Question 1

Figure 22-9  
-In Figure 22-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Accepted Answer

A)  OC 
B)  OJ 
C)  OA 
D)  OK 
A)  OC 
B)  OJ 
C)  OA 
D)  OK

Question 2

Specialization permits larger outputs and offers economies of large-scale production.

Accepted Answer

A) True 
 B)False

Question 3

A quota reduces quantity sold by operating through the demand side of the market.

Accepted Answer

A) True 
 B)False

Question 4

If a nation can produce greater quantities of a good than another nation,it has a(n)

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  declarative advantage. 
D)  entire advantage. 
A)  comparative advantage. 
B)  absolute advantage. 
C)  declarative advantage. 
D)  entire advantage.

Question 5

One reason why nations trade is because

Accepted Answer

A)  trading provides opportunities to earn profits. 
B)  the rate of interest is not the same in all countries. 
C)  resources are not equally distributed to all nations. 
D)  some nations like to build one thing while others like to build another. 
A)  trading provides opportunities to earn profits. 
B)  the rate of interest is not the same in all countries. 
C)  resources are not equally distributed to all nations. 
D)  some nations like to build one thing while others like to build another.

Question 6

Workers in high-wage countries cannot improve their real income when they trade with low-wage countries.

Accepted Answer

A) True 
 B)False

Question 7

Trade adjustment assistance in the United States began in 1962.The program

Accepted Answer

A)  was designed to provide assistance to firms or workers who suffer idle facilities,unprofitability,and unemployment because of sharp increases in imports. 
B)  provided little assistance to victims of free trade before the 1970s. 
C)  was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D)  All of the above are correct. 
A)  was designed to provide assistance to firms or workers who suffer idle facilities,unprofitability,and unemployment because of sharp increases in imports. 
B)  provided little assistance to victims of free trade before the 1970s. 
C)  was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D)  All of the above are correct.

Question 8

Are there impediments to international movement of labor and capital?

Accepted Answer

A)  Yes,but they apply to labor only,capital mobility is almost completely free. 
B)  Yes,although these apply to capital,and not to labor. 
C)  Yes,there are significant (often prohibitive)restrictions on labor and capital mobility. 
D)  No,these have been removed with the passage of recent trade legislation. 
A)  Yes,but they apply to labor only,capital mobility is almost completely free. 
B)  Yes,although these apply to capital,and not to labor. 
C)  Yes,there are significant (often prohibitive)restrictions on labor and capital mobility. 
D)  No,these have been removed with the passage of recent trade legislation.

Question 9

Tariffs are different from quotas because they

Accepted Answer

A)  increase government revenue. 
B)  increase profits. 
C)  increase the quantity traded. 
D)  place all the burden on foreigners. 
A)  increase government revenue. 
B)  increase profits. 
C)  increase the quantity traded. 
D)  place all the burden on foreigners.

Question 10

As a result of pure free trade in a commodity the

Accepted Answer

A)  price of the commodity must be the same in all countries. 
B)  total quantity imported will exceed the total quantity exported. 
C)  price of the commodity will be higher in the producing country. 
D)  price of the commodity will be lower in the producing country. 
A)  price of the commodity must be the same in all countries. 
B)  total quantity imported will exceed the total quantity exported. 
C)  price of the commodity will be higher in the producing country. 
D)  price of the commodity will be lower in the producing country.

Question 11

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

Accepted Answer

A) True 
 B)False

Question 12

A quota is

Accepted Answer

A)  a tax on exported items. 
B)  a tax on imported items. 
C)  a limit on the amount of imports. 
D)  a subsidy to export. 
A)  a tax on exported items. 
B)  a tax on imported items. 
C)  a limit on the amount of imports. 
D)  a subsidy to export.

Question 13

The way in which a country benefits from trade is that it can

Accepted Answer

A)  obtain goods at lower opportunity cost than producing them itself. 
B)  exploit economies of scale in production and lower the cost of goods it produces. 
C)  obtain a wider range of goods than it can produce for itself. 
D)  All of the above are benefits. 
A)  obtain goods at lower opportunity cost than producing them itself. 
B)  exploit economies of scale in production and lower the cost of goods it produces. 
C)  obtain a wider range of goods than it can produce for itself. 
D)  All of the above are benefits.

Question 14

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Accepted Answer

A)  lower the standard of living in both countries. 
B)  raise the standard of living in both countries. 
C)  make some workers less efficient. 
D)  lead to an inappropriate allocation of resources. 
A)  lower the standard of living in both countries. 
B)  raise the standard of living in both countries. 
C)  make some workers less efficient. 
D)  lead to an inappropriate allocation of resources.

Question 15

A common fallacy that is used to oppose trade is the idea that

Accepted Answer

A)  the only gains from trade go to the rich,so the poor must lose. 
B)  "you get what you pay for." 
C)  "if it's not broken,don't fix it." 
D)  one country's gain must be another's loss. 
E)  what is true for one is true for all. 
A)  the only gains from trade go to the rich,so the poor must lose. 
B)  "you get what you pay for." 
C)  "if it's not broken,don't fix it." 
D)  one country's gain must be another's loss. 
E)  what is true for one is true for all.

Question 16

Figure 22-2  
-In Figure 22-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Accepted Answer

A)  the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B)  Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C)  the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D)  if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum,then Mexico will benefit from the trade but the United States will not. 
A)  the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B)  Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C)  the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D)  if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum,then Mexico will benefit from the trade but the United States will not.

Question 17

Figure 22-1  
-In Figure 22-1,

Accepted Answer

A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany,and Germany should export woolens to Great Britain. 
A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany,and Germany should export woolens to Great Britain.

Question 18

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 19

When other nations Orient "dump" products on the U.S.market,they

Accepted Answer

A)  sell at prices that do not cover costs of production. 
B)  sell at prices lower than prices charged to their own domestic customers. 
C)  expect the United States to help pay any industrialists' losses. 
D)  All of the above are true. 
A)  sell at prices that do not cover costs of production. 
B)  sell at prices lower than prices charged to their own domestic customers. 
C)  expect the United States to help pay any industrialists' losses. 
D)  All of the above are true.

Question 20

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

Accepted Answer

A) True 
 B)False

Figure 22-9 -In Figure 22-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Specialization permits larger outputs and offers economies of large-scale production.

A quota reduces quantity sold by operating through the demand side of the market.

If a nation can produce greater quantities of a good than another nation,it has a(n)

One reason why nations trade is because

Workers in high-wage countries cannot improve their real income when they trade with low-wage countries.

Trade adjustment assistance in the United States began in 1962.The program

Are there impediments to international movement of labor and capital?

Tariffs are different from quotas because they

As a result of pure free trade in a commodity the

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

A quota is

The way in which a country benefits from trade is that it can

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

A common fallacy that is used to oppose trade is the idea that

Figure 22-2 -In Figure 22-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Figure 22-1 -In Figure 22-1,

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

When other nations Orient "dump" products on the U.S.market,they

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 18: International Trade and Comparative Advantage

Figure 22-9 -In Figure 22-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Specialization permits larger outputs and offers economies of large-scale production.

A quota reduces quantity sold by operating through the demand side of the market.

If a nation can produce greater quantities of a good than another nation,it has a(n)

One reason why nations trade is because

Workers in high-wage countries cannot improve their real income when they trade with low-wage countries.

Trade adjustment assistance in the United States began in 1962.The program

Are there impediments to international movement of labor and capital?

Tariffs are different from quotas because they

As a result of pure free trade in a commodity the

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

A quota is

The way in which a country benefits from trade is that it can

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

A common fallacy that is used to oppose trade is the idea that

Figure 22-2 -In Figure 22-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Figure 22-1 -In Figure 22-1,

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

When other nations Orient "dump" products on the U.S.market,they

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters