Question 1

The increased-domestic-employment argument for tariff protection holds that

Accepted Answer

A) domestic inflation is a desirable policy goal because it stimulates exports. 
B) domestic deflation is a desirable policy goal because it stimulates imports. 
C) an increase in tariffs will reduce net exports and stimulate domestic employment. 
D) an increase in tariffs will increase net exports and stimulate domestic employment. 
A) domestic inflation is a desirable policy goal because it stimulates exports. 
B) domestic deflation is a desirable policy goal because it stimulates imports. 
C) an increase in tariffs will reduce net exports and stimulate domestic employment. 
D) an increase in tariffs will increase net exports and stimulate domestic employment. D

Question 2

"NAFTA" stands for

Accepted Answer

A) North African Free Trade Area. 
B) North American Free Trade Agreement. 
C) North Asian Free Trade Agreement. 
D) New Zealand-Australia Free Trade Agreement. 
A) North African Free Trade Area. 
B) North American Free Trade Agreement. 
C) North Asian Free Trade Agreement. 
D) New Zealand-Australia Free Trade Agreement. B

Question 3

Which of the following is not a major achievements of the European Union (EU)?

Accepted Answer

A) It abolished tariffs and quotas among its member nations. 
B) It liberalized the movement of capital and labor among its member nations. 
C) It created common policies in agriculture, transportation, and business practices among its members. 
D) It established a common fiscal policy among its member nations. 
A) It abolished tariffs and quotas among its member nations. 
B) It liberalized the movement of capital and labor among its member nations. 
C) It created common policies in agriculture, transportation, and business practices among its members. 
D) It established a common fiscal policy among its member nations. D

Question 4

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Accepted Answer

A) True 
 B)False

Question 5

Research studies indicate that

Accepted Answer

A) U.S.producers gain more from tariffs than U.S.consumers lose. 
B) the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C) the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D) U.S.consumers lose more from tariffs than U.S.producers gain. 
A) U.S.producers gain more from tariffs than U.S.consumers lose. 
B) the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C) the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D) U.S.consumers lose more from tariffs than U.S.producers gain.

Question 6

Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing.Nation Beta can produce either 200 units of chemicals or 800 units of clothing.

Accepted Answer

A) Nation Alpha has a comparative advantage in producing clothing. 
B) Nation Beta has a comparative advantage in producing chemicals. 
C) Nation Alpha has a comparative advantage in producing chemicals. 
D) Nation Beta is the high-cost producer of clothing. 
A) Nation Alpha has a comparative advantage in producing clothing. 
B) Nation Beta has a comparative advantage in producing chemicals. 
C) Nation Alpha has a comparative advantage in producing chemicals. 
D) Nation Beta is the high-cost producer of clothing.

Question 7

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Accepted Answer

A) True 
 B)False

Question 8

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when

Accepted Answer

A) tariffs are eliminated. 
B) transportation costs are almost zero. 
C) relative costs of production differ between nations. 
D) a country can produce more of some product than other nations can. 
A) tariffs are eliminated. 
B) transportation costs are almost zero. 
C) relative costs of production differ between nations. 
D) a country can produce more of some product than other nations can.

Question 9

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Accepted Answer

A) True 
 B)False

Question 10

An excise tax on imported items is known as a(n)

Accepted Answer

A) quota. 
B) tariff. 
C) export restriction. 
D) price ceiling. 
A) quota. 
B) tariff. 
C) export restriction. 
D) price ceiling.

Question 11

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Accepted Answer

A) tractors. 
B) DVD players. 
C) meat. 
D) chemicals. 
A) tractors. 
B) DVD players. 
C) meat. 
D) chemicals.

Question 12

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 13

In 2015, the United States

Accepted Answer

A) imported more services than it exported. 
B) imported more goods than it exported. 
C) traded mainly with developing nations such as Mexico and India. 
D) had a small trade surplus in goods and services. 
A) imported more services than it exported. 
B) imported more goods than it exported. 
C) traded mainly with developing nations such as Mexico and India. 
D) had a small trade surplus in goods and services.

Question 14

The term trade deficit refers to a situation where

Accepted Answer

A) government spending (including transfer payments) exceeds tax revenues. 
B) a nation's purchases from other nations are less than its sales to other nations. 
C) assets are less than liabilities. 
D) exports are less than imports. 
A) government spending (including transfer payments) exceeds tax revenues. 
B) a nation's purchases from other nations are less than its sales to other nations. 
C) assets are less than liabilities. 
D) exports are less than imports.

Question 15

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Accepted Answer

A) price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported) would increase. 
B) prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota. 
C) price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell. 
D) total quantity of wristwatches (domestic and imported) purchased would decline as prices rose. 
A) price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported) would increase. 
B) prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota. 
C) price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell. 
D) total quantity of wristwatches (domestic and imported) purchased would decline as prices rose.

Question 16

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X.By devoting all its resources to Y, Alpha can produce 30Y.Comparable figures for nation Beta are
60X and 40Y.Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

Accepted Answer

A) True 
 B)False

Question 17

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

Accepted Answer

A) True 
 B)False

Question 18

When tariffs on imported products are removed by a nation, it will result in

Accepted Answer

A) higher prices and lower quantities consumed in that nation. 
B) higher prices and higher quantities consumed in that nation. 
C) lower prices and lower quantities consumed in that nation. 
D) lower prices and higher quantities consumed in that nation. 
A) higher prices and lower quantities consumed in that nation. 
B) higher prices and higher quantities consumed in that nation. 
C) lower prices and lower quantities consumed in that nation. 
D) lower prices and higher quantities consumed in that nation.

Question 19

Which of the following statements best describes a protective tariff?

Accepted Answer

A) an excise tax that is usually applied to products that are not produced domestically in order to raise revenues for government 
B) an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets 
C) a specification of the maximum amount of a product that may be imported in any period of time that is often used to protect domestic producers of a product 
D) such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic markets 
A) an excise tax that is usually applied to products that are not produced domestically in order to raise revenues for government 
B) an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets 
C) a specification of the maximum amount of a product that may be imported in any period of time that is often used to protect domestic producers of a product 
D) such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic markets

Question 20

In the theory of comparative advantage, a good should be produced in that nation where

Accepted Answer

A) the production possibilities line lies further to the right than the trading possibilities line. 
B) its cost is least in terms of alternative goods that might otherwise be produced. 
C) its absolute cost in terms of real resources used is least. 
D) its absolute money cost of production is least. 
A) the production possibilities line lies further to the right than the trading possibilities line. 
B) its cost is least in terms of alternative goods that might otherwise be produced. 
C) its absolute cost in terms of real resources used is least. 
D) its absolute money cost of production is least.

Exam 40: International Trade

The increased-domestic-employment argument for tariff protection holds that

"NAFTA" stands for

Which of the following is not a major achievements of the European Union (EU)?

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Research studies indicate that

Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing.Nation Beta can produce either 200 units of chemicals or 800 units of clothing.

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

An excise tax on imported items is known as a(n)

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

In 2015, the United States

The term trade deficit refers to a situation where

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X.By devoting all its resources to Y, Alpha can produce 30Y.Comparable figures for nation Beta are 60X and 40Y.Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

When tariffs on imported products are removed by a nation, it will result in

Which of the following statements best describes a protective tariff?

In the theory of comparative advantage, a good should be produced in that nation where

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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