Question 1

To ensure mutually beneficial trade,the terms of trade between two countries should always

Accepted Answer

A) Allow each country to develop its area of absolute advantage. 
B) Be between their respective opportunity costs in production. 
C) Be set to favor the larger country because its output will be greater. 
D) Be set to favor the country with the least comparative advantage in a good to ensure the greatest gains from specialization. 
A) Allow each country to develop its area of absolute advantage. 
B) Be between their respective opportunity costs in production. 
C) Be set to favor the larger country because its output will be greater. 
D) Be set to favor the country with the least comparative advantage in a good to ensure the greatest gains from specialization.

Question 2

If every country specializes in what it produces best and then trades,more will be produced than if each country tries to produce everything for its own needs.

Accepted Answer

A) True 
 B)False

Question 3

If trade is mutually beneficial,then increasing trade

Accepted Answer

A) Increases the welfare of producers that compete with importers. 
B) Makes countries less interdependent. 
C) Leads to increased output in export industries. 
D) Reduces income for workers in export industries. 
A) Increases the welfare of producers that compete with importers. 
B) Makes countries less interdependent. 
C) Leads to increased output in export industries. 
D) Reduces income for workers in export industries.

Question 4

The terms of trade between any two countries for two goods cannot be between their respective opportunity costs if there are to be any gains in trade.

Accepted Answer

A) True 
 B)False

Question 5

In Figure 35.1,what is the opportunity cost of DVD players in Japan?

Accepted Answer

A) 1/2 of a motorcycle per DVD player. 
B) 1 motorcycle per DVD player. 
C) 2 motorcycles per DVD player. 
D) 1/3 of a motorcycle per DVD player. 
A) 1/2 of a motorcycle per DVD player. 
B) 1 motorcycle per DVD player. 
C) 2 motorcycles per DVD player. 
D) 1/3 of a motorcycle per DVD player.

Question 6

As a result of GATT,tariff rates in developed countries have decreased from 40 percent in 1948 to less than 4 percent today.

Accepted Answer

A) True 
 B)False

Question 7

Refer to Figure 35.5.If S1 represents the U.S.domestic supply of a good and S2 represents supply in the United States under conditions of free trade,what does S3 most likely represent?

Accepted Answer

A) U.S.supply under tariff-restricted trade. 
B) U.S.supply under quota-restricted trade. 
C) The result of a foreign country dumping this good on the U.S.market. 
D) Production possibilities under conditions of free trade. 
A) U.S.supply under tariff-restricted trade. 
B) U.S.supply under quota-restricted trade. 
C) The result of a foreign country dumping this good on the U.S.market. 
D) Production possibilities under conditions of free trade.

Question 8

The World View article "U.S.Slaps China with Huge Anti-Dumping Tariffs" says new tariffs will be imposed on steel from China,and

Accepted Answer

A) U.S.steel distributors will gain from the tariff. 
B) U.S.steel producers will benefit from the tariff. 
C) Consumers will benefit from this U.S.trade policy. 
D) Chinese consumers will benefit. 
A) U.S.steel distributors will gain from the tariff. 
B) U.S.steel producers will benefit from the tariff. 
C) Consumers will benefit from this U.S.trade policy. 
D) Chinese consumers will benefit.

Question 9

The United States imports heavily in all of the following markets except

Accepted Answer

A) Aircraft. 
B) Coffee. 
C) Aluminum. 
D) Chromium. 
A) Aircraft. 
B) Coffee. 
C) Aluminum. 
D) Chromium.

Question 10

Which of the following is not a reason to restrict trade?

Accepted Answer

A) Preservation of national security. 
B) Protection of infant industries. 
C) Concerns about dumping. 
D) Concern about high prices for consumers. 
A) Preservation of national security. 
B) Protection of infant industries. 
C) Concerns about dumping. 
D) Concern about high prices for consumers.

Question 11

The benefits from international trade include

Accepted Answer

A) A rightward shift of the production possibilities curve. 
B) Greater efficiency in the use of the world's limited resources. 
C) A higher standard of living for every person. 
D) A higher rate of population growth. 
A) A rightward shift of the production possibilities curve. 
B) Greater efficiency in the use of the world's limited resources. 
C) A higher standard of living for every person. 
D) A higher rate of population growth.

Question 12

Specialization increases total world output.

Accepted Answer

A) True 
 B)False

Question 13

Compared to their initial positions at points A and B,as a result of complete specialization and trade,the output of the two countries added together in Figure 35.1 would result in an increase in

Accepted Answer

A) Both DVD players and motorcycles. 
B) Motorcycles only. 
C) DVD players only. 
D) Neither DVD players nor motorcycles. 
A) Both DVD players and motorcycles. 
B) Motorcycles only. 
C) DVD players only. 
D) Neither DVD players nor motorcycles.

Question 14

In the World View article on new tariffs on imported steel from China,the tariff is designed to

Accepted Answer

A) Protect U.S.-based import-competing industries. 
B) Protect U.S.steel distributors. 
C) Protect U.S.steel consumers. 
D) Protect Chinese workers who produce steel. 
A) Protect U.S.-based import-competing industries. 
B) Protect U.S.steel distributors. 
C) Protect U.S.steel consumers. 
D) Protect Chinese workers who produce steel.

Question 15

Suppose the production of 12 tons of copper in the United States requires the same amount of resources as the production of 3 tons of aluminum.In Mexico,12 tons of copper requires the same amount of resources as 2 tons of aluminum.Implicitly

Accepted Answer

A) Mexico has a comparative advantage in producing copper. 
B) The United States has an absolute advantage in producing aluminum. 
C) Mexico has an absolute advantage in producing copper. 
D) Neither country has a comparative advantage in producing aluminum. 
A) Mexico has a comparative advantage in producing copper. 
B) The United States has an absolute advantage in producing aluminum. 
C) Mexico has an absolute advantage in producing copper. 
D) Neither country has a comparative advantage in producing aluminum.

Question 16

Overall NAFTA has resulted in

Accepted Answer

A) Massive unemployment and recessions. 
B) Accelerated economic growth and reduced inflationary pressures in Canada,Mexico,and the United States. 
C) Increased economic growth and employment in Mexico at the expense of the United States. 
D) Very little change in any of the three countries. 
A) Massive unemployment and recessions. 
B) Accelerated economic growth and reduced inflationary pressures in Canada,Mexico,and the United States. 
C) Increased economic growth and employment in Mexico at the expense of the United States. 
D) Very little change in any of the three countries.

Question 17

Trade restrictions designed to benefit the import-competing industries will benefit the entire country.

Accepted Answer

A) True 
 B)False

Question 18

According to the text,which of the following is true?

Accepted Answer

A) The United States imports paper,but not computers since it exports computers. 
B) The United States imports baseballs and exports corn. 
C) The United States imports auto parts and cars,but it doesn't export cars. 
D) The United States imports wheat,but not auto parts since it exports auto parts. 
A) The United States imports paper,but not computers since it exports computers. 
B) The United States imports baseballs and exports corn. 
C) The United States imports auto parts and cars,but it doesn't export cars. 
D) The United States imports wheat,but not auto parts since it exports auto parts.

Question 19

Which of the following is true?

Accepted Answer

A) The European nations tend to have lower export ratios. 
B) Ireland has a low export ratio. 
C) Japan has a high export ratio. 
D) The United States has a very low export ratio. 
A) The European nations tend to have lower export ratios. 
B) Ireland has a low export ratio. 
C) Japan has a high export ratio. 
D) The United States has a very low export ratio.

Question 20

The terms of trade between two countries refer to

Accepted Answer

A) What price the two countries agree upon for their imports and exports. 
B) The rules governing trade between the two countries. 
C) The amount of good A given up for good B. 
D) The terms set by the World Trade Organization for trade. 
A) What price the two countries agree upon for their imports and exports. 
B) The rules governing trade between the two countries. 
C) The amount of good A given up for good B. 
D) The terms set by the World Trade Organization for trade.

Exam 35: International Trade

To ensure mutually beneficial trade,the terms of trade between two countries should always

If every country specializes in what it produces best and then trades,more will be produced than if each country tries to produce everything for its own needs.

If trade is mutually beneficial,then increasing trade

The terms of trade between any two countries for two goods cannot be between their respective opportunity costs if there are to be any gains in trade.

In Figure 35.1,what is the opportunity cost of DVD players in Japan?

As a result of GATT,tariff rates in developed countries have decreased from 40 percent in 1948 to less than 4 percent today.

Refer to Figure 35.5.If S1 represents the U.S.domestic supply of a good and S2 represents supply in the United States under conditions of free trade,what does S3 most likely represent?

The World View article "U.S.Slaps China with Huge Anti-Dumping Tariffs" says new tariffs will be imposed on steel from China,and

The United States imports heavily in all of the following markets except

Which of the following is not a reason to restrict trade?

The benefits from international trade include

Specialization increases total world output.

Compared to their initial positions at points A and B,as a result of complete specialization and trade,the output of the two countries added together in Figure 35.1 would result in an increase in

In the World View article on new tariffs on imported steel from China,the tariff is designed to

Suppose the production of 12 tons of copper in the United States requires the same amount of resources as the production of 3 tons of aluminum.In Mexico,12 tons of copper requires the same amount of resources as 2 tons of aluminum.Implicitly

Overall NAFTA has resulted in

Trade restrictions designed to benefit the import-competing industries will benefit the entire country.

According to the text,which of the following is true?

Which of the following is true?

The terms of trade between two countries refer to

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Finance

Global Poverty

Filters

Refer to Figure 35.5.If S₁ represents the U.S.domestic supply of a good and S₂ represents supply in the United States under conditions of free trade,what does S₃ most likely represent?