Question 1

Many call centers that provide telephone customer services for U.S. companies have been established in India, but few or none have been established in China. Why?

Accepted Answer

A) China is at a more advanced stage of economic development than India. 
B) China lacks the political infrastructure to support call centers. 
C) Chinese labor lacks the specific language skills needed to make call centers profitable in China. 
D) Indian labor costs are lower than Chinese labor costs. 
A) China is at a more advanced stage of economic development than India. 
B) China lacks the political infrastructure to support call centers. 
C) Chinese labor lacks the specific language skills needed to make call centers profitable in China. 
D) Indian labor costs are lower than Chinese labor costs.

Question 2

All of the following are arguments in support of protectionist legislation except:

Accepted Answer

A) increasing competition for domestic producers. 
B) increasing political pressure on rogue nations. 
C) increasing income equality. 
D) increasing tax revenues. 
A) increasing competition for domestic producers. 
B) increasing political pressure on rogue nations. 
C) increasing income equality. 
D) increasing tax revenues.

Question 3

What has happened to the size of international trade (relative to US GDP)since the late 1920's? With what countries or regions does the United States trade the most?

Accepted Answer

The relative size of total world trade h

Question 4

What are strategic trade policies,and when can they become a problem?

Accepted Answer

Strategic trade policies are threats to

Question 5

World trade declined in the 1930s. Which of the following is the best explanation of that decline?

Accepted Answer

A) World income shrank, and trade restrictions increased. 
B) World income shrank, but there were few changes in trade restrictions. 
C) Trade restrictions increased, but there was little change in world income. 
D) The incomes of most nations increased, allowing them to become more self-sufficient. 
A) World income shrank, and trade restrictions increased. 
B) World income shrank, but there were few changes in trade restrictions. 
C) Trade restrictions increased, but there was little change in world income. 
D) The incomes of most nations increased, allowing them to become more self-sufficient.

Question 6

Economists believe free trade areas such as NAFTA and the European Union are problematic because they

Accepted Answer

A) tend to lead to free trade rather than fair trade. 
B) can lead to regional trading blocs that restrict trade with outsiders. 
C) lead to globalization. 
D) encourage countries to rely on others rather than being self-sufficient. 
A) tend to lead to free trade rather than fair trade. 
B) can lead to regional trading blocs that restrict trade with outsiders. 
C) lead to globalization. 
D) encourage countries to rely on others rather than being self-sufficient.

Question 7

Why are trade restrictions less likely to be imposed during a booming economy than during a recession?

Accepted Answer

Trade restrictions are more likely to be

Question 8

Consider the following supply and demand diagram shown for a small domestic country.Note that at the world free-trade price of P* illustrated in the diagram,there are imports of Q1 - Q0.   If a government wanted more tariff revenue,given the same tariff,t,would it desire elastic or inelastic demand of the imported good? Explain.Be sure to illustrate your explanation with an appropriate diagram.

Accepted Answer

The government will receive greater reve

Question 9

Strategic bargaining:

Accepted Answer

A) always produces freer trade. 
B) always increases a country's gains from trade. 
C) may reduce trade if it is unsuccessful. 
D) always reduces a country's gains from trade. 
A) always produces freer trade. 
B) always increases a country's gains from trade. 
C) may reduce trade if it is unsuccessful. 
D) always reduces a country's gains from trade.

Question 10

When two country's laws and regulations are similar, economist's arguments for free trade are:

Accepted Answer

A) weaker than when the laws are different. 
B) identical than when the laws are different. 
C) stronger than when the laws are different. 
D) the opposite than when the laws are different. 
A) weaker than when the laws are different. 
B) identical than when the laws are different. 
C) stronger than when the laws are different. 
D) the opposite than when the laws are different.

Question 11

The United States does not allow U.S. citizens to trade with Iraq. This is an example of:

Accepted Answer

A) a quota. 
B) a tariff. 
C) a sanction. 
D) a regulatory trade restriction. 
A) a quota. 
B) a tariff. 
C) a sanction. 
D) a regulatory trade restriction.

Question 12

Free trade is:

Accepted Answer

A) a policy all economists agree is the best policy. 
B) a policy all economists agree is a bad policy. 
C) more complicated than it sometimes seems. 
D) less complicated than it sometimes seems. 
A) a policy all economists agree is the best policy. 
B) a policy all economists agree is a bad policy. 
C) more complicated than it sometimes seems. 
D) less complicated than it sometimes seems.

Question 13

How are tariffs and quotas similar? How are they different? Explain verbally and demonstrate graphically.

Accepted Answer

Tariffs and quotas are similar in that t

Question 14

Most economists support free trade in part because trade restrictions:

Accepted Answer

A) provide no revenue for the government. 
B) result in larger trade deficits for the nations imposing them. 
C) increase international competition. 
D) reduce international competition. 
A) provide no revenue for the government. 
B) result in larger trade deficits for the nations imposing them. 
C) increase international competition. 
D) reduce international competition.

Question 15

Refer to the graph shown.   As a result of a tariff T imposed on speedboats, the price that foreign suppliers will receive probably will be:

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 16

The outsourcing of service jobs such as those in call centers has become a political issue. Do economists see any benefit to outsourcing?

Accepted Answer

A) No; it simply shifts jobs overseas. 
B) No; it only benefits foreign economies. 
C) Yes; it tends to reduce prices to American companies and consumers. 
D) Yes; it tends to raise the value of the dollar. 
A) No; it simply shifts jobs overseas. 
B) No; it only benefits foreign economies. 
C) Yes; it tends to reduce prices to American companies and consumers. 
D) Yes; it tends to raise the value of the dollar.

Question 17

The limit that United States places on textile imports is an example of:

Accepted Answer

A) a tariff. 
B) a quota. 
C) a regulatory trade restriction. 
D) a sanction. 
A) a tariff. 
B) a quota. 
C) a regulatory trade restriction. 
D) a sanction.

Question 18

How can learning by doing and economies of scale play a role in deciding to impose trade restrictions? What name do we give to the argument for trade restrictions that is based on learning by doing and economies of scale?

Accepted Answer

Learning by doing and economies of scale

Question 19

When per-unit output costs fall as output increases, this is called:

Accepted Answer

A) economies of scale. 
B) economies of scope. 
C) learning by doing. 
D) diminishing marginal returns. 
A) economies of scale. 
B) economies of scope. 
C) learning by doing. 
D) diminishing marginal returns.

Question 20

Tariffs are taxes that governments place on internationally traded goods.

Accepted Answer

A) True 
 B)False

Exam 10: International Trade Policy

Many call centers that provide telephone customer services for U.S. companies have been established in India, but few or none have been established in China. Why?

All of the following are arguments in support of protectionist legislation except:

What has happened to the size of international trade (relative to US GDP)since the late 1920's? With what countries or regions does the United States trade the most?

What are strategic trade policies,and when can they become a problem?

World trade declined in the 1930s. Which of the following is the best explanation of that decline?

Economists believe free trade areas such as NAFTA and the European Union are problematic because they

Why are trade restrictions less likely to be imposed during a booming economy than during a recession?

Strategic bargaining:

When two country's laws and regulations are similar, economist's arguments for free trade are:

The United States does not allow U.S. citizens to trade with Iraq. This is an example of:

Free trade is:

How are tariffs and quotas similar? How are they different? Explain verbally and demonstrate graphically.

Most economists support free trade in part because trade restrictions:

Refer to the graph shown. As a result of a tariff T imposed on speedboats, the price that foreign suppliers will receive probably will be:

The outsourcing of service jobs such as those in call centers has become a political issue. Do economists see any benefit to outsourcing?

The limit that United States places on textile imports is an example of:

How can learning by doing and economies of scale play a role in deciding to impose trade restrictions? What name do we give to the argument for trade restrictions that is based on learning by doing and economies of scale?

When per-unit output costs fall as output increases, this is called:

Tariffs are taxes that governments place on internationally traded goods.

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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