Question 1

Production possibilities data for two countries, Alpha and Beta, which have populations of equal size.   Refer to the above data.Beta:

Accepted Answer

A) should specialize in catching fish and trade with Alpha for chips. 
B) should specialize in producing chips and trade with Alpha for fish. 
C) will not realize gains from specialization and trade. 
D) will export both fish and chips to Alpha. 
A) should specialize in catching fish and trade with Alpha for chips. 
B) should specialize in producing chips and trade with Alpha for fish. 
C) will not realize gains from specialization and trade. 
D) will export both fish and chips to Alpha.

Question 2

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product.Sd + Q is the product supply curve after an import quota is imposed.A tariff of PcPt will:

Accepted Answer

A) lower domestic price and increase domestic consumption. 
B) increase the revenues of domestic producers by areas E + F + K. 
C) increase the revenues of domestic producers by areas G + H. 
D) increase the revenues of domestic producers by areas E + F + G + H + J. 
A) lower domestic price and increase domestic consumption. 
B) increase the revenues of domestic producers by areas E + F + K. 
C) increase the revenues of domestic producers by areas G + H. 
D) increase the revenues of domestic producers by areas E + F + G + H + J.

Question 3

Nations Quirk and Turk can produce aluminum and oil in the following maximum quantities when all of their resources are fully employed.   Which one of the following terms of trade is most likely to produce exchange between the two nations?

Accepted Answer

A) .5 unit of oil for 1 unit of aluminum 
B) .5 unit of oil for 2 units of aluminum 
C) 1 unit of oil for.4 unit of aluminum 
D) 1 unit of oil for 5 units of aluminum 
A) .5 unit of oil for 1 unit of aluminum 
B) .5 unit of oil for 2 units of aluminum 
C) 1 unit of oil for.4 unit of aluminum 
D) 1 unit of oil for 5 units of aluminum

Question 4

The 1993 General Agreement on Tariffs and Trade (GATT):

Accepted Answer

A) established the European Union. 
B) is also known as NAFTA. 
C) established new protections for intellectual property (copyrights, patents, and trademarks). 
D) eliminated all tariffs and quotas worldwide. 
A) established the European Union. 
B) is also known as NAFTA. 
C) established new protections for intellectual property (copyrights, patents, and trademarks). 
D) eliminated all tariffs and quotas worldwide.

Question 5

Suppose the domestic price of copper is $1.20 per kilogram in Canada, while the world price is $1.00 per kilogram.Assuming no transportation costs, Canada will:

Accepted Answer

A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper. 
A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper.

Question 6

The specification of the maximum amounts of commodities which may be imported into a country in any period of time is a:

Accepted Answer

A) tariff. 
B) quota. 
C) nontariff barrier. 
D) voluntary export restriction. 
A) tariff. 
B) quota. 
C) nontariff barrier. 
D) voluntary export restriction.

Question 7

GATT was an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Accepted Answer

A) True 
 B)False

Question 8

The Uruguay Round of GATT negotiations:

Accepted Answer

A) reduced the nontariff barriers in services and increased them on manufactured goods. 
B) ended the use of patents, copyrights, and trademarks on an international basis. 
C) reduced or on thousands of products and, reduced the overall tariffs by 33 percent. 
D) restricted foreign investment in other countries to a specified percentage of a nation's domestic output. 
A) reduced the nontariff barriers in services and increased them on manufactured goods. 
B) ended the use of patents, copyrights, and trademarks on an international basis. 
C) reduced or on thousands of products and, reduced the overall tariffs by 33 percent. 
D) restricted foreign investment in other countries to a specified percentage of a nation's domestic output.

Question 9

Which is not commonly offered as a reason to support protectionism and abandon free trade?

Accepted Answer

A) maintaining military self-sufficiency 
B) increasing domestic employment 
C) allowing infant industries to mature and become competitive 
D) promoting specialization and increasing worldwide production levels 
A) maintaining military self-sufficiency 
B) increasing domestic employment 
C) allowing infant industries to mature and become competitive 
D) promoting specialization and increasing worldwide production levels

Question 10

Which is a valid counterargument to use tariffs to protect high wages from cheap foreign labour?

Accepted Answer

A) The benefits of such a policy will go to consumers, not workers. 
B) The benefits of such a policy will go to businesses, not workers. 
C) Wage rates in a nation are largely determined by productivity. 
D) The economy may become overheated, thus increasing inflation. 
A) The benefits of such a policy will go to consumers, not workers. 
B) The benefits of such a policy will go to businesses, not workers. 
C) Wage rates in a nation are largely determined by productivity. 
D) The economy may become overheated, thus increasing inflation.

Question 11

The fact that international specialization and trade based on comparative advantage can increase world output is reflected in the fact that:

Accepted Answer

A) the production possibilities curve of any two nations are identical. 
B) a nation's production possibilities and trading possibilities lines coincide. 
C) a nation's trading possibilities line lies to the right of its production possibility 
D) a nation's production possibilities line lies to the right of its trading possibilities. 
A) the production possibilities curve of any two nations are identical. 
B) a nation's production possibilities and trading possibilities lines coincide. 
C) a nation's trading possibilities line lies to the right of its production possibility 
D) a nation's production possibilities line lies to the right of its trading possibilities.

Question 12

When a tariff on a product is removed, it will result in a(n):

Accepted Answer

A) decrease in the supply of a product and a higher price. 
B) increase in the supply of the product and a higher price. 
C) increase in the supply of the product and a lower price. 
D) decrease in the supply of the product and a lower price. 
A) decrease in the supply of a product and a higher price. 
B) increase in the supply of the product and a higher price. 
C) increase in the supply of the product and a lower price. 
D) decrease in the supply of the product and a lower price.

Question 13

A tax on an imported product is a(n):

Accepted Answer

A) tariff. 
B) quota. 
C) import subsidy. 
D) export subsidy. 
A) tariff. 
B) quota. 
C) import subsidy. 
D) export subsidy.

Question 14

Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel.Assuming no transportation costs, Canada will:

Accepted Answer

A) have a domestic shortage of wheat. 
B) export wheat. 
C) import wheat. 
D) neither export nor import wheat. 
A) have a domestic shortage of wheat. 
B) export wheat. 
C) import wheat. 
D) neither export nor import wheat.

Question 15

Refer to the above diagrams.The solid lines are production possibilities curves; the dashed lines are trading possibilities curves.The data contained in the production possibilities curves are based on the assumption of:

Accepted Answer

A) imperfect substitutability of resources as between beer and pizza production. 
B) constant costs. 
C) decreasing costs. 
D) increasing costs. 
A) imperfect substitutability of resources as between beer and pizza production. 
B) constant costs. 
C) decreasing costs. 
D) increasing costs.

Question 16

Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

Accepted Answer

A) domestic supply curves for two countries. 
B) import demand curves for two countries. 
C) domestic demand curves for two countries. 
D) export supply curves for two countries. 
A) domestic supply curves for two countries. 
B) import demand curves for two countries. 
C) domestic demand curves for two countries. 
D) export supply curves for two countries.

Question 17

The cheap foreign labour argument suggests that:

Accepted Answer

A) trade barriers between rich and poor countries would definitely create a negative impact on the Canadian economy. 
B) free trade between rich and poor countries would definitely create a positive impact on the Canadian economy. 
C) it is not mutually beneficial for rich and poor countries to trade with one another. 
D) it is mutually beneficial for rich and poor countries to trade with one another. 
A) trade barriers between rich and poor countries would definitely create a negative impact on the Canadian economy. 
B) free trade between rich and poor countries would definitely create a positive impact on the Canadian economy. 
C) it is not mutually beneficial for rich and poor countries to trade with one another. 
D) it is mutually beneficial for rich and poor countries to trade with one another.

Question 18

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.   Refer to the above data.With a $1 per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

Accepted Answer

A) 1 unit and 15 units. 
B) 7 units and 4 units. 
C) 11 units and 4 units. 
D) indeterminate. 
A) 1 unit and 15 units. 
B) 7 units and 4 units. 
C) 11 units and 4 units. 
D) indeterminate.

Question 19

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input.To achieve gains from specialization:

Accepted Answer

A) India should export rice to Canada and import Canadian wheat. 
B) India should export wheat to Canada and import Canadian rice. 
C) Canada should produce both wheat and rice and not trade with India. 
D) India should produce both wheat and rice and not trade with Canada. 
A) India should export rice to Canada and import Canadian wheat. 
B) India should export wheat to Canada and import Canadian rice. 
C) Canada should produce both wheat and rice and not trade with India. 
D) India should produce both wheat and rice and not trade with Canada.

Question 20

Suppose Canada eliminates tariffs on German bicycles.As a result, we would expect:

Accepted Answer

A) the price of German bicycles to decline in Canada. 
B) employment would increase in the German bicycle industry. 
C) employment would decrease in the Canadian bicycle industry. 
D) all of the above to occur. 
A) the price of German bicycles to decline in Canada. 
B) employment would increase in the German bicycle industry. 
C) employment would decrease in the Canadian bicycle industry. 
D) all of the above to occur.

Exam 17: B: International Trade

Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Refer to the above data.Beta:

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product.Sd + Q is the product supply curve after an import quota is imposed.A tariff of PcPt will:

Nations Quirk and Turk can produce aluminum and oil in the following maximum quantities when all of their resources are fully employed. Which one of the following terms of trade is most likely to produce exchange between the two nations?

The 1993 General Agreement on Tariffs and Trade (GATT):

Suppose the domestic price of copper is $1.20 per kilogram in Canada, while the world price is $1.00 per kilogram.Assuming no transportation costs, Canada will:

The specification of the maximum amounts of commodities which may be imported into a country in any period of time is a:

GATT was an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

The Uruguay Round of GATT negotiations:

Which is not commonly offered as a reason to support protectionism and abandon free trade?

Which is a valid counterargument to use tariffs to protect high wages from cheap foreign labour?

The fact that international specialization and trade based on comparative advantage can increase world output is reflected in the fact that:

When a tariff on a product is removed, it will result in a(n):

A tax on an imported product is a(n):

Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel.Assuming no transportation costs, Canada will:

Refer to the above diagrams.The solid lines are production possibilities curves; the dashed lines are trading possibilities curves.The data contained in the production possibilities curves are based on the assumption of:

Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

The cheap foreign labour argument suggests that:

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. Refer to the above data.With a $1 per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input.To achieve gains from specialization:

Suppose Canada eliminates tariffs on German bicycles.As a result, we would expect:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product.S_d + Q is the product supply curve after an import quota is imposed.A tariff of P_cP_t will: