Question 1

A subsidy on exports

Accepted Answer

A) is less harmful than a tariff. 
B) increases the demand for imports. 
C) lowers consumer prices and so should be encouraged. 
D) increases the supply of exports. 
E) imposes no cost on the importing country. 
A) is less harmful than a tariff. 
B) increases the demand for imports. 
C) lowers consumer prices and so should be encouraged. 
D) increases the supply of exports. 
E) imposes no cost on the importing country.

Question 2

According to the text, the most important reason international trade has grown so rapidly during the past 40 years is the reduction in the cost of transportation and communication.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 30-1  
-An upper limit on the quantity of a good that may be imported or sold is called a(n)

Accepted Answer

A) per-unit tariff. 
B) ad valorem tariff. 
C) quota. 
D) specific tariff. 
E) value-added tax. 
A) per-unit tariff. 
B) ad valorem tariff. 
C) quota. 
D) specific tariff. 
E) value-added tax.

Question 4

A country can have an absolute advantage in the production of all goods.

Accepted Answer

A) True 
 B)False

Question 5

A new industry that may be encouraged by protectionist policies is called a(n)

Accepted Answer

A) national security industry. 
B) infant industry. 
C) reciprocal trade industry. 
D) strategic trade industry. 
E) growth industry. 
A) national security industry. 
B) infant industry. 
C) reciprocal trade industry. 
D) strategic trade industry. 
E) growth industry.

Question 6

The United States imposes quotas on sugar.

Accepted Answer

A) True 
 B)False

Question 7

When Canada and the United States permitted free trade in cars, Canadian automobile

Accepted Answer

A) exports to the United States did not change. 
B) production costs increased. 
C) production increased. 
D) consumers paid higher prices. 
E) production decreased. 
A) exports to the United States did not change. 
B) production costs increased. 
C) production increased. 
D) consumers paid higher prices. 
E) production decreased.

Question 8

Throughout much of U.S. history, tariffs had the purpose of

Accepted Answer

A) reducing product variety to consumers. 
B) protecting southern states while not affecting northern states. 
C) reducing imports of manufactured goods. 
D) lowering prices to consumers. 
E) resolving conflicts between consumers wanting lower prices and producers wanting higher prices. 
A) reducing product variety to consumers. 
B) protecting southern states while not affecting northern states. 
C) reducing imports of manufactured goods. 
D) lowering prices to consumers. 
E) resolving conflicts between consumers wanting lower prices and producers wanting higher prices.

Question 9

Multilateral approaches have more advantages than regional trading areas have.

Accepted Answer

A) True 
 B)False

Question 10

Explain the connection between the relative price and opportunity cost.

Accepted Answer

Relative price and opportunity cost are

Question 11

When economies of scale exist over wide production ranges for two products,

Accepted Answer

A) no specialization in production will occur but cost per unit will fall. 
B) the gain from trade is the reduction in cost per unit. 
C) specialization in production will occur but cost per unit will not fall. 
D) the gain from trade is the increase in cost per unit. 
E) the gain from trade is the increase in labor productivity. 
A) no specialization in production will occur but cost per unit will fall. 
B) the gain from trade is the reduction in cost per unit. 
C) specialization in production will occur but cost per unit will not fall. 
D) the gain from trade is the increase in cost per unit. 
E) the gain from trade is the increase in labor productivity.

Question 12

Often the benefit an individual consumer receives from the elimination of trade barriers is much less than the benefit a domestic firm or industry receives from keeping such a barrier in place.

Accepted Answer

A) True 
 B)False

Question 13

The selling of goods by foreign firms at a price below average cost or below the price in the domestic country is called

Accepted Answer

A) dumping. 
B) a specific tariff. 
C) dumping duty. 
D) price discrimination. 
E) an ad valorem tariff. 
A) dumping. 
B) a specific tariff. 
C) dumping duty. 
D) price discrimination. 
E) an ad valorem tariff.

Question 14

Exhibit 29-2  
-Suppose two countries trade two goods without government restrictions. If transportation costs are negligible and markets are competitive, then the price of the goods

Accepted Answer

A) will be lower in the high-wage country. 
B) will be lower in the low-wage country. 
C) must be the same in both countries. 
D) could be lower in one country than the other. 
E) could be higher in one country than the other. 
A) will be lower in the high-wage country. 
B) will be lower in the low-wage country. 
C) must be the same in both countries. 
D) could be lower in one country than the other. 
E) could be higher in one country than the other.

Question 15

Countries with low labor productivity will not have a comparative advantage in the production of any good.

Accepted Answer

A) True 
 B)False

Question 16

The slope of a linear production possibilities curve with trade is given by the

Accepted Answer

A) opportunity costs of the product in each country. 
B) relative price-the number of units of good A that can be obtained for one unit of good B. 
C) ratio of productivity of workers in two countries. 
D) ratio of the elasticities of the product demand curves. 
E) rise over run of a country's average total cost curve. 
A) opportunity costs of the product in each country. 
B) relative price-the number of units of good A that can be obtained for one unit of good B. 
C) ratio of productivity of workers in two countries. 
D) ratio of the elasticities of the product demand curves. 
E) rise over run of a country's average total cost curve.

Question 17

A policy that restricts trade is called a protectionist policy.

Accepted Answer

A) True 
 B)False

Question 18

An international treaty and organization that until 1993 promoted mutual reduction in tariffs and other trade barriers among countries was called the

Accepted Answer

A) Maastricht Treaty. 
B) Reciprocal Trade Agreement Act. 
C) Underwood Tariff Act. 
D) General Agreement on Tariffs and Trade. 
E) Smoot-Hawley tariff. 
A) Maastricht Treaty. 
B) Reciprocal Trade Agreement Act. 
C) Underwood Tariff Act. 
D) General Agreement on Tariffs and Trade. 
E) Smoot-Hawley tariff.

Question 19

Answer the questions below:

Accepted Answer

The answer of Answer the questions below:
  
...

Question 20

Exhibit 29-2  
-According to the data in Exhibit 29-2, the relative price of computers and rice for Japan is

Accepted Answer

A) 1/2 computer per unit of rice. 
B) 1 computer per 4 units of rice. 
C) 1/4 computer per unit of rice. 
D) 4 computers per unit of rice. 
E) 2 computers per unit of rice. 
A) 1/2 computer per unit of rice. 
B) 1 computer per 4 units of rice. 
C) 1/4 computer per unit of rice. 
D) 4 computers per unit of rice. 
E) 2 computers per unit of rice.

Exam 29: International Trade

A subsidy on exports

According to the text, the most important reason international trade has grown so rapidly during the past 40 years is the reduction in the cost of transportation and communication.

Exhibit 30-1 -An upper limit on the quantity of a good that may be imported or sold is called a(n)

A country can have an absolute advantage in the production of all goods.

A new industry that may be encouraged by protectionist policies is called a(n)

The United States imposes quotas on sugar.

When Canada and the United States permitted free trade in cars, Canadian automobile

Throughout much of U.S. history, tariffs had the purpose of

Multilateral approaches have more advantages than regional trading areas have.

Explain the connection between the relative price and opportunity cost.

When economies of scale exist over wide production ranges for two products,

Often the benefit an individual consumer receives from the elimination of trade barriers is much less than the benefit a domestic firm or industry receives from keeping such a barrier in place.

The selling of goods by foreign firms at a price below average cost or below the price in the domestic country is called

Exhibit 29-2 -Suppose two countries trade two goods without government restrictions. If transportation costs are negligible and markets are competitive, then the price of the goods

Countries with low labor productivity will not have a comparative advantage in the production of any good.

The slope of a linear production possibilities curve with trade is given by the

A policy that restricts trade is called a protectionist policy.

An international treaty and organization that until 1993 promoted mutual reduction in tariffs and other trade barriers among countries was called the

Answer the questions below:

Exhibit 29-2 -According to the data in Exhibit 29-2, the relative price of computers and rice for Japan is

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

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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

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Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

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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

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Using the Economic Fluctuations Model

Fiscal Policy

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Economic Growth Around the World

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