Question 1

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Accepted Answer

A) fire. 
B) the sun. 
C) other European countries. 
D) invention of the electric light. 
A) fire. 
B) the sun. 
C) other European countries. 
D) invention of the electric light.

Question 2

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Accepted Answer

A) True 
 B)False

Question 3

Countries engaged in international trade specialize in production based on

Accepted Answer

A) relative levels of GDP. 
B) comparative advantage. 
C) relative exchange rates. 
D) relative inflation rates. 
A) relative levels of GDP. 
B) comparative advantage. 
C) relative exchange rates. 
D) relative inflation rates.

Question 4

An excise tax that is applied to an imported product that is not at all produced domestically is called a(n)

Accepted Answer

A) protective tariff. 
B) revenue tariff. 
C) import quota. 
D) nontariff barrier. 
A) protective tariff. 
B) revenue tariff. 
C) import quota. 
D) nontariff barrier.

Question 5

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

A) a decrease in consumer prices 
B) a decrease in the tariff rates of foreign nations 
C) an increase in the number of jobs 
D) an increase in the possibility of retaliatory tariffs 
A) a decrease in consumer prices 
B) a decrease in the tariff rates of foreign nations 
C) an increase in the number of jobs 
D) an increase in the possibility of retaliatory tariffs

Question 6

The principal concept behind comparative advantage is that a nation should

Accepted Answer

A) maximize its volume of trade with other nations. 
B) use tariffs and quotas to protect the production of vital products for the nation. 
C) concentrate production on those products for which it has the lowest domestic opportunity cost. 
D) strive to be self-sufficient in the production of essential goods and services. 
A) maximize its volume of trade with other nations. 
B) use tariffs and quotas to protect the production of vital products for the nation. 
C) concentrate production on those products for which it has the lowest domestic opportunity cost. 
D) strive to be self-sufficient in the production of essential goods and services.

Question 7

(Last Word) Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

Accepted Answer

A) increased domestic employment argument 
B) infant industry argument 
C) cheap foreign labor argument 
D) diversification-for-stability argument 
A) increased domestic employment argument 
B) infant industry argument 
C) cheap foreign labor argument 
D) diversification-for-stability argument

Question 8

Which of the following products is a leading import of the United States?

Accepted Answer

A) grains 
B) aircraft 
C) automobiles 
D) generating equipment 
A) grains 
B) aircraft 
C) automobiles 
D) generating equipment

Question 9

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 60 Y.Comparable figures for nation Beta are 60 X
and 40 Y.Beta would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 10

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.Topic: The Economic Basis for Trade

Accepted Answer

A) True 
 B)False

Question 11

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel.In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.In this case,

Accepted Answer

A) France has a comparative advantage in the production of chemicals. 
B) Germany has a comparative advantage in the production of chemicals. 
C) France has an absolute advantage in the production of chemicals. 
D) Germany has an absolute advantage in the production of chemicals. 
A) France has a comparative advantage in the production of chemicals. 
B) Germany has a comparative advantage in the production of chemicals. 
C) France has an absolute advantage in the production of chemicals. 
D) Germany has an absolute advantage in the production of chemicals.

Question 12

Critics of the World Trade Organization (WTO) say that liberalized world trade does all of the following except

Accepted Answer

A) produce environmental degradation. 
B) allow producers to circumvent labor protections such as workplace safety, child labor restrictions, and collective bargaining rights. 
C) help developing nations escape from poverty. 
D) promote the interests of multinational corporations. 
A) produce environmental degradation. 
B) allow producers to circumvent labor protections such as workplace safety, child labor restrictions, and collective bargaining rights. 
C) help developing nations escape from poverty. 
D) promote the interests of multinational corporations.

Question 13

Barriers to free trade impair efficiency in the international allocation of resources.

Accepted Answer

A) True 
 B)False

Question 14

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Accepted Answer

A) higher combined output. 
B) higher consumption and standard of living. 
C) rising total employment. 
D) consuming combinations of products that are outside their PPCs. 
A) higher combined output. 
B) higher consumption and standard of living. 
C) rising total employment. 
D) consuming combinations of products that are outside their PPCs.

Question 15

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following best describes economists' general assessment of the impacts of offshoring?

Accepted Answer

A) Offshoring has an overall negative impact on the U.S.economy because of the significant domestic job losses it causes. 
B) Offshoring benefits the U.S.economy by promoting greater specialization and exchange of goods and services based on comparative advantage. 
C) Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers. 
D) Job losses from offshoring are magnified by job losses in complementary industries. 
A) Offshoring has an overall negative impact on the U.S.economy because of the significant domestic job losses it causes. 
B) Offshoring benefits the U.S.economy by promoting greater specialization and exchange of goods and services based on comparative advantage. 
C) Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers. 
D) Job losses from offshoring are magnified by job losses in complementary industries.

Question 17

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Accepted Answer

A) specialization in production 
B) nationalization of industries 
C) regulation of production and trade 
D) spreading out of resources in more industries 
A) specialization in production 
B) nationalization of industries 
C) regulation of production and trade 
D) spreading out of resources in more industries

Question 18

In terms of absolute dollar volume, the top 3 leaders in world exports are

Accepted Answer

A) Japan, China, and the European Union. 
B) the United States, England, and Canada. 
C) Germany, England, and the United States. 
D) China, the United States, and Germany. 
A) Japan, China, and the European Union. 
B) the United States, England, and Canada. 
C) Germany, England, and the United States. 
D) China, the United States, and Germany.

Question 19

Differences in production efficiencies among nations in producing a particular good result from

Accepted Answer

A) different endowments of fertile soil. 
B) different amounts of skilled labor. 
C) different levels of technological knowledge. 
D) all of these. 
A) different endowments of fertile soil. 
B) different amounts of skilled labor. 
C) different levels of technological knowledge. 
D) all of these.

Question 20

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Accepted Answer

A) the increased domestic employment argument 
B) the cheap foreign labor argument 
C) the diversification-for-stability argument 
D) the infant industry argument 
A) the increased domestic employment argument 
B) the cheap foreign labor argument 
C) the diversification-for-stability argument 
D) the infant industry argument

Exam 40: International Trade

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Countries engaged in international trade specialize in production based on

An excise tax that is applied to an imported product that is not at all produced domestically is called a(n)

Which of the following is a likely result of imposing tariffs to increase domestic employment?

The principal concept behind comparative advantage is that a nation should

(Last Word) Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

Which of the following products is a leading import of the United States?

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 60 Y.Comparable figures for nation Beta are 60 X and 40 Y.Beta would prefer terms of trade at, or close to, 1X = 1½Y.

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.Topic: The Economic Basis for Trade

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel.In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.In this case,

Critics of the World Trade Organization (WTO) say that liberalized world trade does all of the following except

Barriers to free trade impair efficiency in the international allocation of resources.

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Which of the following best describes economists' general assessment of the impacts of offshoring?

What other economic process needs to accompany international trade, for nations to benefit from such trade?

In terms of absolute dollar volume, the top 3 leaders in world exports are

Differences in production efficiencies among nations in producing a particular good result from

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

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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