Question 1

Figure 17-10  
-Refer to Figure 17-10. With trade and without a tariff, the price and domestic quantity demanded are

Accepted Answer

A)  P1 and Q1. 
B)  P1 and Q4. 
C)  P2 and Q2. 
D)  P2 and Q3. 
A)  P1 and Q1. 
B)  P1 and Q4. 
C)  P2 and Q2. 
D)  P2 and Q3.

Question 2

According to international trade theory, a country can gain if it

Accepted Answer

A)  imports goods when they can be purchased cheaper from domestic producers. 
B)  imports goods when foreigners are willing to pay higher prices than domestic consumers. 
C)  specializes in producing those things it does best (produces at a low cost). 
D)  trades with high-income countries but not low-income countries. 
A)  imports goods when they can be purchased cheaper from domestic producers. 
B)  imports goods when foreigners are willing to pay higher prices than domestic consumers. 
C)  specializes in producing those things it does best (produces at a low cost). 
D)  trades with high-income countries but not low-income countries.

Question 3

Figure 17-6
The domestic country is China.  
-Refer to Figure 17-6. With no international trade,

Accepted Answer

A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450. 
A)  the equilibrium price is $12 and the equilibrium quantity is 300. 
B)  the equilibrium price is $16 and the equilibrium quantity is 200. 
C)  the equilibrium price is $16 and the equilibrium quantity is 300. 
D)  the equilibrium price is $16 and the equilibrium quantity is 450.

Question 4

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 5

Figure 17-9  
-Refer to Figure 17-9. The imposition of a tariff on carnations

Accepted Answer

A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400. 
A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400.

Question 6

The primary source of purchasing power used to buy imported goods is the

Accepted Answer

A)  revenue received from exports. 
B)  monetary sector. 
C)  balance of payments deficit. 
D)  domestic currency of a nation. 
A)  revenue received from exports. 
B)  monetary sector. 
C)  balance of payments deficit. 
D)  domestic currency of a nation.

Question 7

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Accepted Answer

A)  General Agreement on Tariffs and Trade. 
B)  Uruguay Round. 
C)  North American Free Trade Agreement. 
D)  Tariff Reduction Act of 1993. 
A)  General Agreement on Tariffs and Trade. 
B)  Uruguay Round. 
C)  North American Free Trade Agreement. 
D)  Tariff Reduction Act of 1993.

Question 8

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Accepted Answer

A)  Domestic producers in the United States, Canada, and Mexico have free access to larger markets. 
B)  The low wages of Mexican workers have made it virtually impossible for American and Canadian producers to export goods to Mexico. 
C)  A smaller variety of goods are available to consumers in all three countries. 
D)  Unemployment has increased in all three countries. 
A)  Domestic producers in the United States, Canada, and Mexico have free access to larger markets. 
B)  The low wages of Mexican workers have made it virtually impossible for American and Canadian producers to export goods to Mexico. 
C)  A smaller variety of goods are available to consumers in all three countries. 
D)  Unemployment has increased in all three countries.

Question 9

Figure 17-9  
-Refer to Figure 17-9. The size of the tariff on carnations is

Accepted Answer

A)  $8 per dozen. 
B)  $6 per dozen. 
C)  $4 per dozen. 
D)  $2 per dozen. 
A)  $8 per dozen. 
B)  $6 per dozen. 
C)  $4 per dozen. 
D)  $2 per dozen.

Question 10

Data on trade barriers and the growth of per capita GDP indicate that

Accepted Answer

A)  there is no link between the degree of a country's trade openness and its economic growth. 
B)  more open economies have grown more rapidly than those that have imposed substantial barriers restricting trade. 
C)  economies that have imposed high trade barriers have, on average, grown more rapidly than economies that are more open to international trade. 
D)  countries with higher trade barriers have been able to achieve higher levels of per capita GDP than those that are more open to international trade. 
E)  both c and d are correct. 
A)  there is no link between the degree of a country's trade openness and its economic growth. 
B)  more open economies have grown more rapidly than those that have imposed substantial barriers restricting trade. 
C)  economies that have imposed high trade barriers have, on average, grown more rapidly than economies that are more open to international trade. 
D)  countries with higher trade barriers have been able to achieve higher levels of per capita GDP than those that are more open to international trade. 
E)  both c and d are correct.

Question 11

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 12

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

Accepted Answer

A)  increasing as a share of the economy. 
B)  relatively constant as a share of the economy. 
C)  declining as a share of the economy. 
D)  increasing during periods of recession, but declining during periods of strong economic growth. 
A)  increasing as a share of the economy. 
B)  relatively constant as a share of the economy. 
C)  declining as a share of the economy. 
D)  increasing during periods of recession, but declining during periods of strong economic growth.

Question 13

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 14

Figure 17-5  
-Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

Accepted Answer

A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically. 
A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically.

Question 15

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the

Accepted Answer

A)  free rider problem. 
B)  infant-industry argument. 
C)  law of comparative advantage. 
D)  equation of exchange. 
A)  free rider problem. 
B)  infant-industry argument. 
C)  law of comparative advantage. 
D)  equation of exchange.

Question 16

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 17

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 18

Suppose that in the absence of trade, the U.S. price for peas was lower than the world price for peas. Would allowing international trade mean that the United States would import or export peas? Who in the United States would benefit and who would lose with a free trade policy, and would the gains be greater than the losses?

Accepted Answer

The United States would export peas as p

Question 19

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Accepted Answer

A)  trade between the United States and Mexico increased. 
B)  trade between the United States and Canada increased. 
C)  the joint output of the United States, Mexico, and Canada has increased. 
D)  all of the above are correct. 
A)  trade between the United States and Mexico increased. 
B)  trade between the United States and Canada increased. 
C)  the joint output of the United States, Mexico, and Canada has increased. 
D)  all of the above are correct.

Question 20

"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

Figure 17-10 -Refer to Figure 17-10. With trade and without a tariff, the price and domestic quantity demanded are

According to international trade theory, a country can gain if it

Figure 17-6 The domestic country is China. -Refer to Figure 17-6. With no international trade,

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. The imposition of a tariff on carnations

The primary source of purchasing power used to buy imported goods is the

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Figure 17-9 -Refer to Figure 17-9. The size of the tariff on carnations is

Data on trade barriers and the growth of per capita GDP indicate that

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?

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

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?

Figure 17-5 -Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the

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

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?

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

"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?

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

Figure 17-10 -Refer to Figure 17-10. With trade and without a tariff, the price and domestic quantity demanded are

According to international trade theory, a country can gain if it

Figure 17-6 The domestic country is China. -Refer to Figure 17-6. With no international trade,

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. The imposition of a tariff on carnations

The primary source of purchasing power used to buy imported goods is the

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Figure 17-9 -Refer to Figure 17-9. The size of the tariff on carnations is

Data on trade barriers and the growth of per capita GDP indicate that

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?

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

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?

Figure 17-5 -Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

Nations will be able to produce a larger joint output and realize mutual gains when each specializes in the production of those items for which it is a low-opportunity cost producer and trades for those things that it could produce only at a high cost. This statement best describes the

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

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?

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

"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?

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