Question 1

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to A

Question 2

Use the following to answer questions:  
-(Figure: The Domestic Supply and Demand for SUVs in the United States) Use Figure: The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs.

Accepted Answer

A)  import 6 million 
B)  export 6 million 
C)  export 2 million 
D)  import 2 million 
A)  import 6 million 
B)  export 6 million 
C)  export 2 million 
D)  import 2 million B

Question 3

Use the following to answer questions:  
-(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. After international trade, this nation will _____ a quantity of rice equal to _____.

Accepted Answer

A)  import; Qs - Qd 
B)  export; Qs - Qd 
C)  export; Qs - Qa 
D)  import; Qa - Qd 
A)  import; Qs - Qd 
B)  export; Qs - Qd 
C)  export; Qs - Qa 
D)  import; Qa - Qd B

Question 4

Use the following to answer questions:  
-(Table: Production Possibilities for the United States and Canada) Use Table: Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. If these nations were to specialize and trade, the United States would benefit from trade by exporting 1 million cars to Canada in exchange for _____ million board feet of lumber.

Accepted Answer

A)  2 
B)  0.5 
C)  0.7 
D)  1 
A)  2 
B)  0.5 
C)  0.7 
D)  1

Question 5

Use the following to answer questions:  
-(Figure: The Market for Laptops) Use Figure: The Market for Laptops. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of government tax revenue when a tariff raises the domestic price from the world price to PT.

Accepted Answer

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

Question 6

Use the following to answer questions:  
-(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and consumer surplus _____ to _____.

Accepted Answer

A)  falls; F 
B)  falls; F + G 
C)  rises; F + G + H + I 
D)  rises; G + H + I 
A)  falls; F 
B)  falls; F + G 
C)  rises; F + G + H + I 
D)  rises; G + H + I

Question 7

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  in the case of demand and supply both being elastic, less than 
A)  less than 
B)  greater than 
C)  equal to 
D)  in the case of demand and supply both being elastic, less than

Question 8

If the United States imposes an import quota on French wines, the result in the short run is likely to be _____ profits for American wine producers and _____ profits for French wine producers.

Accepted Answer

A)  lower; lower 
B)  lower; higher 
C)  higher; lower 
D)  higher; higher 
A)  lower; lower 
B)  lower; higher 
C)  higher; lower 
D)  higher; higher

Question 9

Mexico is relatively labor-abundant when compared with the United States. Therefore, Mexico has a comparative advantage in _____ compared with the United States.

Accepted Answer

A)  all goods 
B)  goods that are labor-intensive in production 
C)  goods that are capital-intensive in production 
D)  goods that are land-intensive in production 
A)  all goods 
B)  goods that are labor-intensive in production 
C)  goods that are capital-intensive in production 
D)  goods that are land-intensive in production

Question 10

Use the following to answer questions:  
-(Figure: The Market for Laptops) Use Figure: The Market for Laptops. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of consumer surplus when a tariff raises the domestic price from the world price to PT.

Accepted Answer

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

Question 11

As measured by a percentage of the entire economic output:

Accepted Answer

A)  foreign trade is just as important for the United States as it is for most other countries. 
B)  foreign trade is more important for the United States than it is for most other countries. 
C)  foreign trade is less important for the United States than it is for many other countries. 
D)  the United States ranks highest in the world. 
A)  foreign trade is just as important for the United States as it is for most other countries. 
B)  foreign trade is more important for the United States than it is for most other countries. 
C)  foreign trade is less important for the United States than it is for many other countries. 
D)  the United States ranks highest in the world.

Question 12

Use the following to answer questions:  
-(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. Before international trade, consumer surplus is equal to the area:

Accepted Answer

A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D. 
A)  A. 
B)  A + B. 
C)  A + B + C. 
D)  A + B + D.

Question 13

Which statement is NOT true about the World Trade Organization (WTO)?

Accepted Answer

A)  The WTO provides the framework for complex negotiations involved in major international trade agreements. 
B)  The WTO resolves disputes between member countries. 
C)  The WTO is an international organization. 
D)  The WTO is a direct enforcer of trade agreements. 
A)  The WTO provides the framework for complex negotiations involved in major international trade agreements. 
B)  The WTO resolves disputes between member countries. 
C)  The WTO is an international organization. 
D)  The WTO is a direct enforcer of trade agreements.

Question 14

Goods and services purchased from abroad are _____, while goods and services sold abroad are _____.

Accepted Answer

A)  always been positive. 
B)  always been negative. 
C)  shown an increase in exports as a ratio of world production since 2005. 
D)  shown occasional declines but has generally remained positive. 
A)  always been positive. 
B)  always been negative. 
C)  shown an increase in exports as a ratio of world production since 2005. 
D)  shown occasional declines but has generally remained positive.

Question 15

The absolute value of the slope of the production possibility frontier at any point:

Accepted Answer

A)  gives the autarky price of the good on the vertical axis. 
B)  is found by dividing the horizontal change by a vertical change. 
C)  gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D)  gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis. 
A)  gives the autarky price of the good on the vertical axis. 
B)  is found by dividing the horizontal change by a vertical change. 
C)  gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D)  gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis.

Question 16

The effect of international trade on U.S. factor markets is to:

Accepted Answer

A)  increase the wage of highly educated workers. 
B)  increase the wage of unskilled workers. 
C)  decrease the wage of both highly educated workers and unskilled workers. 
D)  increase the wage of both highly educated workers and unskilled workers. 
A)  increase the wage of highly educated workers. 
B)  increase the wage of unskilled workers. 
C)  decrease the wage of both highly educated workers and unskilled workers. 
D)  increase the wage of both highly educated workers and unskilled workers.

Question 17

Use the following to answer questions:  
-(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P1, consumer surplus equals _____ and producer surplus equals _____.

Accepted Answer

A)  F + G + H + I; J + K 
B)  F; G + H + I + J + K 
C)  F + I; J + K 
D)  F + G + H; J + K 
A)  F + G + H + I; J + K 
B)  F; G + H + I + J + K 
C)  F + I; J + K 
D)  F + G + H; J + K

Question 18

A tax on imports of foreign goods is called a(n):

Accepted Answer

A)  import quota. 
B)  aubsidy. 
C)  tariff. 
D)  export restriction. 
A)  import quota. 
B)  aubsidy. 
C)  tariff. 
D)  export restriction.

Question 19

If the United States placed larger tariffs on all textiles, domestic _____ surplus would _____.

Accepted Answer

A)  producer; increase 
B)  consumer; increase 
C)  total; increase 
D)  producer; decrease 
A)  producer; increase 
B)  consumer; increase 
C)  total; increase 
D)  producer; decrease

Question 20

If a nation exports a good when the economy is opened to trade, relative to the autarky price, the domestic price of the good will _____ and domestic consumption will _____.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

Use the following to answer questions: -(Figure: The Domestic Supply and Demand for SUVs in the United States) Use Figure: The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs.

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. After international trade, this nation will _ a quantity of rice equal to _.

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W and consumer surplus _ to _.

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

If the United States imposes an import quota on French wines, the result in the short run is likely to be _ profits for American wine producers and _ profits for French wine producers.

Mexico is relatively labor-abundant when compared with the United States. Therefore, Mexico has a comparative advantage in _____ compared with the United States.

As measured by a percentage of the entire economic output:

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. Before international trade, consumer surplus is equal to the area:

Which statement is NOT true about the World Trade Organization (WTO)?

Goods and services purchased from abroad are _, while goods and services sold abroad are _.

The absolute value of the slope of the production possibility frontier at any point:

The effect of international trade on U.S. factor markets is to:

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P₁, consumer surplus equals _ and producer surplus equals _.

A tax on imports of foreign goods is called a(n):

If the United States placed larger tariffs on all textiles, domestic _ surplus would _.

If a nation exports a good when the economy is opened to trade, relative to the autarky price, the domestic price of the good will _ and domestic consumption will _.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 5: International Trade

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

Use the following to answer questions: -(Figure: The Domestic Supply and Demand for SUVs in the United States) Use Figure: The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs.

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. After international trade, this nation will _____ a quantity of rice equal to _____.

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and consumer surplus _____ to _____.

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

If the United States imposes an import quota on French wines, the result in the short run is likely to be _____ profits for American wine producers and _____ profits for French wine producers.

Mexico is relatively labor-abundant when compared with the United States. Therefore, Mexico has a comparative advantage in _____ compared with the United States.

As measured by a percentage of the entire economic output:

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. Before international trade, consumer surplus is equal to the area:

Which statement is NOT true about the World Trade Organization (WTO)?

Goods and services purchased from abroad are _____, while goods and services sold abroad are _____.

The absolute value of the slope of the production possibility frontier at any point:

The effect of international trade on U.S. factor markets is to:

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P1, consumer surplus equals _____ and producer surplus equals _____.

A tax on imports of foreign goods is called a(n):

If the United States placed larger tariffs on all textiles, domestic _____ surplus would _____.

If a nation exports a good when the economy is opened to trade, relative to the autarky price, the domestic price of the good will _____ and domestic consumption will _____.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. After international trade, this nation will _ a quantity of rice equal to _.

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W and consumer surplus _ to _.

If the United States imposes an import quota on French wines, the result in the short run is likely to be _ profits for American wine producers and _ profits for French wine producers.

Use the following to answer questions: -(Figure: The Domestic Market for Rice) Use Figure: The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. Before international trade, consumer surplus is equal to the area:

Goods and services purchased from abroad are _, while goods and services sold abroad are _.

Use the following to answer questions: -(Figure: The Market for Tea in Sri Lanka) Use Figure: The Market for Tea in Sri Lanka. In autarky, the price is P₁, consumer surplus equals _ and producer surplus equals _.

If the United States placed larger tariffs on all textiles, domestic _ surplus would _.

If a nation exports a good when the economy is opened to trade, relative to the autarky price, the domestic price of the good will _ and domestic consumption will _.