Question 1

In recent years, the largest trading partners of the United States have been

Accepted Answer

A) Germany, France, Spain, and the United Kingdom. 
B) Canada, Mexico, China, and Japan. 
C) Canada, Brazil, Argentina, and Chile. 
D) Russia, Venezuela, Saudi Arabia, and Indonesia. 
A) Germany, France, Spain, and the United Kingdom. 
B) Canada, Mexico, China, and Japan. 
C) Canada, Brazil, Argentina, and Chile. 
D) Russia, Venezuela, Saudi Arabia, and Indonesia.

Question 2

American textile manufacturers and union members have often lobbied successfully for restrictive quotas limiting the importation of textile products. The major impact of these quotas is

Accepted Answer

A) a permanent reduction in unemployment in the United States. 
B) lower prices for American consumers and an improvement in the quality of textile products available. 
C) higher prices for American consumers, a narrower selection of products, and less competition in the U.S.textile industry. 
D) long-run profits in the U.S.textile industry that are substantially above market equilibrium. 
A) a permanent reduction in unemployment in the United States. 
B) lower prices for American consumers and an improvement in the quality of textile products available. 
C) higher prices for American consumers, a narrower selection of products, and less competition in the U.S.textile industry. 
D) long-run profits in the U.S.textile industry that are substantially above market equilibrium.

Question 3

Figure 17-9  
-Refer to Figure 17-9. With trade and without a tariff,

Accepted Answer

A) the domestic price is equal to the world price. 
B) carnations are sold at $8 in this market. 
C) there is a shortage of 400 carnations in this market. 
D) this country imports 200 carnations. 
A) the domestic price is equal to the world price. 
B) carnations are sold at $8 in this market. 
C) there is a shortage of 400 carnations in this market. 
D) this country imports 200 carnations.

Question 4

Which of the following is most likely to increase U.S. exports?

Accepted Answer

A) The government gives subsidies to U.S.firms that export goods or services. 
B) The government reduces the size of the budget surplus. 
C) The United States unilaterally reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise. 
A) The government gives subsidies to U.S.firms that export goods or services. 
B) The government reduces the size of the budget surplus. 
C) The United States unilaterally reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise.

Question 5

Suppose the lowest-wage state in the United States is West Virginia and the highest-wage state is New York. Which of the following would be true?

Accepted Answer

A) If New York trades with West Virginia, consumers in New York will be worse off. 
B) If New York trades with West Virginia, wages in New York will fall until they equal the wages in West Virginia. 
C) New York would be better off if its state government imposed restrictions on the importation of goods made in West Virginia. 
D) Both New York and West Virginia will be better off if they are allowed to trade freely. 
A) If New York trades with West Virginia, consumers in New York will be worse off. 
B) If New York trades with West Virginia, wages in New York will fall until they equal the wages in West Virginia. 
C) New York would be better off if its state government imposed restrictions on the importation of goods made in West Virginia. 
D) Both New York and West Virginia will be better off if they are allowed to trade freely.

Question 6

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Accepted Answer

This is a bad strategy. When few goods a

Question 7

Economists consider tariffs to be

Accepted Answer

A) necessary for the protection of domestic industries and the achievement of full employment. 
B) harmful to domestic consumers. 
C) obstacles that hinder voluntary exchange and gains from trade. 
D) both b and c above 
A) necessary for the protection of domestic industries and the achievement of full employment. 
B) harmful to domestic consumers. 
C) obstacles that hinder voluntary exchange and gains from trade. 
D) both b and c above

Question 8

Which of the following is true?

Accepted Answer

A) In recent decades, the volume of U.S.international trade has been increasing as a share of the economy. 
B) As transportation costs decline, the volume of international trade will also tend to decline. 
C) Most international trade is between the governments of different nations. 
D) If one party to an international exchange gains, the other party must lose a similar amount. 
A) In recent decades, the volume of U.S.international trade has been increasing as a share of the economy. 
B) As transportation costs decline, the volume of international trade will also tend to decline. 
C) Most international trade is between the governments of different nations. 
D) If one party to an international exchange gains, the other party must lose a similar amount.

Question 9

When a country allows trade and becomes an importer of steel,

Accepted Answer

A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. 
B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. 
C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. 
D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel. 
A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. 
B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. 
C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. 
D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.

Question 10

A tariff differs from a quota in that a tariff is

Accepted Answer

A) levied on imports, whereas a quota is imposed on exports. 
B) levied on exports, whereas a quota is imposed on imports. 
C) a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. 
A) levied on imports, whereas a quota is imposed on exports. 
B) levied on exports, whereas a quota is imposed on imports. 
C) a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

Question 11

Figure 17-4  
-In Figure 17-4, the equilibrium price of Dominican pesos is Pe. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium), what does the quantity Qd through Qs represent?

Accepted Answer

A) the quantity of Dominican exports 
B) a shortage of foreign exchange 
C) the quantity of Dominican imports 
D) a surplus of foreign exchange 
A) the quantity of Dominican exports 
B) a shortage of foreign exchange 
C) the quantity of Dominican imports 
D) a surplus of foreign exchange

Question 12

When both exports and imports are considered, the major advantage of international trade is that it allows us to

Accepted Answer

A) seclude ourselves from foreign products. 
B) consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail. 
C) benefit at the expense of less-developed nations 
D) maintain jobs for workers who would otherwise have little to do. 
A) seclude ourselves from foreign products. 
B) consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail. 
C) benefit at the expense of less-developed nations 
D) maintain jobs for workers who would otherwise have little to do.

Question 13

A downfall of the infant-industry argument is that

Accepted Answer

A) most industries need protection when they are mature, not when they are first established. 
B) the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C) once a tariff is granted, political pressure will likely force withdrawal of the tariff before the industry matures. 
D) once established, a tariff is politically difficult to remove. 
A) most industries need protection when they are mature, not when they are first established. 
B) the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C) once a tariff is granted, political pressure will likely force withdrawal of the tariff before the industry matures. 
D) once established, a tariff is politically difficult to remove.

Question 14

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Accepted Answer

A) U.S.steel companies and employees. 
B) U.S.automobile companies and employees. 
C) foreign steel companies. 
D) foreign steel workers. 
E) both a and b above. 
A) U.S.steel companies and employees. 
B) U.S.automobile companies and employees. 
C) foreign steel companies. 
D) foreign steel workers. 
E) both a and b above.

Question 15

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

Accepted Answer

A) high rates of economic growth. 
B) low rates of economic growth. 
C) a large export sector. 
D) a large import sector. 
A) high rates of economic growth. 
B) low rates of economic growth. 
C) a large export sector. 
D) a large import sector.

Question 16

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, which area represents the United States' net loss as a result of the tariff?

Accepted Answer

A) a + b + c + e 
B) b + c + e 
C) b + c 
D) c + e 
E) b + f 
A) a + b + c + e 
B) b + c + e 
C) b + c 
D) c + e 
E) b + f

Question 17

A tariff can be defined simply as a

Accepted Answer

A) tax on imports. 
B) tax on exports. 
C) legal limit on imports. 
D) legal limit on exports. 
A) tax on imports. 
B) tax on exports. 
C) legal limit on imports. 
D) legal limit on exports.

Question 18

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 many baseballs will be purchased in the United States?

Accepted Answer

A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000 
A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000

Question 19

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question.   The law of comparative advantage suggests that

Accepted Answer

A) neither country would gain from trade, even if the costs for transporting the products were zero. 
B) Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C) both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D) both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine. 
A) neither country would gain from trade, even if the costs for transporting the products were zero. 
B) Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C) both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D) both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine.

Question 20

Nevada is the low opportunity cost producer of computer software, and California is low opportunity cost producer of wine. Which of the following is true?

Accepted Answer

A) Nevada has no comparative advantage over California in the production of wine or computer software. 
B) Nevada has a comparative advantage in producing wine 
C) Nevada has a comparative advantage in producing software. 
D) Nevada has a comparative advantage in producing both wine and software. 
A) Nevada has no comparative advantage over California in the production of wine or computer software. 
B) Nevada has a comparative advantage in producing wine 
C) Nevada has a comparative advantage in producing software. 
D) Nevada has a comparative advantage in producing both wine and software.

In recent years, the largest trading partners of the United States have been

American textile manufacturers and union members have often lobbied successfully for restrictive quotas limiting the importation of textile products. The major impact of these quotas is

Figure 17-9 -Refer to Figure 17-9. With trade and without a tariff,

Which of the following is most likely to increase U.S. exports?

Suppose the lowest-wage state in the United States is West Virginia and the highest-wage state is New York. Which of the following would be true?

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Economists consider tariffs to be

Which of the following is true?

When a country allows trade and becomes an importer of steel,

A tariff differs from a quota in that a tariff is

Figure 17-4 -In Figure 17-4, the equilibrium price of Dominican pesos is P_e. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at P_f (below equilibrium), what does the quantity Q_d through Q_s represent?

When both exports and imports are considered, the major advantage of international trade is that it allows us to

A downfall of the infant-industry argument is that

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

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, which area represents the United States' net loss as a result of the tariff?

A tariff can be defined simply as a

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 many baseballs will be purchased in the United States?

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question. The law of comparative advantage suggests that

Nevada is the low opportunity cost producer of computer software, and California is low opportunity cost producer of wine. Which of the following is true?

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

In recent years, the largest trading partners of the United States have been

American textile manufacturers and union members have often lobbied successfully for restrictive quotas limiting the importation of textile products. The major impact of these quotas is

Figure 17-9 -Refer to Figure 17-9. With trade and without a tariff,

Which of the following is most likely to increase U.S. exports?

Suppose the lowest-wage state in the United States is West Virginia and the highest-wage state is New York. Which of the following would be true?

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Economists consider tariffs to be

Which of the following is true?

When a country allows trade and becomes an importer of steel,

A tariff differs from a quota in that a tariff is

Figure 17-4 -In Figure 17-4, the equilibrium price of Dominican pesos is Pe. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium), what does the quantity Qd through Qs represent?

When both exports and imports are considered, the major advantage of international trade is that it allows us to

A downfall of the infant-industry argument is that

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

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, which area represents the United States' net loss as a result of the tariff?

A tariff can be defined simply as a

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 many baseballs will be purchased in the United States?

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question. The law of comparative advantage suggests that

Nevada is the low opportunity cost producer of computer software, and California is low opportunity cost producer of wine. Which of the following is true?

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

Figure 17-4 -In Figure 17-4, the equilibrium price of Dominican pesos is P_e. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at P_f (below equilibrium), what does the quantity Q_d through Q_s represent?