Question 1

Free trade makes the people of a country worse off.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Table 18.1. If Scotland produces 10 bagpipes, how many accordions can they produce for the rest of the day?

Accepted Answer

A)  15 
B)  20 
C)  25 
D)  40 
A)  15 
B)  20 
C)  25 
D)  40

Question 3

Trade theory suggests that increased trade leads to increased wage inequality.

Accepted Answer

A) True 
 B)False

Question 4

If France can produce grapes at a higher opportunity cost than any other nation, France is said to have a(n) _______  in the production of grapes.

Accepted Answer

A)  comparative advantage 
B)  absolute advantage 
C)  comparative disadvantage 
D)  autarky 
A)  comparative advantage 
B)  absolute advantage 
C)  comparative disadvantage 
D)  autarky

Question 5

Figure 18.3
-Refer to Figure 18.3. With free trade, domestic production is:

Accepted Answer

A)  0. 
B)  60. 
C)  100. 
D)  80. 
A)  0. 
B)  60. 
C)  100. 
D)  80.

Question 6

During the 1980s, firms from _______ were accused of dumping VCRs in Europe.

Accepted Answer

A)  Taiwan 
B)  Mexico 
C)  Japan 
D)  Korea 
A)  Taiwan 
B)  Mexico 
C)  Japan 
D)  Korea

Question 7

Which of the following organizations has over 149 member nations and oversees the General Agreement on Trade and Tariffs?

Accepted Answer

A)  European Union 
B)  World Trade Organization 
C)  North American Free Trade Agreement 
D)  Asian Pacific Economic Cooperation 
A)  European Union 
B)  World Trade Organization 
C)  North American Free Trade Agreement 
D)  Asian Pacific Economic Cooperation

Question 8

Figure 18.3
-Refer to Figure 18.3. With free trade, the equilibrium price is:

Accepted Answer

A)  $10. 
B)  $12. 
C)  $8. 
D)  $0. 
A)  $10. 
B)  $12. 
C)  $8. 
D)  $0.

Question 9

Figure 18.5
-For the good in Figure 18.5, with the tariff, the people in the country will buy:

Accepted Answer

A)  Q5. 
B)  Q2. 
C)  Q1. 
D)  Q4. 
A)  Q5. 
B)  Q2. 
C)  Q1. 
D)  Q4.

Question 10

The combinations of goods a nation can consume after trade and specialization begin are illustrated by the _______ curve.

Accepted Answer

A)  supply 
B)  demand 
C)  consumption possibilities 
D)  production possibilities 
A)  supply 
B)  demand 
C)  consumption possibilities 
D)  production possibilities

Question 11

-Refer to Table 18.1. After trade begins, _______ will specialize in the production of accordions and _______ will specialize in the production of bagpipes.

Accepted Answer

A)  Poland; Scotland 
B)  Scotland; Poland 
C)  Poland; Poland 
D)  Scotland; Scotland 
A)  Poland; Scotland 
B)  Scotland; Poland 
C)  Poland; Poland 
D)  Scotland; Scotland

Question 12

Figure 18.4
-Refer to Figure 18.4. With an import ban, how many artichokes are produced domestically in Duckland?

Accepted Answer

A)  30 
B)  85 
C)  75 
D)  65 
A)  30 
B)  85 
C)  75 
D)  65

Question 13

-Refer to Table 18.1. Scotland has a comparative advantage in:

Accepted Answer

A)  accordions. 
B)  bagpipes. 
C)  both accordions and bagpipes. 
D)  neither accordions nor bagpipes. 
A)  accordions. 
B)  bagpipes. 
C)  both accordions and bagpipes. 
D)  neither accordions nor bagpipes.

Question 14

Among the problems associated with subsidizing an industry in the hope of establishing a worldwide monopoly is that if two nations subsidize firms in the same industry, each could lose money.

Accepted Answer

A) True 
 B)False

Question 15

_______ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

Accepted Answer

A)  Deliberate dumping. 
B)  Price discrimination 
C)  Predatory pricing 
D)  Voracious dumping 
A)  Deliberate dumping. 
B)  Price discrimination 
C)  Predatory pricing 
D)  Voracious dumping

Question 16

Which of the following situations will arise in the domestic market following the imposition of a tariff?

Accepted Answer

A)  imports increase, domestic production increases, prices increase 
B)  imports increase, domestic production decreases, prices decrease 
C)  imports decrease, domestic production increases, prices increase 
D)  imports decrease, domestic production increases, prices decrease 
A)  imports increase, domestic production increases, prices increase 
B)  imports increase, domestic production decreases, prices decrease 
C)  imports decrease, domestic production increases, prices increase 
D)  imports decrease, domestic production increases, prices decrease

Question 17

According to the infant industry argument for trade protectionism:

Accepted Answer

A)  tariffs imposed to aid new industries should never be removed. 
B)  new industries are capable of competing with established rivals. 
C)  trade barriers must be used to protect domestic workers. 
D)  new industries need to be shielded in the early stages of learning by doing. 
A)  tariffs imposed to aid new industries should never be removed. 
B)  new industries are capable of competing with established rivals. 
C)  trade barriers must be used to protect domestic workers. 
D)  new industries need to be shielded in the early stages of learning by doing.

Question 18

Which of the following trade policies raises prices for domestic consumers?

Accepted Answer

A)  voluntary export restraints 
B)  tariffs 
C)  import quotas 
D)  all of the above 
A)  voluntary export restraints 
B)  tariffs 
C)  import quotas 
D)  all of the above

Question 19

As a whole, nations are better off after trade and specialization because:

Accepted Answer

A)  nations experience an outward shift of their production possibilities curve. 
B)  nations can consume along their production possibilities curve, which is above of their consumption possibilities curve. 
C)  nations can consume along their consumption possibilities curve, which is above of their production possibilities curve. 
D)  nations can consume along their consumption possibilities curve, which is below of their production possibilities curve. 
A)  nations experience an outward shift of their production possibilities curve. 
B)  nations can consume along their production possibilities curve, which is above of their consumption possibilities curve. 
C)  nations can consume along their consumption possibilities curve, which is above of their production possibilities curve. 
D)  nations can consume along their consumption possibilities curve, which is below of their production possibilities curve.

Question 20

Figure 18.4
-Refer to Figure 18.4. With free trade, what is the equilibrium quantity of artichokes in Duckland?

Accepted Answer

A)  75 
B)  65 
C)  85 
D)  30 
A)  75 
B)  65 
C)  85 
D)  30

Free trade makes the people of a country worse off.

-Refer to Table 18.1. If Scotland produces 10 bagpipes, how many accordions can they produce for the rest of the day?

Trade theory suggests that increased trade leads to increased wage inequality.

If France can produce grapes at a higher opportunity cost than any other nation, France is said to have a(n) _______ in the production of grapes.

Figure 18.3 -Refer to Figure 18.3. With free trade, domestic production is:

During the 1980s, firms from _______ were accused of dumping VCRs in Europe.

Which of the following organizations has over 149 member nations and oversees the General Agreement on Trade and Tariffs?

Figure 18.3 -Refer to Figure 18.3. With free trade, the equilibrium price is:

Figure 18.5 -For the good in Figure 18.5, with the tariff, the people in the country will buy:

The combinations of goods a nation can consume after trade and specialization begin are illustrated by the _______ curve.

-Refer to Table 18.1. After trade begins, _ will specialize in the production of accordions and _ will specialize in the production of bagpipes.

Figure 18.4 -Refer to Figure 18.4. With an import ban, how many artichokes are produced domestically in Duckland?

-Refer to Table 18.1. Scotland has a comparative advantage in:

Among the problems associated with subsidizing an industry in the hope of establishing a worldwide monopoly is that if two nations subsidize firms in the same industry, each could lose money.

_______ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

Which of the following situations will arise in the domestic market following the imposition of a tariff?

According to the infant industry argument for trade protectionism:

Which of the following trade policies raises prices for domestic consumers?

As a whole, nations are better off after trade and specialization because:

Figure 18.4 -Refer to Figure 18.4. With free trade, what is the equilibrium quantity of artichokes in Duckland?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

The World of International Finance

Filters

Exam 18: International Trade and Public Policy

Free trade makes the people of a country worse off.

-Refer to Table 18.1. If Scotland produces 10 bagpipes, how many accordions can they produce for the rest of the day?

Trade theory suggests that increased trade leads to increased wage inequality.

If France can produce grapes at a higher opportunity cost than any other nation, France is said to have a(n) _______ in the production of grapes.

Figure 18.3 -Refer to Figure 18.3. With free trade, domestic production is:

During the 1980s, firms from _______ were accused of dumping VCRs in Europe.

Which of the following organizations has over 149 member nations and oversees the General Agreement on Trade and Tariffs?

Figure 18.3 -Refer to Figure 18.3. With free trade, the equilibrium price is:

Figure 18.5 -For the good in Figure 18.5, with the tariff, the people in the country will buy:

The combinations of goods a nation can consume after trade and specialization begin are illustrated by the _______ curve.

-Refer to Table 18.1. After trade begins, _______ will specialize in the production of accordions and _______ will specialize in the production of bagpipes.

Figure 18.4 -Refer to Figure 18.4. With an import ban, how many artichokes are produced domestically in Duckland?

-Refer to Table 18.1. Scotland has a comparative advantage in:

Among the problems associated with subsidizing an industry in the hope of establishing a worldwide monopoly is that if two nations subsidize firms in the same industry, each could lose money.

_______ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

Which of the following situations will arise in the domestic market following the imposition of a tariff?

According to the infant industry argument for trade protectionism:

Which of the following trade policies raises prices for domestic consumers?

As a whole, nations are better off after trade and specialization because:

Figure 18.4 -Refer to Figure 18.4. With free trade, what is the equilibrium quantity of artichokes in Duckland?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

The World of International Finance

Filters

-Refer to Table 18.1. After trade begins, _ will specialize in the production of accordions and _ will specialize in the production of bagpipes.