Question 1

Figure 17-9  
-Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

Accepted Answer

A) $200. 
B) $400. 
C) $500. 
D) $600. 
A) $200. 
B) $400. 
C) $500. 
D) $600.

Question 2

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

Accepted Answer

A) residents who produce shoes become worse off; residents who buy shoes become better off; and the economic well-being of Venezia rises. 
B) residents who produce shoes become worse off; residents who buy shoes become better off; and the economic well-being of Venezia falls. 
C) residents who produce shoes become better off; residents who buy shoes become worse off; and the economic well-being of Venezia rises. 
D) residents who produce shoes become better off; residents who buy shoes become worse off; and the economic well-being of Venezia falls. 
A) residents who produce shoes become worse off; residents who buy shoes become better off; and the economic well-being of Venezia rises. 
B) residents who produce shoes become worse off; residents who buy shoes become better off; and the economic well-being of Venezia falls. 
C) residents who produce shoes become better off; residents who buy shoes become worse off; and the economic well-being of Venezia rises. 
D) residents who produce shoes become better off; residents who buy shoes become worse off; and the economic well-being of Venezia falls.

Question 3

The United States is the world's leading grain-producing nation. Exporting U.S. grain causes the

Accepted Answer

A) domestic consumption of grain to rise because of the added foreign demand. 
B) price of grain in the domestic market to fall because foreigners are now taking some of the domestic demand. 
C) price of grain to domestic consumers to rise because of the added foreign demand. 
D) standard of living of foreigners to fall because they lose purchasing power. 
A) domestic consumption of grain to rise because of the added foreign demand. 
B) price of grain in the domestic market to fall because foreigners are now taking some of the domestic demand. 
C) price of grain to domestic consumers to rise because of the added foreign demand. 
D) standard of living of foreigners to fall because they lose purchasing power.

Question 4

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Accepted Answer

A) The domestic price of shoes would fall. 
B) The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C) The number of unemployed workers in the domestic shoe industry would decline. 
D) The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations. 
A) The domestic price of shoes would fall. 
B) The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C) The number of unemployed workers in the domestic shoe industry would decline. 
D) The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations.

Question 5

Which of the following is correct?

Accepted Answer

A) An increase in the tariff on foreign-produced automobiles will benefit U.S.consumers of domestic cars. 
B) An ongoing result of the North American Free Trade Agreement is that producers in both countries will benefit at the expense of consumers. 
C) The wages of U.S.workers would sharply decline if we traded freely with low-wage countries like India and China. 
D) Exports provide a nation with its primary source of purchasing power used to buy imported goods. 
A) An increase in the tariff on foreign-produced automobiles will benefit U.S.consumers of domestic cars. 
B) An ongoing result of the North American Free Trade Agreement is that producers in both countries will benefit at the expense of consumers. 
C) The wages of U.S.workers would sharply decline if we traded freely with low-wage countries like India and China. 
D) Exports provide a nation with its primary source of purchasing power used to buy imported goods.

Question 6

What is the law of comparative advantage, and why is it important in international trade?

Accepted Answer

The law of comparative advantage states

Question 7

Hong Kong and Singapore both have relatively

Accepted Answer

A) high trade barriers and high rates of economic growth. 
B) high trade barriers and low rates of economic growth. 
C) low trade barriers and high rates of economic growth. 
D) low trade barriers and low rates of economic growth. 
A) high trade barriers and high rates of economic growth. 
B) high trade barriers and low rates of economic growth. 
C) low trade barriers and high rates of economic growth. 
D) low trade barriers and low rates of economic growth.

Question 8

What is the difference between a tariff and a quota?

Accepted Answer

A tariff is a tax imposed by a

Question 9

Figure 17-13  
-In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

Accepted Answer

A) $4,000 
B) $16,000 
C) $20,000 
D) $24,000 
E) $48,000 
A) $4,000 
B) $16,000 
C) $20,000 
D) $24,000 
E) $48,000

Question 10

When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result?

Accepted Answer

A) A black market will develop for foreign exchange. 
B) Residents of that country can buy as much foreign currency as they want. 
C) There will be a surplus of foreign exchange. 
D) A depreciation of the currency will restore equilibrium in the foreign exchange market. 
A) A black market will develop for foreign exchange. 
B) Residents of that country can buy as much foreign currency as they want. 
C) There will be a surplus of foreign exchange. 
D) A depreciation of the currency will restore equilibrium in the foreign exchange market.

Question 11

The argument that import restrictions save jobs and promote prosperity fails to recognize that

Accepted Answer

A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S.imports provide people in other countries with the purchasing power required for the purchase of U.S.exports. 
A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S.imports provide people in other countries with the purchasing power required for the purchase of U.S.exports.

Question 12

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Accepted Answer

A) The opportunity cost of producing watches is lower in Denmark. 
B) The opportunity cost of producing cheese is lower in Denmark. 
C) The opportunity cost of producing watches is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In Germany the opportunity cost of producing one pound of cheese is one watch. 
A) The opportunity cost of producing watches is lower in Denmark. 
B) The opportunity cost of producing cheese is lower in Denmark. 
C) The opportunity cost of producing watches is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In Germany the opportunity cost of producing one pound of cheese is one watch.

Question 13

Assume, for Canada, that the domestic price of steel without international trade is higher than the world price of steel. This suggests that with trade,

Accepted Answer

A) Canada has a comparative advantage in the production of steel over other countries and Canada will import steel. 
B) Canada has a comparative advantage in the production of steel over other countries and Canada will export steel. 
C) other countries have a comparative advantage over Canada in the production of steel and Canada will import steel. 
D) other countries have a comparative advantage over Canada in the production of steel and Canada will export steel. 
A) Canada has a comparative advantage in the production of steel over other countries and Canada will import steel. 
B) Canada has a comparative advantage in the production of steel over other countries and Canada will export steel. 
C) other countries have a comparative advantage over Canada in the production of steel and Canada will import steel. 
D) other countries have a comparative advantage over Canada in the production of steel and Canada will export steel.

Question 14

If labor-intensive textile products could be produced more cheaply in low-wage countries than in the United States, the United States would gain if it

Accepted Answer

A) levied a tariff on the goods produced by the cheap foreign labor. 
B) subsidized the domestic textile industry so it could compete in international markets. 
C) used its resources to produce other items while importing textiles from foreigners. 
D) levied a tax on the domestic textile products to penalize the industry for inefficiency. 
A) levied a tariff on the goods produced by the cheap foreign labor. 
B) subsidized the domestic textile industry so it could compete in international markets. 
C) used its resources to produce other items while importing textiles from foreigners. 
D) levied a tax on the domestic textile products to penalize the industry for inefficiency.

Question 15

When the nation of Roma allows trade and as a result becomes an importer of scooters,

Accepted Answer

A) residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma rises. 
B) residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma falls. 
C) residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma rises. 
D) residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma falls. 
A) residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma rises. 
B) residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma falls. 
C) residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma rises. 
D) residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma falls.

Question 16

The infant-industry argument about tariffs implies that

Accepted Answer

A) it is unfair to levy tariffs on items intended for use by infants. 
B) tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C) if a newly established domestic industry can survive in the short run, a tariff should be levied to protect it from foreign competition in the long run. 
D) permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries. 
A) it is unfair to levy tariffs on items intended for use by infants. 
B) tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C) if a newly established domestic industry can survive in the short run, a tariff should be levied to protect it from foreign competition in the long run. 
D) permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries.

Question 17

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Accepted Answer

A) The domestic price of automobiles would fall. 
B) The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 
A) The domestic price of automobiles would fall. 
B) The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

Question 18

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

Accepted Answer

Trade restrictions will stop foreign imp

Question 19

International trade is advantageous because trade makes it possible for people in each country to

Accepted Answer

A) import more than they export. 
B) export more than they import. 
C) employ more of their domestic resources producing things that are costly for them to produce domestically. 
D) acquire goods from foreigners more economically than they could be produced domestically. 
E) do all of the above. 
A) import more than they export. 
B) export more than they import. 
C) employ more of their domestic resources producing things that are costly for them to produce domestically. 
D) acquire goods from foreigners more economically than they could be produced domestically. 
E) do all of the above.

Question 20

Which of the following is a partially valid economic argument for restricting free trade?

Accepted Answer

A) Restrictions on foreign trade will increase employment and permanently reduce unemployment. 
B) Infant industries may need temporary protection to develop and gain productive efficiency. 
C) A nation needs to protect its national defense; hence, it should restrict some products that threaten an industry considered vital to its defense. 
D) Both b and c are correct. 
A) Restrictions on foreign trade will increase employment and permanently reduce unemployment. 
B) Infant industries may need temporary protection to develop and gain productive efficiency. 
C) A nation needs to protect its national defense; hence, it should restrict some products that threaten an industry considered vital to its defense. 
D) Both b and c are correct.

Figure 17-9 -Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

The United States is the world's leading grain-producing nation. Exporting U.S. grain causes the

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Which of the following is correct?

What is the law of comparative advantage, and why is it important in international trade?

Hong Kong and Singapore both have relatively

What is the difference between a tariff and a quota?

Figure 17-13 -In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result?

The argument that import restrictions save jobs and promote prosperity fails to recognize that

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Assume, for Canada, that the domestic price of steel without international trade is higher than the world price of steel. This suggests that with trade,

If labor-intensive textile products could be produced more cheaply in low-wage countries than in the United States, the United States would gain if it

When the nation of Roma allows trade and as a result becomes an importer of scooters,

The infant-industry argument about tariffs implies that

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

International trade is advantageous because trade makes it possible for people in each country to

Which of the following is a partially valid economic argument for restricting free trade?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Filters

Exam 18: Gaining From International Trade

Figure 17-9 -Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

The United States is the world's leading grain-producing nation. Exporting U.S. grain causes the

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Which of the following is correct?

What is the law of comparative advantage, and why is it important in international trade?

Hong Kong and Singapore both have relatively

What is the difference between a tariff and a quota?

Figure 17-13 -In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

When a country fixes the price of foreign exchange (in terms of the domestic currency) below equilibrium, which of the following will result?

The argument that import restrictions save jobs and promote prosperity fails to recognize that

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Assume, for Canada, that the domestic price of steel without international trade is higher than the world price of steel. This suggests that with trade,

If labor-intensive textile products could be produced more cheaply in low-wage countries than in the United States, the United States would gain if it

When the nation of Roma allows trade and as a result becomes an importer of scooters,

The infant-industry argument about tariffs implies that

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

International trade is advantageous because trade makes it possible for people in each country to

Which of the following is a partially valid economic argument for restricting free trade?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Filters