Question 1

As it relates to international trade, dumping

Accepted Answer

A) is a form of price discrimination illegal under U.S.antitrust laws. 
B) is the practice of selling goods in a foreign market at less than cost. 
C) constitutes a general case for permanent tariffs. 
D) is defined as selling more goods than allowed by an import quota. 
A) is a form of price discrimination illegal under U.S.antitrust laws. 
B) is the practice of selling goods in a foreign market at less than cost. 
C) constitutes a general case for permanent tariffs. 
D) is defined as selling more goods than allowed by an import quota.

Question 2

The imposition of a tariff on a product is least likely to result in a(n)

Accepted Answer

A) increase in efficiency in the domestic industry producing the product. 
B) increase in the price of the product. 
C) decrease in the quantity of imports. 
D) decrease in the real incomes of workers in other industries. 
A) increase in efficiency in the domestic industry producing the product. 
B) increase in the price of the product. 
C) decrease in the quantity of imports. 
D) decrease in the real incomes of workers in other industries.

Question 3

In comparing a tariff and an import quota, we find that

Accepted Answer

A) the tariff and quota both generate the same amount of revenue for the U.S.Treasury. 
B) the tariff generates revenue for the U.S.Treasury, but the quota does not. 
C) the quota generates revenue for the U.S.Treasury, but the tariff does not. 
D) neither the tariff nor the quota generates revenue for the U.S.Treasury. 
A) the tariff and quota both generate the same amount of revenue for the U.S.Treasury. 
B) the tariff generates revenue for the U.S.Treasury, but the quota does not. 
C) the quota generates revenue for the U.S.Treasury, but the tariff does not. 
D) neither the tariff nor the quota generates revenue for the U.S.Treasury.

Question 4

"Offshoring" refers to

Accepted Answer

A) importing goods, services, and resources. 
B) stashing money in offshore accounts for the purpose of avoiding taxes. 
C) shifting work overseas that was previously done domestically. 
D) exporting key resources. 
A) importing goods, services, and resources. 
B) stashing money in offshore accounts for the purpose of avoiding taxes. 
C) shifting work overseas that was previously done domestically. 
D) exporting key resources.

Question 5

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Accepted Answer

A) True 
 B)False

Question 6

The basic difference in the economic effects of a tariff compared with a quota is that a

Accepted Answer

A) quota reduces domestic consumption of the product, but a tariff does not. 
B) tariff allows imports to increase if demand increases, whereas a quota does not. 
C) tariff raises product prices, but a quota does not. 
D) quota raises product prices, but a tariff does not. 
A) quota reduces domestic consumption of the product, but a tariff does not. 
B) tariff allows imports to increase if demand increases, whereas a quota does not. 
C) tariff raises product prices, but a quota does not. 
D) quota raises product prices, but a tariff does not.

Question 7

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

Accepted Answer

A) the increased domestic employment argument 
B) the cheap foreign labor argument 
C) the diversification-for-stability argument 
D) the military self-sufficiency argument 
A) the increased domestic employment argument 
B) the cheap foreign labor argument 
C) the diversification-for-stability argument 
D) the military self-sufficiency argument

Question 8

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel.Assuming no transportation costs, the United States will

Accepted Answer

A) have a domestic shortage of wheat. 
B) export wheat. 
C) import wheat. 
D) neither export nor import wheat. 
A) have a domestic shortage of wheat. 
B) export wheat. 
C) import wheat. 
D) neither export nor import wheat.

Question 9

Common arguments often raised to present the case for protectionism include the following, except

Accepted Answer

A) protecting infant industries until they mature. 
B) protection against foreign suppliers' dumping. 
C) raising domestic employment in specific industries. 
D) reducing the price of the product to consumers. 
A) protecting infant industries until they mature. 
B) protection against foreign suppliers' dumping. 
C) raising domestic employment in specific industries. 
D) reducing the price of the product to consumers.

Question 10

Which of the following was not one of the principles on which the General Agreement on Tariffs and Trade (GATT) was established?

Accepted Answer

A) the elimination of import quotas 
B) equal, nondiscriminatory trade treatment for all member nations 
C) the formation of international trade contracts to alleviate global poverty 
D) the reduction of tariffs by multilateral negotiations 
A) the elimination of import quotas 
B) equal, nondiscriminatory trade treatment for all member nations 
C) the formation of international trade contracts to alleviate global poverty 
D) the reduction of tariffs by multilateral negotiations

Question 11

Tariffs and import quotas meant to increase domestic employment also eliminate domestic jobs in export industries.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive?

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

Question 13

(Consider This) The greatest benefit to an economy from international trade is

Accepted Answer

A) greater employment in the export sector of the economy. 
B) the economic power it gives a nation over other countries. 
C) full employment of its labor force. 
D) consumption beyond domestic production possibilities. 
A) greater employment in the export sector of the economy. 
B) the economic power it gives a nation over other countries. 
C) full employment of its labor force. 
D) consumption beyond domestic production possibilities.

Question 14

Trade protection in most instances transfers wealth from consumers to domestic producers.

Accepted Answer

A) True 
 B)False

Question 15

In a two-nation, two-good world, which of the following statements is true?

Accepted Answer

A) One nation cannot possibly have an absolute advantage over the other nation in both products. 
B) If one nation has the comparative advantage in one product, then the other nation would have the comparative advantage in the other product. 
C) One nation will always have the comparative advantage over the other nation in one of the products. 
D) If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product. 
A) One nation cannot possibly have an absolute advantage over the other nation in both products. 
B) If one nation has the comparative advantage in one product, then the other nation would have the comparative advantage in the other product. 
C) One nation will always have the comparative advantage over the other nation in one of the products. 
D) If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product.

Question 16

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

Accepted Answer

A) no comparative advantage over the other nation. 
B) a comparative advantage in one good and a comparative disadvantage in the other good. 
C) no absolute advantage over the other nation. 
D) an absolute advantage in one good and an absolute disadvantage in the other good. 
A) no comparative advantage over the other nation. 
B) a comparative advantage in one good and a comparative disadvantage in the other good. 
C) no absolute advantage over the other nation. 
D) an absolute advantage in one good and an absolute disadvantage in the other good.

Question 17

(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting.This means that

Accepted Answer

A) there is no reason for them to trade services. 
B) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D) Madison has the comparative advantage in both services. 
A) there is no reason for them to trade services. 
B) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D) Madison has the comparative advantage in both services.

Question 18

The terms of trade reflect the

Accepted Answer

A) rate at which gold exchanges internationally for any domestic currency. 
B) ratio at which nations will exchange two goods. 
C) fact that the gains from trade will be equally divided. 
D) cost conditions embodied in a single country's production possibilities curve. 
A) rate at which gold exchanges internationally for any domestic currency. 
B) ratio at which nations will exchange two goods. 
C) fact that the gains from trade will be equally divided. 
D) cost conditions embodied in a single country's production possibilities curve.

Question 19

Which is a valid counterargument to the infant industry argument for protective tariffs?

Accepted Answer

A) Protective tariffs result in too many benefits for domestic firms that export goods and services. 
B) It is difficult to determine which infant industries will become mature industries with a comparative advantage. 
C) The objective would be better achieved through strategic trade policy. 
D) The objective would be better achieved by import quotas and nontariff barriers. 
A) Protective tariffs result in too many benefits for domestic firms that export goods and services. 
B) It is difficult to determine which infant industries will become mature industries with a comparative advantage. 
C) The objective would be better achieved through strategic trade policy. 
D) The objective would be better achieved by import quotas and nontariff barriers.

Question 20

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y.Trade in the two products will only benefit the two nations if

Accepted Answer

A) the exchange ratio of X for Y is fixed. 
B) the terms of trade increase in both nations. 
C) there is excess capacity in both economies. 
D) the prices charged for X and Y reflect their domestic opportunity costs. 
A) the exchange ratio of X for Y is fixed. 
B) the terms of trade increase in both nations. 
C) there is excess capacity in both economies. 
D) the prices charged for X and Y reflect their domestic opportunity costs.

Exam 40: International Trade

As it relates to international trade, dumping

The imposition of a tariff on a product is least likely to result in a(n)

In comparing a tariff and an import quota, we find that

"Offshoring" refers to

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

The basic difference in the economic effects of a tariff compared with a quota is that a

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel.Assuming no transportation costs, the United States will

Common arguments often raised to present the case for protectionism include the following, except

Which of the following was not one of the principles on which the General Agreement on Tariffs and Trade (GATT) was established?

Tariffs and import quotas meant to increase domestic employment also eliminate domestic jobs in export industries.

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive?

(Consider This) The greatest benefit to an economy from international trade is

Trade protection in most instances transfers wealth from consumers to domestic producers.

In a two-nation, two-good world, which of the following statements is true?

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting.This means that

The terms of trade reflect the

Which is a valid counterargument to the infant industry argument for protective tariffs?

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y.Trade in the two products will only benefit the two nations if

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

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Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

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Natural Resource and Energy Economics

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Antitrust Policy and Regulation

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Income Inequality, Poverty, and Discrimination

Health Care

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An Introduction to Macroeconomics

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Basic Macroeconomic Relationships

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Money, Banking, and Financial Institutions

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Interest Rates and Monetary Policy

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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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