Question 1

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

A) It spawned a global trade war. 
B) It triggered the Great Depression. 
C) It favored imports over domestic producers. 
D) It is a classic example of the dumping argument. 
A) It spawned a global trade war. 
B) It triggered the Great Depression. 
C) It favored imports over domestic producers. 
D) It is a classic example of the dumping argument.

Question 2

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

Accepted Answer

A) lower in price because import competition has risen. 
B) higher in price because import competition has risen. 
C) higher in price because import competition has declined. 
D) lower in price because import competition has declined. 
A) lower in price because import competition has risen. 
B) higher in price because import competition has risen. 
C) higher in price because import competition has declined. 
D) lower in price because import competition has declined.

Question 3

In 2015, the United States had its first-ever trade surplus with OPEC.

Accepted Answer

A) True 
 B)False

Question 4

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound.Assuming no transportation costs, the United States will

Accepted Answer

A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper. 
A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper.

Question 6

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Accepted Answer

A) Trade barriers protect the development of new technology, but the new technology eliminates jobs. 
B) Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment. 
C) The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment. 
D) Major American firms have produced many products in other countries and would not hire more domestic labor when trade barriers are imposed. 
A) Trade barriers protect the development of new technology, but the new technology eliminates jobs. 
B) Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment. 
C) The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment. 
D) Major American firms have produced many products in other countries and would not hire more domestic labor when trade barriers are imposed.

Question 7

Assume that a VER (voluntary export restraint) is imposed on an imported product.The difference between the domestic price and the world price is captured by

Accepted Answer

A) the government. 
B) foreign exporters. 
C) domestic consumers. 
D) domestic workers. 
A) the government. 
B) foreign exporters. 
C) domestic consumers. 
D) domestic workers.

Question 8

The U.S.has a sizable trade surplus in services.

Accepted Answer

A) True 
 B)False

Question 9

From an economic perspective, studies of the costs of trade barriers show that they

Accepted Answer

A) are outweighed by the reduction in foreign competition provided by the barriers. 
B) are much less than benefits for domestic producers and workers. 
C) are about equal to the benefits from trade barriers. 
D) far exceed their benefits for society. 
A) are outweighed by the reduction in foreign competition provided by the barriers. 
B) are much less than benefits for domestic producers and workers. 
C) are about equal to the benefits from trade barriers. 
D) far exceed their benefits for society.

Question 10

An example of a nontariff barrier would be

Accepted Answer

A) a minimum limit on the quantity of imports. 
B) excessive licensing requirements. 
C) a tax on an imported product. 
D) voluntary export restraints. 
A) a minimum limit on the quantity of imports. 
B) excessive licensing requirements. 
C) a tax on an imported product. 
D) voluntary export restraints.

Question 11

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

Accepted Answer

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

Question 12

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Accepted Answer

A) True 
 B)False

Question 13

Other things equal, economists would prefer

Accepted Answer

A) free trade to tariffs and tariffs to import quotas. 
B) free trade to import quotas and import quotas to tariffs. 
C) import quotas to tariffs and tariffs to voluntary export restrictions. 
D) import quotas to free trade and free trade to tariffs. 
A) free trade to tariffs and tariffs to import quotas. 
B) free trade to import quotas and import quotas to tariffs. 
C) import quotas to tariffs and tariffs to voluntary export restrictions. 
D) import quotas to free trade and free trade to tariffs.

Question 14

Comparative advantage is another name for absolute advantage.

Accepted Answer

A) True 
 B)False

Question 15

When a nation starts opening up to international trade, it will see falling prices for

Accepted Answer

A) goods that it exports. 
B) goods that it imports. 
C) goods that it has a comparative advantage in. 
D) all goods traded. 
A) goods that it exports. 
B) goods that it imports. 
C) goods that it has a comparative advantage in. 
D) all goods traded.

Question 16

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

Accepted Answer

A) U.S.firms to establish export markets around the world. 
B) other nations to become familiar with, and adjust to, U.S.products. 
C) workers displaced by imports or plant relocations abroad. 
D) businesses who wish to globalize and compete in the world market. 
A) U.S.firms to establish export markets around the world. 
B) other nations to become familiar with, and adjust to, U.S.products. 
C) workers displaced by imports or plant relocations abroad. 
D) businesses who wish to globalize and compete in the world market.

Question 17

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50 percent of its GDP.

Accepted Answer

A) True 
 B)False

Question 18

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all of its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that

Accepted Answer

A) the terms of trade will be 3X equals 1Y. 
B) Alpha should specialize in Y and Beta in X. 
C) Alpha should specialize in X and Beta in Y. 
D) there is no basis for mutually beneficial specialization and trade. 
A) the terms of trade will be 3X equals 1Y. 
B) Alpha should specialize in Y and Beta in X. 
C) Alpha should specialize in X and Beta in Y. 
D) there is no basis for mutually beneficial specialization and trade.

Question 19

The law of increasing opportunity costs

Accepted Answer

A) applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B) results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C) refutes the principle of comparative advantage. 
D) may limit the extent to which a nation specializes in producing a particular product. 
A) applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B) results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C) refutes the principle of comparative advantage. 
D) may limit the extent to which a nation specializes in producing a particular product.

Question 20

Starting in 2012, an important shift occurred in the U.S.trade in petroleum, which was

Accepted Answer

A) a sharp decline in petroleum exports from the U.S. 
B) a significant increase in petroleum imports into the U.S. 
C) a significant decline in the petroleum imports into the U.S. 
D) a huge increase in petroleum exports from the U.S. 
A) a sharp decline in petroleum exports from the U.S. 
B) a significant increase in petroleum imports into the U.S. 
C) a significant decline in the petroleum imports into the U.S. 
D) a huge increase in petroleum exports from the U.S.

Exam 40: International Trade

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

In 2015, the United States had its first-ever trade surplus with OPEC.

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound.Assuming no transportation costs, the United States will

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Assume that a VER (voluntary export restraint) is imposed on an imported product.The difference between the domestic price and the world price is captured by

The U.S.has a sizable trade surplus in services.

From an economic perspective, studies of the costs of trade barriers show that they

An example of a nontariff barrier would be

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Other things equal, economists would prefer

Comparative advantage is another name for absolute advantage.

When a nation starts opening up to international trade, it will see falling prices for

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50 percent of its GDP.

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all of its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that

The law of increasing opportunity costs

Starting in 2012, an important shift occurred in the U.S.trade in petroleum, which was

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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