Question 1

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Accepted Answer

A) True 
 B)False

Question 2

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Accepted Answer

A) Nation A has the absolute advantage over Nation B in producing cloth. 
B) Nation B has the absolute advantage over Nation A in producing cloth. 
C) Nation A has the comparative advantage over Nation B in producing cloth. 
D) Nation B has the comparative advantage over Nation A in producing cloth. 
A) Nation A has the absolute advantage over Nation B in producing cloth. 
B) Nation B has the absolute advantage over Nation A in producing cloth. 
C) Nation A has the comparative advantage over Nation B in producing cloth. 
D) Nation B has the comparative advantage over Nation A in producing cloth.

Question 3

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Accepted Answer

A) textiles 
B) financial services 
C) steel 
D) apparel 
A) textiles 
B) financial services 
C) steel 
D) apparel

Question 4

The benefits to trading nations based on comparative advantage accrue from

Accepted Answer

A) specialization only. 
B) specialization and trading. 
C) trading only. 
D) protection of domestic industries. 
A) specialization only. 
B) specialization and trading. 
C) trading only. 
D) protection of domestic industries.

Question 5

The use of tariffs and quotas for trade protection results in

Accepted Answer

A) lower prices for domestic consumers. 
B) less revenue for government. 
C) less efficiency in the economy. 
D) less rent-seeking activity. 
A) lower prices for domestic consumers. 
B) less revenue for government. 
C) less efficiency in the economy. 
D) less rent-seeking activity.

Question 6

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Accepted Answer

A) True 
 B)False

Question 7

Which is not a commonly heard argument for protectionism?

Accepted Answer

A) A strong national defense requires that some military products be produced domestically. 
B) Infant industries need short-term protection from foreign competition in order to grow. 
C) Specialization along the lines of comparative advantage can lead to some economic instability in a nation. 
D) When other nations' economies grow, they typically import fewer goods and services. 
A) A strong national defense requires that some military products be produced domestically. 
B) Infant industries need short-term protection from foreign competition in order to grow. 
C) Specialization along the lines of comparative advantage can lead to some economic instability in a nation. 
D) When other nations' economies grow, they typically import fewer goods and services.

Question 8

A tariff is a

Accepted Answer

A) tax. 
B) price ceiling. 
C) quantity limit. 
D) subsidy. 
A) tax. 
B) price ceiling. 
C) quantity limit. 
D) subsidy.

Question 9

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Accepted Answer

A) the product with fewer inputs than the other nation. 
B) the product at lower average cost than the other nation. 
C) the product at a lower domestic opportunity cost than the other nation. 
D) more of the product than the other nation. 
A) the product with fewer inputs than the other nation. 
B) the product at lower average cost than the other nation. 
C) the product at a lower domestic opportunity cost than the other nation. 
D) more of the product than the other nation.

Question 10

Suppose the United States eliminates high tariffs on German bicycles.As a result, we would expect

Accepted Answer

A) the price of German bicycles to increase in the United States. 
B) employment to decrease in the German bicycle industry. 
C) employment to decrease in the U.S.bicycle industry. 
D) profits to rise in the U.S.bicycle industry. 
A) the price of German bicycles to increase in the United States. 
B) employment to decrease in the German bicycle industry. 
C) employment to decrease in the U.S.bicycle industry. 
D) profits to rise in the U.S.bicycle industry.

Question 11

U.S.exports of goods and services (on a national income account basis) are about

Accepted Answer

A) 20 percent of U.S.GDP. 
B) 8 percent of U.S.GDP. 
C) 28 percent of U.S.GDP. 
D) 13 percent of U.S.GDP. 
A) 20 percent of U.S.GDP. 
B) 8 percent of U.S.GDP. 
C) 28 percent of U.S.GDP. 
D) 13 percent of U.S.GDP.

Question 12

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Accepted Answer

A) True 
 B)False

Question 13

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.If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say that the gains from specialization and trade are 10X and 10Y.

Accepted Answer

A) True 
 B)False

Question 14

Benefits from international trade are based on differences in the following areas, except

Accepted Answer

A) resource endowments. 
B) technological capabilities. 
C) product quality and other attributes. 
D) income levels. 
A) resource endowments. 
B) technological capabilities. 
C) product quality and other attributes. 
D) income levels.

Question 15

In 2015, U.S.exports of services U.S.imports of services by about .

Accepted Answer

A) exceeded; $20 B 
B) fell short of; $20 B 
C) exceeded; $220 B 
D) fell short of; $220 B 
A) exceeded; $20 B 
B) fell short of; $20 B 
C) exceeded; $220 B 
D) fell short of; $220 B

Question 16

Dumping of goods abroad

Accepted Answer

A) constitutes a general case for permanent tariffs. 
B) may be part of a firm's price discrimination strategy. 
C) may be part of a nation's strategy to rectify its trade deficit. 
D) drives up prices of the dumped goods. 
A) constitutes a general case for permanent tariffs. 
B) may be part of a firm's price discrimination strategy. 
C) may be part of a nation's strategy to rectify its trade deficit. 
D) drives up prices of the dumped goods.

Question 17

One main point of Frederic Bastiat's satire is that

Accepted Answer

A) employment, or jobs, is the single most important measure of the standard of living. 
B) we should not try to produce what we can get from others at a lower cost. 
C) some industries may reasonably require protection in order to grow. 
D) exporting is always a worthwhile activity to be supported and enhanceD. 
A) employment, or jobs, is the single most important measure of the standard of living. 
B) we should not try to produce what we can get from others at a lower cost. 
C) some industries may reasonably require protection in order to grow. 
D) exporting is always a worthwhile activity to be supported and enhanceD.

Question 18

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

Accepted Answer

A) protective tariffs. 
B) nontariff barriers. 
C) voluntary export restrictions. 
D) quotas on imported products. 
A) protective tariffs. 
B) nontariff barriers. 
C) voluntary export restrictions. 
D) quotas on imported products.

Question 19

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Accepted Answer

A) True 
 B)False

Question 20

The primary gain from international trade is

Accepted Answer

A) increased employment in the domestic export sector. 
B) more goods than would be attainable through domestic production alone. 
C) tariff revenue. 
D) increased employment in the domestic import sector. 
A) increased employment in the domestic export sector. 
B) more goods than would be attainable through domestic production alone. 
C) tariff revenue. 
D) increased employment in the domestic import sector.

Exam 40: International Trade

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

The benefits to trading nations based on comparative advantage accrue from

The use of tariffs and quotas for trade protection results in

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Which is not a commonly heard argument for protectionism?

A tariff is a

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Suppose the United States eliminates high tariffs on German bicycles.As a result, we would expect

U.S.exports of goods and services (on a national income account basis) are about

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Benefits from international trade are based on differences in the following areas, except

In 2015, U.S.exports of services U.S.imports of services by about .

Dumping of goods abroad

One main point of Frederic Bastiat's satire is that

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

The primary gain from international trade is

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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