Question 1

Exhibit 15-2 Production possibilities curves for U.S. and Mexico  
-As shown in Exhibit 15-2, in Mexico, producing 1 additional ton of wheat costs:

Accepted Answer

A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth. 
A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth.

Question 2

If a nation follows a policy of being self-sufficient, its:

Accepted Answer

A)  production possibilities equal its consumption possibilities. 
B)  consumption possibilities are greater than its production possibilities. 
C)  production possibilities curve shifts rightward. 
D)  consumption possibilities are less than its production possibilities. 
A)  production possibilities equal its consumption possibilities. 
B)  consumption possibilities are greater than its production possibilities. 
C)  production possibilities curve shifts rightward. 
D)  consumption possibilities are less than its production possibilities.

Question 3

According to the infant industry argument, a new domestic industry needs protection because it has higher costs than established foreign competitors.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Borrowing from foreign banks by U.S. firms represents a capital inflow.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 15-1 Production possibilities curves  
-In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Suppose Pada produces at point B on its PPC. How much corn is the country able to produce?

Accepted Answer

A)  2. 
B)  15. 
C)  10. 
D)  6. 
E)  13. 
A)  2. 
B)  15. 
C)  10. 
D)  6. 
E)  13.

Question 7

A country that has a lower opportunity cost of producing a good:

Accepted Answer

A)  has a comparative advantage. 
B)  can produce the good using fewer resources than another country. 
C)  requires fewer labor hours to produce the good. 
D)  all of these. 
A)  has a comparative advantage. 
B)  can produce the good using fewer resources than another country. 
C)  requires fewer labor hours to produce the good. 
D)  all of these.

Question 8

The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:

Accepted Answer

A)  consumers are willing to pay higher prices for domestic goods. 
B)  producers will not exploit reduced foreign competition by charging higher prices. 
C)  foreign companies are more costly to deal with than domestic companies. 
D)  sales of imports come at the expense of domestic goods and jobs. 
A)  consumers are willing to pay higher prices for domestic goods. 
B)  producers will not exploit reduced foreign competition by charging higher prices. 
C)  foreign companies are more costly to deal with than domestic companies. 
D)  sales of imports come at the expense of domestic goods and jobs.

Question 9

Exhibit 15-4 Coffee and tea output (pounds per hour) $$\begin{array} { | l | c | c | } 
\hline \text { Country } & \text { Coffee } & \text { T ea } \
\hline \text { Brazil } & 10 & 5 \
\text { China } & 8 & 8 \
\hline
\end{array}$$
-As shown in Exhibit 15-4, compared to Brazil, China has a comparative advantage in the production of:

Accepted Answer

A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea. 
A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea.

Question 10

If there is bilateral currency trade between Japan and the U.S., then as the supply of U.S. dollars on the world foreign exchange market ________, the price of a dollar in terms of Japanese yen will ________.

Accepted Answer

A)  increases, fall 
B)  decreases, fall 
C)  increases, increases 
D)  decreases, stays the same 
A)  increases, fall 
B)  decreases, fall 
C)  increases, increases 
D)  decreases, stays the same

Question 11

Suppose a quota on foreign-made automobiles is proposed in Congress. Which of the following groups is most likely to oppose the bill?

Accepted Answer

A)  American Automobiles Manufacturers. 
B)  Consumers. 
C)  American Steel Workers. 
D)  United Auto Workers. 
A)  American Automobiles Manufacturers. 
B)  Consumers. 
C)  American Steel Workers. 
D)  United Auto Workers.

Question 12

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the best example of a quota?

Accepted Answer

A)  a tax placed on all small cars sold in the domestic market 
B)  a limit imposed on the number of men's suits that can be imported from a foreign country 
C)  a subsidy from the U.S. government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits 
D)  a $100-per-car fee imposed on all small imported cars 
A)  a tax placed on all small cars sold in the domestic market 
B)  a limit imposed on the number of men's suits that can be imported from a foreign country 
C)  a subsidy from the U.S. government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits 
D)  a $100-per-car fee imposed on all small imported cars

Question 14

Suppose the exchange rate changes so that more Japanese yen are required to buy a dollar. We could conclude that:

Accepted Answer

A)  the Japanese yen has appreciated in value. 
B)  U.S. citizens will buy more Japanese imports. 
C)  Japanese will demand more U.S. exports. 
D)  U.S. citizens will buy less Japanese imports. 
A)  the Japanese yen has appreciated in value. 
B)  U.S. citizens will buy more Japanese imports. 
C)  Japanese will demand more U.S. exports. 
D)  U.S. citizens will buy less Japanese imports.

Question 15

A depreciation in the value of the U.S. dollar would:

Accepted Answer

A)  encourage foreigners to travel on American owned airlines. 
B)  make U.S. goods more expensive to foreign consumers. 
C)  decrease the number of dollars it takes to buy a Swiss franc. 
D)  make it more expensive for U.S. citizens to travel abroad. 
A)  encourage foreigners to travel on American owned airlines. 
B)  make U.S. goods more expensive to foreign consumers. 
C)  decrease the number of dollars it takes to buy a Swiss franc. 
D)  make it more expensive for U.S. citizens to travel abroad.

Question 16

The primary purpose of WTO is to:

Accepted Answer

A)  protect the United States from cheap foreign labor. 
B)  foster trade among nations. 
C)  promote the dumping of foreign products. 
D)  increase worldwide tariffs. 
E)  form a union of European nations. 
A)  protect the United States from cheap foreign labor. 
B)  foster trade among nations. 
C)  promote the dumping of foreign products. 
D)  increase worldwide tariffs. 
E)  form a union of European nations.

Question 17

If the dollar appreciates:

Accepted Answer

A)  imports to the United States become more expensive for foreigners 
B)  exports from the United States become more expensive for foreigners 
C)  imports become more expensive for U.S. citizens. 
D)  exports from the United States become cheaper 
E)  the dollar will exchange for fewer units of a foreign currency 
A)  imports to the United States become more expensive for foreigners 
B)  exports from the United States become more expensive for foreigners 
C)  imports become more expensive for U.S. citizens. 
D)  exports from the United States become cheaper 
E)  the dollar will exchange for fewer units of a foreign currency

Question 18

How is a tariff different from a quota?

Accepted Answer

A)  A tariff sets a limit on the quantity of a good that may be imported, while a quota is a tax on an import. 
B)  A tariff and a quota are different words for the same thing. 
C)  A tariff is a tax on an import, while a quota set a limit on the quantity of a good that may be imported. 
D)  None of the above are correct. 
A)  A tariff sets a limit on the quantity of a good that may be imported, while a quota is a tax on an import. 
B)  A tariff and a quota are different words for the same thing. 
C)  A tariff is a tax on an import, while a quota set a limit on the quantity of a good that may be imported. 
D)  None of the above are correct.

Question 19

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

Accepted Answer

A)  fixed. 
B)  government-determined. 
C)  set by the value of gold. 
D)  floating. 
E)  improper. 
A)  fixed. 
B)  government-determined. 
C)  set by the value of gold. 
D)  floating. 
E)  improper.

Question 20

If the dollar appreciates (becomes stronger) this causes:

Accepted Answer

A)  the relative price of U.S. goods to increase for foreigners. 
B)  the relative price of foreign goods to decrease for Americans. 
C)  U.S. exports to fall and U.S. imports to rise. 
D)  a balance of trade deficit for the U.S. 
E)  all of these. 
A)  the relative price of U.S. goods to increase for foreigners. 
B)  the relative price of foreign goods to decrease for Americans. 
C)  U.S. exports to fall and U.S. imports to rise. 
D)  a balance of trade deficit for the U.S. 
E)  all of these.

Exhibit 15-2 Production possibilities curves for U.S. and Mexico -As shown in Exhibit 15-2, in Mexico, producing 1 additional ton of wheat costs:

If a nation follows a policy of being self-sufficient, its:

According to the infant industry argument, a new domestic industry needs protection because it has higher costs than established foreign competitors.

The primary benefits derived from tariffs usually accrue to the:

Borrowing from foreign banks by U.S. firms represents a capital inflow.

Exhibit 15-1 Production possibilities curves -In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Suppose Pada produces at point B on its PPC. How much corn is the country able to produce?

A country that has a lower opportunity cost of producing a good:

The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:

Exhibit 15-4 Coffee and tea output (pounds per hour) Country Coffee T ea Brazil 10 5 China 8 8 -As shown in Exhibit 15-4, compared to Brazil, China has a comparative advantage in the production of:

If there is bilateral currency trade between Japan and the U.S., then as the supply of U.S. dollars on the world foreign exchange market , the price of a dollar in terms of Japanese yen will .

Suppose a quota on foreign-made automobiles is proposed in Congress. Which of the following groups is most likely to oppose the bill?

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Which of the following is the best example of a quota?

Suppose the exchange rate changes so that more Japanese yen are required to buy a dollar. We could conclude that:

A depreciation in the value of the U.S. dollar would:

The primary purpose of WTO is to:

If the dollar appreciates:

How is a tariff different from a quota?

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

If the dollar appreciates (becomes stronger) this causes:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

Economies in Transition

Growth and the

Filters

Exam 15: International Trade and Finance

Exhibit 15-2 Production possibilities curves for U.S. and Mexico -As shown in Exhibit 15-2, in Mexico, producing 1 additional ton of wheat costs:

If a nation follows a policy of being self-sufficient, its:

According to the infant industry argument, a new domestic industry needs protection because it has higher costs than established foreign competitors.

The primary benefits derived from tariffs usually accrue to the:

Borrowing from foreign banks by U.S. firms represents a capital inflow.

Exhibit 15-1 Production possibilities curves -In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Suppose Pada produces at point B on its PPC. How much corn is the country able to produce?

A country that has a lower opportunity cost of producing a good:

The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:

Exhibit 15-4 Coffee and tea output (pounds per hour) Country Coffee T ea Brazil 10 5 China 8 8 -As shown in Exhibit 15-4, compared to Brazil, China has a comparative advantage in the production of:

If there is bilateral currency trade between Japan and the U.S., then as the supply of U.S. dollars on the world foreign exchange market ________, the price of a dollar in terms of Japanese yen will ________.

Suppose a quota on foreign-made automobiles is proposed in Congress. Which of the following groups is most likely to oppose the bill?

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Which of the following is the best example of a quota?

Suppose the exchange rate changes so that more Japanese yen are required to buy a dollar. We could conclude that:

A depreciation in the value of the U.S. dollar would:

The primary purpose of WTO is to:

If the dollar appreciates:

How is a tariff different from a quota?

If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is:

If the dollar appreciates (becomes stronger) this causes:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

Economies in Transition

Growth and the

Filters

If there is bilateral currency trade between Japan and the U.S., then as the supply of U.S. dollars on the world foreign exchange market , the price of a dollar in terms of Japanese yen will .