Question 1

Choose the correct statement.

Accepted Answer

A) Exports include goods and services. 
B) Imports include goods but not services. 
C) Imports include services but not goods. 
D) Exports include goods but not services. 
E) Exports include services but not goods. 
A) Exports include goods and services. 
B) Imports include goods but not services. 
C) Imports include services but not goods. 
D) Exports include goods but not services. 
E) Exports include services but not goods.

Question 2

A country opens up to trade.In an export industry,

Accepted Answer

A) domestic consumers lose and domestic producers win. 
B) domestic producers lose and domestic consumers win. 
C) domestic producers lose and the government wins. 
D) the government loses and domestic consumers win. 
E) none of the above. 
A) domestic consumers lose and domestic producers win. 
B) domestic producers lose and domestic consumers win. 
C) domestic producers lose and the government wins. 
D) the government loses and domestic consumers win. 
E) none of the above.

Question 3

One reason that international trade is restricted is that

Accepted Answer

A) the individual gain to parties who benefit from the protection will be much larger than the individual loss to parties who lose. 
B) the government completely pays the losers from international trade for their losses. 
C) protectionism benefits consumers. 
D) the government cannot measure the cost of protectionism. 
E) tariff revenue raises more income than income taxes in industrial countries. 
A) the individual gain to parties who benefit from the protection will be much larger than the individual loss to parties who lose. 
B) the government completely pays the losers from international trade for their losses. 
C) protectionism benefits consumers. 
D) the government cannot measure the cost of protectionism. 
E) tariff revenue raises more income than income taxes in industrial countries.

Question 4

A tariff imposed by Canada on Japanese cars ________ the price of cars in Canada and ________ the quantity of Japanese cars imported into Canada.

Accepted Answer

A) raises;increases 
B) raises;decreases 
C) lowers;increases 
D) lowers;decreases 
E) raises;does not change 
A) raises;increases 
B) raises;decreases 
C) lowers;increases 
D) lowers;decreases 
E) raises;does not change

Question 5

In developing countries,there is more reliance on ________ as opposed to ________ for government revenue.

Accepted Answer

A) tariffs;tax collection 
B) import quotas;tariffs 
C) tax collection;tariffs 
D) tariffs;import quotas 
E) import quotas;tax collection 
A) tariffs;tax collection 
B) import quotas;tariffs 
C) tax collection;tariffs 
D) tariffs;import quotas 
E) import quotas;tax collection

Question 6

Lowering the tariff on good X

Accepted Answer

A) increases domestic employment in industry X. 
B) increases domestic imports of good X. 
C) increases the domestic price of good X. 
D) has no effect unless the nation's trading partners also lower their tariffs on good X. 
E) increases government revenue. 
A) increases domestic employment in industry X. 
B) increases domestic imports of good X. 
C) increases the domestic price of good X. 
D) has no effect unless the nation's trading partners also lower their tariffs on good X. 
E) increases government revenue.

Question 7

A tariff ________ the domestic price of the good and an import quota ________ the domestic price of the good.

Accepted Answer

A) lowers;lowers 
B) lowers;raises 
C) raises;lowers 
D) raises;raises 
E) does not change;does not change 
A) lowers;lowers 
B) lowers;raises 
C) raises;lowers 
D) raises;raises 
E) does not change;does not change

Question 8

A Canadian tariff imposed on items that can be produced more cheaply abroad

Accepted Answer

A) benefits Canadians by making these goods cheaper. 
B) makes the goods more expensive in foreign markets. 
C) creates a social loss. 
D) equalizes the cost of production between Canada and foreign producers. 
E) All of the above. 
A) benefits Canadians by making these goods cheaper. 
B) makes the goods more expensive in foreign markets. 
C) creates a social loss. 
D) equalizes the cost of production between Canada and foreign producers. 
E) All of the above.

Question 9

Refer to the figure below to answer the following questions.
   
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.2.1
-Refer to Figure 31.2.1,with the tariff Canada imports ________ million shirts per year.

Accepted Answer

A) 24 
B) 8 
C) 32 
D) 16 
E) 40 
A) 24 
B) 8 
C) 32 
D) 16 
E) 40

Question 10

Refer to the figure below to answer the following questions.
   
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.
Figure 31.1.1
-In Figure 31.1.1,with international trade Canadians buy ________ million shirts per year.

Accepted Answer

A) 48 
B) 32 
C) 16 
D) 24 
E) 56 
A) 48 
B) 32 
C) 16 
D) 24 
E) 56

Question 11

The fundamental force that drives international trade is

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production. 
A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production.

Question 12

The argument that protection ________.

Accepted Answer

A) penalizes poor environmental standards is true 
B) allows us to compete with cheap foreign wages is true 
C) is necessary for infant industries is true 
D) saves jobs is flawed 
E) prevents rich countries from exploiting poor countries is true. 
A) penalizes poor environmental standards is true 
B) allows us to compete with cheap foreign wages is true 
C) is necessary for infant industries is true 
D) saves jobs is flawed 
E) prevents rich countries from exploiting poor countries is true.

Question 13

Import quotas ________ the price of imported goods and ________ the quantity consumed in the country imposing the quota.

Accepted Answer

A) raise;increase 
B) raise;decrease 
C) lower;increase 
D) lower;decrease 
E) raise;do not change 
A) raise;increase 
B) raise;decrease 
C) lower;increase 
D) lower;decrease 
E) raise;do not change

Question 14

Table 31.1.3
   
Refer to the table below to answer the following question.
-Refer to Table 31.1.3.The table shows a country's demand and supply schedules.At what world price would the country export?

Accepted Answer

A) at only $8 a unit 
B) any price below $8 
C) a price of $6 a unit 
D) a price of $4 a unit 
E) any price above $8 a unit 
A) at only $8 a unit 
B) any price below $8 
C) a price of $6 a unit 
D) a price of $4 a unit 
E) any price above $8 a unit

Question 15

Which of the following is an explanation for the existence of trade restrictions?

Accepted Answer

A) tariffs generate revenue for the government 
B) rent seeking 
C) inefficient quotas 
D) both A and B 
E) both A and C 
A) tariffs generate revenue for the government 
B) rent seeking 
C) inefficient quotas 
D) both A and B 
E) both A and C

Question 16

Table 31.1.1
Glazeland's Doughnut Market
   
Refer to the table below to answer the following questions.
-Table 31.1.1 shows Glazeland's doughnut market before international trade.Glazeland opens up to international trade.If the world price is $0.60,then Glazeland will produce ________ doughnuts and will ________ doughnuts.

Accepted Answer

A) 2 million;import 3 million 
B) 4 million;import 1 million 
C) 4 million;export 1 million 
D) 5 million;import 3 million 
E) 5 million;export 3 million 
A) 2 million;import 3 million 
B) 4 million;import 1 million 
C) 4 million;export 1 million 
D) 5 million;import 3 million 
E) 5 million;export 3 million

Question 17

An import quota is

Accepted Answer

A) a tariff that is a fixed percentage of the price of a good. 
B) a tariff that is a fixed dollar amount per unit of a good. 
C) an agreed upon price for a good to be imported at a specified future date. 
D) a restriction that specifies the maximum amount of a good that may be imported. 
E) the same as an export subsidy. 
A) a tariff that is a fixed percentage of the price of a good. 
B) a tariff that is a fixed dollar amount per unit of a good. 
C) an agreed upon price for a good to be imported at a specified future date. 
D) a restriction that specifies the maximum amount of a good that may be imported. 
E) the same as an export subsidy.

Question 18

Refer to the figure below to answer the following questions.
   
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve.Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
Figure 31.1.2
-In Figure 31.1.2,with international trade Canadian firms buy ________ helicopters per year.

Accepted Answer

A) 240 
B) 480 
C) 720 
D) 360 
E) 600 
A) 240 
B) 480 
C) 720 
D) 360 
E) 600

Question 19

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed on a ________ number of people.

Accepted Answer

A) small;large 
B) large;small 
C) small;small 
D) large;large 
E) We can't determine the relative number of people who benefit and lose from free trade. 
A) small;large 
B) large;small 
C) small;small 
D) large;large 
E) We can't determine the relative number of people who benefit and lose from free trade.

Question 20

Refer to the figure below to answer the following questions.
   
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.2.1
-Refer to Figure 31.2.1,the tariff ________ Canada's imports of shirts by ________ million shirts per year.

Accepted Answer

A) decreases;16 
B) decreases;8 
C) increases;8 
D) increases;4 
E) increases;16 
A) decreases;16 
B) decreases;8 
C) increases;8 
D) increases;4 
E) increases;16

Exam 31:International Trade Policy

Choose the correct statement.

A country opens up to trade.In an export industry,

One reason that international trade is restricted is that

A tariff imposed by Canada on Japanese cars ________ the price of cars in Canada and ________ the quantity of Japanese cars imported into Canada.

In developing countries,there is more reliance on ________ as opposed to ________ for government revenue.

Lowering the tariff on good X

A tariff ________ the domestic price of the good and an import quota ________ the domestic price of the good.

A Canadian tariff imposed on items that can be produced more cheaply abroad

The fundamental force that drives international trade is

The argument that protection ________.

Import quotas ________ the price of imported goods and ________ the quantity consumed in the country imposing the quota.

Table 31.1.3 Refer to the table below to answer the following question. -Refer to Table 31.1.3.The table shows a country's demand and supply schedules.At what world price would the country export?

Which of the following is an explanation for the existence of trade restrictions?

An import quota is

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed on a ________ number of people.

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

Filters

A tariff imposed by Canada on Japanese cars the price of cars in Canada and the quantity of Japanese cars imported into Canada.

In developing countries,there is more reliance on as opposed to for government revenue.

A tariff the domestic price of the good and an import quota the domestic price of the good.

Import quotas the price of imported goods and the quantity consumed in the country imposing the quota.

The gains from free trade are enjoyed by a number of people and the costs of free trade are imposed on a number of people.