Question 1

A country has a comparative advantage over another in the production of gadgets if it can produce

Accepted Answer

A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country. 
A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country.

Question 2

An import quota will ordinarily raise the price of the good in the importing country.

Accepted Answer

A) True 
 B)False

Question 3

One of the major reasons why nations trade is that

Accepted Answer

A)  nations choose to trade for largely unknown reasons. 
B)  resources are not equally distributed across the planet. 
C)  nations wish to exert cultural influence abroad. 
D)  nations wish to copy others,and need imports to study. 
A)  nations choose to trade for largely unknown reasons. 
B)  resources are not equally distributed across the planet. 
C)  nations wish to exert cultural influence abroad. 
D)  nations wish to copy others,and need imports to study.

Question 4

An upward spiral of protectionism is a possible outcome of strategic trade policy.

Accepted Answer

A) True 
 B)False

Question 5

A quota sets the maximum amount of a good that is permitted into a country.

Accepted Answer

A) True 
 B)False

Question 6

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

Accepted Answer

A)  were much lower than wages in countries that imported U.S.products. 
B)  were much higher than wages in countries that imported U.S.products. 
C)  were roughly the same as wages in countries that imported U.S.products. 
D)  fell throughout that period,enabling the continuing trade surplus. 
E)  rose throughout that period,ending the trade surplus. 
A)  were much lower than wages in countries that imported U.S.products. 
B)  were much higher than wages in countries that imported U.S.products. 
C)  were roughly the same as wages in countries that imported U.S.products. 
D)  fell throughout that period,enabling the continuing trade surplus. 
E)  rose throughout that period,ending the trade surplus.

Question 7

The effect of an import quota is to

Accepted Answer

A)  raise the price and reduce the quantity of imports. 
B)  raise the price and the quantity of imports. 
C)  lower the price and the quantity of imports. 
D)  raise the quantity and reduce the price of imports. 
A)  raise the price and reduce the quantity of imports. 
B)  raise the price and the quantity of imports. 
C)  lower the price and the quantity of imports. 
D)  raise the quantity and reduce the price of imports.

Question 8

Which of the following is true?

Accepted Answer

A)  A nation cannot have a comparative advantage in the production of every good. 
B)  A nation cannot have an absolute advantage in the production of every good. 
C)  A nation can have a comparative advantage in the production of every good,but not an absolute advantage. 
D)  A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. 
E)  A nation cannot have an absolute advantage in the production of a good unless it also has a comparative advantage. 
A)  A nation cannot have a comparative advantage in the production of every good. 
B)  A nation cannot have an absolute advantage in the production of every good. 
C)  A nation can have a comparative advantage in the production of every good,but not an absolute advantage. 
D)  A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. 
E)  A nation cannot have an absolute advantage in the production of a good unless it also has a comparative advantage.

Question 9

Figure 22-7  
-In Figure 22-7,where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland,Pastaland is

Accepted Answer

A)  better at producing pasta and pesto than Pestoland. 
B)  better at producing pasta,but relatively inefficient in producing pesto. 
C)  relatively better at producing pasta than pesto. 
D)  relatively better at producing pesto than pasta. 
A)  better at producing pasta and pesto than Pestoland. 
B)  better at producing pasta,but relatively inefficient in producing pesto. 
C)  relatively better at producing pasta than pesto. 
D)  relatively better at producing pesto than pasta.

Question 10

If the supply curve of a commodity is upward sloping,and the producing country begins to export more in a pure free trade system,the domestic price of the commodity will

Accepted Answer

A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries. 
A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries.

Question 11

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

Accepted Answer

A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist 
A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist

Question 12

Tariffs and quotas are effective in protecting industry

Accepted Answer

A)  but at very high cost per job saved. 
B)  and at very low cost per job saved. 
C)  but have not saved any jobs in the industries. 
D)  and do not distort the economy in the process. 
A)  but at very high cost per job saved. 
B)  and at very low cost per job saved. 
C)  but have not saved any jobs in the industries. 
D)  and do not distort the economy in the process.

Question 13

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

Accepted Answer

A) True 
 B)False

Question 14

An export subsidy is a payment by the government to exporters to permit them to charge lower prices.

Accepted Answer

A) True 
 B)False

Question 15

Specialization is a major obstacle to international trade.

Accepted Answer

A) True 
 B)False

Question 16

Trade between two nations is complicated by

Accepted Answer

A)  the variability in exchange rates of the respective nation's currencies. 
B)  different production techniques in the nations. 
C)  the age and experience of the respective nation's diplomats. 
D)  the variability in climate between the nations. 
A)  the variability in exchange rates of the respective nation's currencies. 
B)  different production techniques in the nations. 
C)  the age and experience of the respective nation's diplomats. 
D)  the variability in climate between the nations.

Question 17

Capital,labor,and other factors of production move more freely from country to country than they do within a country.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that with 1 unit of labor,Canada can produce 40 TVs or 20 computers.With 1 unit of labor,Taiwan can produce 30 TVs or 10 computers.Which of the following is correct?

Accepted Answer

A)  Taiwan has a comparative advantage in the production of computers. 
B)  Canada has an absolute advantage in the production of neither good. 
C)  Canada has a comparative advantage in the production of computers. 
D)  Taiwan has an absolute advantage in the production of computers. 
E)  Taiwan has an absolute advantage in the production of TVs. 
A)  Taiwan has a comparative advantage in the production of computers. 
B)  Canada has an absolute advantage in the production of neither good. 
C)  Canada has a comparative advantage in the production of computers. 
D)  Taiwan has an absolute advantage in the production of computers. 
E)  Taiwan has an absolute advantage in the production of TVs.

Question 19

Generally,if a nation imposes a tariff on imports,

Accepted Answer

A)  part of the tax is paid by foreign exporters. 
B)  the entire tax is paid by foreign exporters. 
C)  none of the tax is paid by foreign exporters. 
D)  the tax has no impact on the profits of foreign exporters. 
A)  part of the tax is paid by foreign exporters. 
B)  the entire tax is paid by foreign exporters. 
C)  none of the tax is paid by foreign exporters. 
D)  the tax has no impact on the profits of foreign exporters.

Question 20

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

Accepted Answer

A)  import guns. 
B)  have a comparative advantage in guns. 
C)  have an absolute advantage in guns. 
D)  have a comparative advantage in rice. 
A)  import guns. 
B)  have a comparative advantage in guns. 
C)  have an absolute advantage in guns. 
D)  have a comparative advantage in rice.

A country has a comparative advantage over another in the production of gadgets if it can produce

An import quota will ordinarily raise the price of the good in the importing country.

One of the major reasons why nations trade is that

An upward spiral of protectionism is a possible outcome of strategic trade policy.

A quota sets the maximum amount of a good that is permitted into a country.

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

The effect of an import quota is to

Which of the following is true?

Figure 22-7 -In Figure 22-7,where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland,Pastaland is

If the supply curve of a commodity is upward sloping,and the producing country begins to export more in a pure free trade system,the domestic price of the commodity will

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

Tariffs and quotas are effective in protecting industry

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

An export subsidy is a payment by the government to exporters to permit them to charge lower prices.

Specialization is a major obstacle to international trade.

Trade between two nations is complicated by

Capital,labor,and other factors of production move more freely from country to country than they do within a country.

Suppose that with 1 unit of labor,Canada can produce 40 TVs or 20 computers.With 1 unit of labor,Taiwan can produce 30 TVs or 10 computers.Which of the following is correct?

Generally,if a nation imposes a tariff on imports,

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

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

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Exam 18: International Trade and Comparative Advantage

A country has a comparative advantage over another in the production of gadgets if it can produce

An import quota will ordinarily raise the price of the good in the importing country.

One of the major reasons why nations trade is that

An upward spiral of protectionism is a possible outcome of strategic trade policy.

A quota sets the maximum amount of a good that is permitted into a country.

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

The effect of an import quota is to

Which of the following is true?

Figure 22-7 -In Figure 22-7,where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland,Pastaland is

If the supply curve of a commodity is upward sloping,and the producing country begins to export more in a pure free trade system,the domestic price of the commodity will

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

Tariffs and quotas are effective in protecting industry

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

An export subsidy is a payment by the government to exporters to permit them to charge lower prices.

Specialization is a major obstacle to international trade.

Trade between two nations is complicated by

Capital,labor,and other factors of production move more freely from country to country than they do within a country.

Suppose that with 1 unit of labor,Canada can produce 40 TVs or 20 computers.With 1 unit of labor,Taiwan can produce 30 TVs or 10 computers.Which of the following is correct?

Generally,if a nation imposes a tariff on imports,

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

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