Question 1

Specialization and trade between individuals or between nations leads to

Accepted Answer

A) greater self-sufficiency. 
B) higher product prices. 
C) higher utilization of resources. 
D) higher total output. 
A) greater self-sufficiency. 
B) higher product prices. 
C) higher utilization of resources. 
D) higher total output.

Question 2

International trade based on the principle of comparative advantage creates a more efficient allocation of world economic resources.

Accepted Answer

A) True 
 B)False

Question 3

NAFTA established a free-trade area and eliminated trade barriers between

Accepted Answer

A) the U.S.and Canada only. 
B) the U.S., Mexico, and China. 
C) the U.S., Mexico, and Canada. 
D) the U.S., China, and Canada.Difficulty: 01 Easy 
A) the U.S.and Canada only. 
B) the U.S., Mexico, and China. 
C) the U.S., Mexico, and Canada. 
D) the U.S., China, and Canada.Difficulty: 01 Easy

Question 4

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Accepted Answer

A) The benefits of such a tariff policy will go to consumers, not workers. 
B) The benefits of such a tariff policy will go to businesses, not workers. 
C) Wage rates in a nation are largely determined by productivity, not trade tariffs. 
D) The economy may become overheated, thus increasing inflation. 
A) The benefits of such a tariff policy will go to consumers, not workers. 
B) The benefits of such a tariff policy will go to businesses, not workers. 
C) Wage rates in a nation are largely determined by productivity, not trade tariffs. 
D) The economy may become overheated, thus increasing inflation.

Question 5

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Accepted Answer

A) decrease in total supply and an increase in the price of the product. 
B) decrease in demand and a decrease in the price of the product. 
C) decrease in supply of, and an increase in demand for, the product. 
D) increase in supply of, and a decrease in demand for, the product. 
A) decrease in total supply and an increase in the price of the product. 
B) decrease in demand and a decrease in the price of the product. 
C) decrease in supply of, and an increase in demand for, the product. 
D) increase in supply of, and a decrease in demand for, the product.

Question 6

Tariffs create larger gains to domestic producers than losses to domestic consumers.

Accepted Answer

A) True 
 B)False

Question 7

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat.In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat.In this case,

Accepted Answer

A) Korea has a comparative advantage in the production of wheat. 
B) the United States has a comparative advantage in the production of televisions. 
C) mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States. 
D) mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United States. 
A) Korea has a comparative advantage in the production of wheat. 
B) the United States has a comparative advantage in the production of televisions. 
C) mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States. 
D) mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United States.

Question 8

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

Accepted Answer

A) 6 percent 
B) 13 percent 
C) 24 percent 
D) 42 percent 
A) 6 percent 
B) 13 percent 
C) 24 percent 
D) 42 percent

Question 9

Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

Accepted Answer

A) True 
 B)False

Question 10

It is impossible for a nation to have a comparative advantage in producing everything.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

Accepted Answer

A) The alleged benefits like "saved jobs" are limited to a narrow sector of the economy and clearly seen by the general public, while the adverse effects tend to be obscure and dispersed. 
B) The general public does not have much interest in trade and trade barriers because their effects are very small. 
C) The alleged benefits of trade barriers tend to be spread over the whole economy, while their adverse effects are narrow and concentrated on a small sector. 
D) The U.S.does not really have any significant trade barriers.Thatâ€™s why there is not much debate about them. 
A) The alleged benefits like "saved jobs" are limited to a narrow sector of the economy and clearly seen by the general public, while the adverse effects tend to be obscure and dispersed. 
B) The general public does not have much interest in trade and trade barriers because their effects are very small. 
C) The alleged benefits of trade barriers tend to be spread over the whole economy, while their adverse effects are narrow and concentrated on a small sector. 
D) The U.S.does not really have any significant trade barriers.Thatâ€™s why there is not much debate about them.

Question 12

The impact of increasing, as opposed to constant, costs is to

Accepted Answer

A) intensify and prolong the comparative advantages that any nation may have initially. 
B) expand the limits of the terms of trade. 
C) cause the bases for further specialization to disappear as nations specialize according to comparative advantage. 
D) cause nations to realize economies of scale in those products in which they specialize. 
A) intensify and prolong the comparative advantages that any nation may have initially. 
B) expand the limits of the terms of trade. 
C) cause the bases for further specialization to disappear as nations specialize according to comparative advantage. 
D) cause nations to realize economies of scale in those products in which they specialize.

Question 13

Adam Smith recognized the benefits from trade based on , and David Ricardo recognized the benefits from trade based on .

Accepted Answer

A) comparative advantage; resource endowments 
B) absolute advantage; comparative advantage 
C) absolute advantage; resource endowments 
D) comparative advantage; absolute advantage 
A) comparative advantage; resource endowments 
B) absolute advantage; comparative advantage 
C) absolute advantage; resource endowments 
D) comparative advantage; absolute advantage

Question 14

The World Trade Organization is the successor to the

Accepted Answer

A) General Agreement on Tariffs and Trade (GATT). 
B) United Nations Commission on Trade Law (UNCTL). 
C) World Customs Organization. 
D) United Nations Conference on Trade and Development (UNCTA
D) . 
A) General Agreement on Tariffs and Trade (GATT). 
B) United Nations Commission on Trade Law (UNCTL). 
C) World Customs Organization. 
D) United Nations Conference on Trade and Development (UNCTA
D) .

Question 15

Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C), in countries Singsong and Harmony.Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2C Harmony: 1F = 4C
If these two nations specialize based on comparative advantage,

Accepted Answer

A) Singsong will both produce chicken and catch fish. 
B) Harmony will both produce chicken and catch fish. 
C) Harmony will produce chicken and Singsong will catch fish. 
D) Singsong will produce chicken and Harmony will catch fish. 
A) Singsong will both produce chicken and catch fish. 
B) Harmony will both produce chicken and catch fish. 
C) Harmony will produce chicken and Singsong will catch fish. 
D) Singsong will produce chicken and Harmony will catch fish.

Question 16

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are
60X and 40Y.Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 17

An excise tax on an imported good that is not produced domestically is called a

Accepted Answer

A) protective tariff. 
B) import quota. 
C) revenue tariff. 
D) voluntary export restriction. 
A) protective tariff. 
B) import quota. 
C) revenue tariff. 
D) voluntary export restriction.

Question 18

If a nation exports a product, then the price of that product in the nation

Accepted Answer

A) will rise above the domestic (no-trade) equilibrium price. 
B) will fall below the domestic (no-trade) equilibrium price. 
C) will remain the same as the domestic (no-trade) equilibrium price. 
D) may either rise or fall, depending on the product. 
A) will rise above the domestic (no-trade) equilibrium price. 
B) will fall below the domestic (no-trade) equilibrium price. 
C) will remain the same as the domestic (no-trade) equilibrium price. 
D) may either rise or fall, depending on the product.

Question 19

"Offshoring" of certain production activities refers to

Accepted Answer

A) businesses shifting production activities from being done domestically to foreign locations. 
B) businesses acquiring other businesses abroad. 
C) investors putting their funds into foreign assets instead of investing them in local businesses. 
D) firms opening new markets offshore and expanding their targeted export areas. 
A) businesses shifting production activities from being done domestically to foreign locations. 
B) businesses acquiring other businesses abroad. 
C) investors putting their funds into foreign assets instead of investing them in local businesses. 
D) firms opening new markets offshore and expanding their targeted export areas.

Question 20

A protective tariff will

Accepted Answer

A) increase the sales of foreign exporters. 
B) increase the price and sales of domestic producers. 
C) increase the welfare of domestic consumers. 
D) create an efficiency gain in the domestic economy. 
A) increase the sales of foreign exporters. 
B) increase the price and sales of domestic producers. 
C) increase the welfare of domestic consumers. 
D) create an efficiency gain in the domestic economy.

Exam 40: International Trade

Specialization and trade between individuals or between nations leads to

International trade based on the principle of comparative advantage creates a more efficient allocation of world economic resources.

NAFTA established a free-trade area and eliminated trade barriers between

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Tariffs create larger gains to domestic producers than losses to domestic consumers.

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat.In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat.In this case,

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

It is impossible for a nation to have a comparative advantage in producing everything.

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

The impact of increasing, as opposed to constant, costs is to

Adam Smith recognized the benefits from trade based on , and David Ricardo recognized the benefits from trade based on .

The World Trade Organization is the successor to the

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

An excise tax on an imported good that is not produced domestically is called a

If a nation exports a product, then the price of that product in the nation

"Offshoring" of certain production activities refers to

A protective tariff will

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

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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

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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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