Question 1

Public choice theory indicates that tariffs, quotas, and other trade restrictions are primarily the result of the

Accepted Answer

A)  political clout of foreigners. 
B)  political clout of domestic consumers. 
C)  political power of the special interest groups. 
D)  attractiveness of sound economic policies to elected political officials. 
A)  political clout of foreigners. 
B)  political clout of domestic consumers. 
C)  political power of the special interest groups. 
D)  attractiveness of sound economic policies to elected political officials.

Question 2

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 3

Figure 17-10  
-Refer to Figure 17-11. The tariff

Accepted Answer

A)  decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B)  decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C)  increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D)  increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F. 
A)  decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
B)  decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. 
C)  increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. 
D)  increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.

Question 4

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Accepted Answer

One error is that higher wages do not me

Question 5

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

Accepted Answer

A)  would rise, and domestic output would also rise. 
B)  would decline, but the domestic output would rise. 
C)  would decline, and domestic output would decline also. 
D)  would rise, but domestic output would fall. 
A)  would rise, and domestic output would also rise. 
B)  would decline, but the domestic output would rise. 
C)  would decline, and domestic output would decline also. 
D)  would rise, but domestic output would fall.

Question 6

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Accepted Answer

A)  steel producers, who supply steel to the domestic automobile industry. 
B)  foreign producers of automobiles. 
C)  importers of automobiles. 
D)  domestic distributors of foreign automobiles. 
A)  steel producers, who supply steel to the domestic automobile industry. 
B)  foreign producers of automobiles. 
C)  importers of automobiles. 
D)  domestic distributors of foreign automobiles.

Question 7

Compared to the no-trade situation, if the United States imports video games,

Accepted Answer

A)  the price of video games will decline in the domestic market. 
B)  domestic video game producers will be able to charge higher prices. 
C)  domestic video game producers will expand both output and employment. 
D)  U.S. consumers will be harmed. 
A)  the price of video games will decline in the domestic market. 
B)  domestic video game producers will be able to charge higher prices. 
C)  domestic video game producers will expand both output and employment. 
D)  U.S. consumers will be harmed.

Question 8

As a result of a tariff on an imported good,

Accepted Answer

A)  domestic producers are better off because they sell more goods at the same price. 
B)  domestic producers are better off because they sell more goods at a higher price. 
C)  domestic producers are better off because they sell the same quantity of goods at a higher price. 
D)  domestic consumers are better off because there are more domestically produced goods available. 
E)  domestic consumers are neither better off nor worse off because imports do not change. 
A)  domestic producers are better off because they sell more goods at the same price. 
B)  domestic producers are better off because they sell more goods at a higher price. 
C)  domestic producers are better off because they sell the same quantity of goods at a higher price. 
D)  domestic consumers are better off because there are more domestically produced goods available. 
E)  domestic consumers are neither better off nor worse off because imports do not change.

Question 9

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

Accepted Answer

A)  a decrease in both U.S. imports and exports 
B)  an increase in both U.S. imports and exports 
C)  a decrease in U.S. imports and an increase in U.S. exports 
D)  an increase in U.S. imports and a decrease in U.S. exports 
A)  a decrease in both U.S. imports and exports 
B)  an increase in both U.S. imports and exports 
C)  a decrease in U.S. imports and an increase in U.S. exports 
D)  an increase in U.S. imports and a decrease in U.S. exports

Question 10

If tariffs are decreased, the long-run effect is most likely to be

Accepted Answer

A)  a decrease in both U.S. imports and exports. 
B)  an increase in both U.S. imports and exports. 
C)  a decrease in U.S. imports and an increase in U.S. exports. 
D)  an increase in U.S. imports and a decrease in U.S. exports. 
A)  a decrease in both U.S. imports and exports. 
B)  an increase in both U.S. imports and exports. 
C)  a decrease in U.S. imports and an increase in U.S. exports. 
D)  an increase in U.S. imports and a decrease in U.S. exports.

Question 11

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 12

Figure 17-8  
-Refer to Figure 17-8. If this country allows free trade in wagons,

Accepted Answer

A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose. 
A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose.

Question 13

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

Accepted Answer

A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. 
A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Question 14

Figure 17-10  
-Refer to Figure 17-10. Consumer surplus with the tariff is

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D +E + F. 
A)  A. 
B)  A + B. 
C)  A + C + G. 
D)  A + B + C + D +E + F.

Question 15

Fixing exchange rates and limiting the convertibility of currency will

Accepted Answer

A)  improve international trade. 
B)  increase the ability of people to gain from specialization. 
C)  lead to black markets and less trade. 
D)  increase productivity and living standards. 
A)  improve international trade. 
B)  increase the ability of people to gain from specialization. 
C)  lead to black markets and less trade. 
D)  increase productivity and living standards.

Question 16

The law of comparative advantage explains why a nation will benefit from trade when

Accepted Answer

A)  it exports more than it imports. 
B)  its trading partners are experiencing offsetting losses. 
C)  it exports goods for which it is a high-opportunity cost producer, while importing those for which it is a low-opportunity cost producer. 
D)  it exports goods for which it is a low-opportunity cost producer, while importing those for which it is a high-opportunity cost producer. 
A)  it exports more than it imports. 
B)  its trading partners are experiencing offsetting losses. 
C)  it exports goods for which it is a high-opportunity cost producer, while importing those for which it is a low-opportunity cost producer. 
D)  it exports goods for which it is a low-opportunity cost producer, while importing those for which it is a high-opportunity cost producer.

Question 17

The primary benefits derived from tariffs usually accrue to the

Accepted Answer

A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs. 
A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs.

Question 18

A nation can gain from international trade when

Accepted Answer

A)  its relative production costs are the same as those of other countries. 
B)  it exports goods for which it is a low-opportunity cost producer while importing goods that it could produce only at a high opportunity cost. 
C)  it imports goods for which it is a low-opportunity cost producer and exports goods for which it is a high opportunity cost producer. 
D)  it has a trade deficit. 
A)  its relative production costs are the same as those of other countries. 
B)  it exports goods for which it is a low-opportunity cost producer while importing goods that it could produce only at a high opportunity cost. 
C)  it imports goods for which it is a low-opportunity cost producer and exports goods for which it is a high opportunity cost producer. 
D)  it has a trade deficit.

Question 19

An increase in the tariff on foreign-produced automobiles would most likely help

Accepted Answer

A)  the domestic producers of automobiles. 
B)  steel producers that sell most of their output to foreign producers of automobiles. 
C)  workers in the foreign automobile industry. 
D)  consumers looking for alternatives to domestic automobiles. 
A)  the domestic producers of automobiles. 
B)  steel producers that sell most of their output to foreign producers of automobiles. 
C)  workers in the foreign automobile industry. 
D)  consumers looking for alternatives to domestic automobiles.

Question 20

According to international trade theory, a country can gain

Accepted Answer

A)  if it protects domestic industries from low-wage foreign producers. 
B)  only if the trade harms its trading partners. 
C)  by importing goods when they can be obtained more economically from foreign producers. 
D)  if it maximizes the employment in domestic industries that face competition from foreign producers who have lower costs. 
A)  if it protects domestic industries from low-wage foreign producers. 
B)  only if the trade harms its trading partners. 
C)  by importing goods when they can be obtained more economically from foreign producers. 
D)  if it maximizes the employment in domestic industries that face competition from foreign producers who have lower costs.

Public choice theory indicates that tariffs, quotas, and other trade restrictions are primarily the result of the

Which of the following is correct?

Figure 17-10 -Refer to Figure 17-11. The tariff

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Compared to the no-trade situation, if the United States imports video games,

As a result of a tariff on an imported good,

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

If tariffs are decreased, the long-run effect is most likely to be

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?

Figure 17-8 -Refer to Figure 17-8. If this country allows free trade in wagons,

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

Figure 17-10 -Refer to Figure 17-10. Consumer surplus with the tariff is

Fixing exchange rates and limiting the convertibility of currency will

The law of comparative advantage explains why a nation will benefit from trade when

The primary benefits derived from tariffs usually accrue to the

A nation can gain from international trade when

An increase in the tariff on foreign-produced automobiles would most likely help

According to international trade theory, a country can gain

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Exam 16: Gaining From International Trade

Public choice theory indicates that tariffs, quotas, and other trade restrictions are primarily the result of the

Which of the following is correct?

Figure 17-10 -Refer to Figure 17-11. The tariff

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Compared to the no-trade situation, if the United States imports video games,

As a result of a tariff on an imported good,

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

If tariffs are decreased, the long-run effect is most likely to be

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?

Figure 17-8 -Refer to Figure 17-8. If this country allows free trade in wagons,

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

Figure 17-10 -Refer to Figure 17-10. Consumer surplus with the tariff is

Fixing exchange rates and limiting the convertibility of currency will

The law of comparative advantage explains why a nation will benefit from trade when

The primary benefits derived from tariffs usually accrue to the

A nation can gain from international trade when

An increase in the tariff on foreign-produced automobiles would most likely help

According to international trade theory, a country can gain

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters