suppose country X imposes a tariff on imported shoes. The table below shows the import demand and export supply before and after the tariff. Quantities are in thousands.

Accepted Answer

The answer of Suppose country X imposes a tariff on...

Question 15

Linear production possibilities curves explain why a country

Accepted Answer

A) tries to produce both products. 
B) specializes in one product but not the one in which it has a comparative advantage. 
C) does not specialize in the product in which it has a comparative advantage. 
D) completely specializes in one product. 
E) becomes self-sufficient. 
A) tries to produce both products. 
B) specializes in one product but not the one in which it has a comparative advantage. 
C) does not specialize in the product in which it has a comparative advantage. 
D) completely specializes in one product. 
E) becomes self-sufficient.

Question 16

The shifting of trade away from the low-cost producer toward a higher-cost producer because of a reduction in trade barriers with the country of the higher-cost producer is called

Accepted Answer

A) the Uruguay Round. 
B) multilateral trade. 
C) trade creation. 
D) trade diversion. 
E) multilateral negotiations. 
A) the Uruguay Round. 
B) multilateral trade. 
C) trade creation. 
D) trade diversion. 
E) multilateral negotiations.

Question 17

When trade restrictions are removed,

Accepted Answer

A) unemployment will increase in the long run. 
B) workers can be easily moved from the protected industries to other industries. 
C) workers from the protected industries can be easily retrained and moved to other industries. 
D) everyone benefits because prices are lower. 
E) unemployment will increase in the short run. 
A) unemployment will increase in the long run. 
B) workers can be easily moved from the protected industries to other industries. 
C) workers from the protected industries can be easily retrained and moved to other industries. 
D) everyone benefits because prices are lower. 
E) unemployment will increase in the short run.

Question 18

Trade restrictions imposed on a country with poor environmental and/or labor standards in order to get the country to improve these standards are often counterproductive.

Accepted Answer

A) True 
 B)False

Question 19

A curve showing the quantity of exports supplied at various prices is called a(n)

Accepted Answer

A) export demand curve. 
B) import demand curve. 
C) export supply curve. 
D) supply curve. 
E) import supply curve. 
A) export demand curve. 
B) import demand curve. 
C) export supply curve. 
D) supply curve. 
E) import supply curve.

Question 20

Which of the following is not a reason why international trade has increased as a proportion of the world GDP in the last 50 years?

Accepted Answer

A) The reduction in transportation costs 
B) The advent of the Internet and the subsequent reduction in the cost of doing international business 
C) Reductions in government restrictions on trade between countries 
D) All of the above are relevant in explaining the growth of international trade. 
E) None of the above are relevant in explaining the growth of international trade. 
A) The reduction in transportation costs 
B) The advent of the Internet and the subsequent reduction in the cost of doing international business 
C) Reductions in government restrictions on trade between countries 
D) All of the above are relevant in explaining the growth of international trade. 
E) None of the above are relevant in explaining the growth of international trade.

Exam 29: International Trade

Country A has a comparative advantage over country B in the production of a good if the opportunity cost of producing the good in country A is less than in country B.

The recommendation of early economists such as Smith and Ricardo to the British government was to

A country should specialize in the production of those goods that use its most abundant factor most intensively.

As tariffs were being reduced in the post-World War II period,

The commerce clause of the U.S. Constitution is a clause that

The average tariff level reached a high of ____ percent in the nineteenth century.

If consumers as a whole benefit from the reduction of trade barriers, then why are businesses able to successfully lobby Congress to impose trade barriers?

Production that uses a relatively high level of capital per worker is called

Revenue tariffs are still common in less-developed countries because

In trade policy, the removal of trade barriers by one country without reciprocal action on the part of other countries is called

What is the difference between the effect of a tariff and the effect of a quota?

Currently, unilateral disarmament is seldom used by developed countries.

What problems do quality and performance standards create in terms of foreign trade?

Suppose country X imposes a tariff on imported shoes. The table below shows the import demand and export supply before and after the tariff. Quantities are in thousands.

Linear production possibilities curves explain why a country

The shifting of trade away from the low-cost producer toward a higher-cost producer because of a reduction in trade barriers with the country of the higher-cost producer is called

When trade restrictions are removed,

Trade restrictions imposed on a country with poor environmental and/or labor standards in order to get the country to improve these standards are often counterproductive.

A curve showing the quantity of exports supplied at various prices is called a(n)

Which of the following is not a reason why international trade has increased as a proportion of the world GDP in the last 50 years?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Finance

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