Question 1

Based on export ratios,which of the following countries is closest to being a closed economy?

Accepted Answer

A) Belgium. 
B) China. 
C) Saudi Arabia. 
D) Samoa. 
A) Belgium. 
B) China. 
C) Saudi Arabia. 
D) Samoa.

Question 2

A tax imposed on imported goods is

Accepted Answer

A) A tariff. 
B) A quota. 
C) An embargo. 
D) An example of fiscal policy. 
A) A tariff. 
B) A quota. 
C) An embargo. 
D) An example of fiscal policy.

Question 3

The expansion of world output as a result of trade is mainly due to the effects of

Accepted Answer

A) Higher trade barriers. 
B) Improved terms of trade. 
C) Specialization according to comparative advantage. 
D) Specialization according to absolute advantage. 
A) Higher trade barriers. 
B) Improved terms of trade. 
C) Specialization according to comparative advantage. 
D) Specialization according to absolute advantage.

Question 4

Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico.These two curves indicate that

Accepted Answer

A) The United States has a comparative advantage in the production of machinery. 
B) Mexico has an absolute advantage in the production of machinery. 
C) The United States has an absolute advantage in the production of both goods. 
D) The United States does not have an absolute advantage in the production of either good. 
A) The United States has a comparative advantage in the production of machinery. 
B) Mexico has an absolute advantage in the production of machinery. 
C) The United States has an absolute advantage in the production of both goods. 
D) The United States does not have an absolute advantage in the production of either good.

Question 5

From a consumer's viewpoint,which of the following policies would be least desirable?

Accepted Answer

A) Tariffs on imported goods. 
B) Quotas on imported goods. 
C) No trade. 
D) Free trade. 
A) Tariffs on imported goods. 
B) Quotas on imported goods. 
C) No trade. 
D) Free trade.

Question 6

A country can consume outside its production possibilities curve by trading.

Accepted Answer

A) True 
 B)False

Question 7

The purpose of the World Trade Organization (WTO)is to

Accepted Answer

A) Enforce the rules of free trade. 
B) Protect workers from foreign competition. 
C) Protect producers from foreign competition. 
D) Ensure that there are no losers as a result of free trade. 
A) Enforce the rules of free trade. 
B) Protect workers from foreign competition. 
C) Protect producers from foreign competition. 
D) Ensure that there are no losers as a result of free trade.

Question 8

Increased opportunities for trade increase production by

Accepted Answer

A) Protecting countries from competition. 
B) Improving efficiency through specialization. 
C) Shifting the production possibilities curve outward. 
D) Encouraging countries to be self-sufficient. 
A) Protecting countries from competition. 
B) Improving efficiency through specialization. 
C) Shifting the production possibilities curve outward. 
D) Encouraging countries to be self-sufficient.

Question 9

A country with a comparative advantage in producing computer chips

Accepted Answer

A) Has a lower opportunity cost of producing computer chips than its trading partners. 
B) Can produce computer chips with fewer resources than its trading partners. 
C) Can achieve better terms of trade in selling computer chips than its trading partners. 
D) Has greater capacity to produce computer chips,given its resources,than do its trading partners. 
A) Has a lower opportunity cost of producing computer chips than its trading partners. 
B) Can produce computer chips with fewer resources than its trading partners. 
C) Can achieve better terms of trade in selling computer chips than its trading partners. 
D) Has greater capacity to produce computer chips,given its resources,than do its trading partners.

Question 10

Specialization in production and then trading with other countries

Accepted Answer

A) Change the mix of output for rich countries but not for poor countries. 
B) Change the mix of output for each country and increase total world output. 
C) Increase the standard of living for rich countries but not for poor countries. 
D) Mean that every citizen in every country is better off. 
A) Change the mix of output for rich countries but not for poor countries. 
B) Change the mix of output for each country and increase total world output. 
C) Increase the standard of living for rich countries but not for poor countries. 
D) Mean that every citizen in every country is better off.

Question 11

Suppose the United States can produce 2,000 cars or 2,000 trucks.Japan can produce either 2,000 cars or 1,000 trucks.In terms of car production,we can conclude that

Accepted Answer

A) Japan has an absolute advantage. 
B) The United States has an absolute advantage. 
C) The United States has a comparative advantage. 
D) Japan has a comparative advantage. 
A) Japan has an absolute advantage. 
B) The United States has an absolute advantage. 
C) The United States has a comparative advantage. 
D) Japan has a comparative advantage.

Question 12

Refer to Figure 35.6: If S1 represents the U.S.domestic supply of a good,what does S2 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 13

The United States has an absolute advantage in producing T-shirts,but not a comparative advantage,because

Accepted Answer

A) Another country may have an absolute advantage in producing T-shirts. 
B) The United States uses fewer resources to produce T-shirts than another country can 
C) Other countries,such as China,can produce T-shirts at a lower opportunity cost relative to the United States. 
D) Labor costs in the production of T-shirts are lower in the United States than in other countries. 
A) Another country may have an absolute advantage in producing T-shirts. 
B) The United States uses fewer resources to produce T-shirts than another country can 
C) Other countries,such as China,can produce T-shirts at a lower opportunity cost relative to the United States. 
D) Labor costs in the production of T-shirts are lower in the United States than in other countries.

Question 14

An In the News article titled "U.S.Winemakers Hurt by Imported Wine" discusses foreign wine sold in the U.S.market.California grape growers' main complaint was that

Accepted Answer

A) The state had removed all subsidies due to the financial crisis that had left the budget in disarray. 
B) The weather had hurt their business. 
C) The growing strength of the dollar makes it hard to compete 
D) California wineries were not buying domestic grapes but were selling wine and calling it "100% pure American." 
A) The state had removed all subsidies due to the financial crisis that had left the budget in disarray. 
B) The weather had hurt their business. 
C) The growing strength of the dollar makes it hard to compete 
D) California wineries were not buying domestic grapes but were selling wine and calling it "100% pure American."

Question 15

All of the following companies export over one quarter of their production except

Accepted Answer

A) Caterpillar Tractors. 
B) Boeing. 
C) Oracle. 
D) McDonalds. 
A) Caterpillar Tractors. 
B) Boeing. 
C) Oracle. 
D) McDonalds.

Question 16

Table 35.1 $$\begin{array} { | l | c | c | } 
\hline  { \text { Country } } & \text { Tons of Soybeans } & \text { Computer } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$$ Based on the information in Table 35.1,assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods.The opportunity cost of producing 1 ton of soybeans in the United States is

Accepted Answer

A) 1/5 of a computer. 
B) 1/3 of a computer. 
C) 3 computers. 
D) 5 computers. 
A) 1/5 of a computer. 
B) 1/3 of a computer. 
C) 3 computers. 
D) 5 computers.

Question 17

The General Agreement on Tariffs and Trade (GATT)

Accepted Answer

A) Encourages trade restrictions. 
B) Committed GATT members to a reduction of protectionism. 
C) Established the European Common Market. 
D) Has now eliminated all nontariff barriers to trade. 
A) Encourages trade restrictions. 
B) Committed GATT members to a reduction of protectionism. 
C) Established the European Common Market. 
D) Has now eliminated all nontariff barriers to trade.

Question 18

Table 35.1 $$\begin{array} { | l | c | c | } 
\hline  { \text { Country } } & \text { Tons of Soybeans } & \text { Computer } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$$ Based on the information in Table 35.1,assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods.The output of computers and soybeans would be greatest if

Accepted Answer

A) China specialized in producing soybeans,and the United States specialized in producing computers. 
B) Both countries prohibited trade. 
C) China specialized in producing computers,while the United States specialized in producing soybeans. 
D) The United States produced both goods and exported them to China. 
A) China specialized in producing soybeans,and the United States specialized in producing computers. 
B) Both countries prohibited trade. 
C) China specialized in producing computers,while the United States specialized in producing soybeans. 
D) The United States produced both goods and exported them to China.

Question 19

Assume the United States and Australia have the same amount of resources.In a given time period,the United States can produce 2 tons of beef or 200,000 cars.Australia can produce 1 ton of beef or 100,000 cars.This means that

Accepted Answer

A) The United States has a comparative advantage in beef. 
B) Australia has a comparative advantage in cars. 
C) The United States has an absolute advantage in both beef and cars. 
D) Australia has an absolute advantage in both beef and cars. 
A) The United States has a comparative advantage in beef. 
B) Australia has a comparative advantage in cars. 
C) The United States has an absolute advantage in both beef and cars. 
D) Australia has an absolute advantage in both beef and cars.

Question 20

The United States is capable of producing many goods and services that it imports,but it does not because

Accepted Answer

A) We produce those goods more cheaply if we make them ourselves. 
B) We can import those goods at a lower opportunity cost than if we make them ourselves. 
C) We can export goods that we specialize in. 
D) We have lost those skilled workers. 
A) We produce those goods more cheaply if we make them ourselves. 
B) We can import those goods at a lower opportunity cost than if we make them ourselves. 
C) We can export goods that we specialize in. 
D) We have lost those skilled workers.

Exam 35: International Trade

Based on export ratios,which of the following countries is closest to being a closed economy?

A tax imposed on imported goods is

The expansion of world output as a result of trade is mainly due to the effects of

Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico.These two curves indicate that

From a consumer's viewpoint,which of the following policies would be least desirable?

A country can consume outside its production possibilities curve by trading.

The purpose of the World Trade Organization (WTO)is to

Increased opportunities for trade increase production by

A country with a comparative advantage in producing computer chips

Specialization in production and then trading with other countries

Suppose the United States can produce 2,000 cars or 2,000 trucks.Japan can produce either 2,000 cars or 1,000 trucks.In terms of car production,we can conclude that

Refer to Figure 35.6: If S1 represents the U.S.domestic supply of a good,what does S2 most likely represent?

The United States has an absolute advantage in producing T-shirts,but not a comparative advantage,because

An In the News article titled "U.S.Winemakers Hurt by Imported Wine" discusses foreign wine sold in the U.S.market.California grape growers' main complaint was that

All of the following companies export over one quarter of their production except

The General Agreement on Tariffs and Trade (GATT)

Assume the United States and Australia have the same amount of resources.In a given time period,the United States can produce 2 tons of beef or 200,000 cars.Australia can produce 1 ton of beef or 100,000 cars.This means that

The United States is capable of producing many goods and services that it imports,but it does not because

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 35.6: If S₁ represents the U.S.domestic supply of a good,what does S₂ most likely represent?