Question 1

Which of the following is a TRUE statement?

Accepted Answer

A)  Everyone benefits from free trade. 
B)  Only exporters benefit from trade. 
C)  All producers benefit from trade and but not all consumers benefit. 
D)  Free trade harms domestic producers of goods that face import competition. 
A)  Everyone benefits from free trade. 
B)  Only exporters benefit from trade. 
C)  All producers benefit from trade and but not all consumers benefit. 
D)  Free trade harms domestic producers of goods that face import competition.

Question 2

Which of the following is a valid reason for protecting an industry?

Accepted Answer

A)  The industry is unable to compete with low-wage foreign competitors. 
B)  Protection penalizes lax environmental standards. 
C)  Protection keeps richer nations from exploiting the workers of poorer countries. 
D)  None of the above reasons is a valid reason for protection. 
A)  The industry is unable to compete with low-wage foreign competitors. 
B)  Protection penalizes lax environmental standards. 
C)  Protection keeps richer nations from exploiting the workers of poorer countries. 
D)  None of the above reasons is a valid reason for protection.

Question 3

If the United States imposes a tariff on imported cars, the

Accepted Answer

A)  U.S. demand curve shifts rightward. 
B)  U.S. demand curve shifts leftward. 
C)  U.S. supply curve shifts rightward. 
D)  price in the United States rises but neither the U.S. demand curve nor the U.S. supply curve shift. 
A)  U.S. demand curve shifts rightward. 
B)  U.S. demand curve shifts leftward. 
C)  U.S. supply curve shifts rightward. 
D)  price in the United States rises but neither the U.S. demand curve nor the U.S. supply curve shift.

Question 4

Compared to the situation before international trade, after the United States exports a good production in the United States ________ and consumption in the United States ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 5

Who benefits from imports?

Accepted Answer

A)  domestic consumers 
B)  domestic producers 
C)  foreign consumers 
D)  Both answers A and B are correct. 
A)  domestic consumers 
B)  domestic producers 
C)  foreign consumers 
D)  Both answers A and B are correct.

Question 6

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. This fact means that

Accepted Answer

A)  Brazilian coffee workers "gain" from this trade. 
B)  Brazilian producers "lose" from this trade. 
C)  Brazilian consumers "gain" from this trade. 
D)  Brazilian car manufacturers "lose" from this trade. 
A)  Brazilian coffee workers "gain" from this trade. 
B)  Brazilian producers "lose" from this trade. 
C)  Brazilian consumers "gain" from this trade. 
D)  Brazilian car manufacturers "lose" from this trade.

Question 7

The United States has a comparative advantage in producing airplanes if

Accepted Answer

A)  it can produce them at a lower opportunity cost than can other nations. 
B)  it can produce them at a lower dollar cost than can other nations. 
C)  it can produce a larger quantity than can other nations. 
D)  it has a larger quantity of skilled workers than do other nations. 
A)  it can produce them at a lower opportunity cost than can other nations. 
B)  it can produce them at a lower dollar cost than can other nations. 
C)  it can produce a larger quantity than can other nations. 
D)  it has a larger quantity of skilled workers than do other nations.

Question 8

Which of the following are reasons most economists consider valid for trade protection? I. Protection penalizes countries that have weak environmental standards.
II) Protection limits dumping of low-wage jobs into the domestic economy.
III) Protection prevents low-wage jobs in foreign countries from lowering wages in the United States.

Accepted Answer

A)  I and II 
B)  II and III 
C)  I, II, and III 
D)  none of the above 
A)  I and II 
B)  II and III 
C)  I, II, and III 
D)  none of the above

Question 9

The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, with international trade ________ helicopters per year are produced in the United States.

Accepted Answer

A)  360 
B)  480 
C)  720 
D)  240 
A)  360 
B)  480 
C)  720 
D)  240

Question 10

Which of the following statements about U.S. international trade in 2016 is CORRECT?

Accepted Answer

A)  The value of U.S. exports exceeded the value of U.S. imports. 
B)  The value of U.S. exports was about 33 percent of the value of total U.S. production. 
C)  The United States imported only goods. 
D)  The United States was the world's largest trader. 
A)  The value of U.S. exports exceeded the value of U.S. imports. 
B)  The value of U.S. exports was about 33 percent of the value of total U.S. production. 
C)  The United States imported only goods. 
D)  The United States was the world's largest trader.

Question 11

Currently Belize, a country in Central America, has a small coffee industry but does not export any coffee. Suppose the government of Belize, in order to protect the new coffee industry to enable it to grow into a mature industry that can compete in world markets, places a tariff on the importation of coffee. What is the argument that has been used to support the tariff on coffee?

Accepted Answer

A)  the infant-industry argument 
B)  the dumping argument 
C)  protection of Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries 
A)  the infant-industry argument 
B)  the dumping argument 
C)  protection of Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries

Question 12

The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt.
-In the figure above, the tariff ________ U.S. imports of shirts by ________ million shirts per year.

Accepted Answer

A)  decreases; 16 
B)  decreases; 8 
C)  increases; 8 
D)  increases; 4 
A)  decreases; 16 
B)  decreases; 8 
C)  increases; 8 
D)  increases; 4

Question 13

An import quota specifies the

Accepted Answer

A)  price that can be charged for any imported good. 
B)  amount of taxes that must be paid on any imported good. 
C)  maximum amount of a good that may be imported during a specified period. 
D)  minimum amount of a good that may be imported during a specified period. 
A)  price that can be charged for any imported good. 
B)  amount of taxes that must be paid on any imported good. 
C)  maximum amount of a good that may be imported during a specified period. 
D)  minimum amount of a good that may be imported during a specified period.

Question 14

An import quota is

Accepted Answer

A)  a tariff that is a fixed percentage of the price of a good. 
B)  a tariff that is a fixed dollar amount per unit of a good. 
C)  an agreed upon price for a good to be imported at a specified future date. 
D)  a restriction that specifies the maximum amount of a good that may be imported. 
A)  a tariff that is a fixed percentage of the price of a good. 
B)  a tariff that is a fixed dollar amount per unit of a good. 
C)  an agreed upon price for a good to be imported at a specified future date. 
D)  a restriction that specifies the maximum amount of a good that may be imported.

Question 15

Average tariff levels in the United States in the last decade are

Accepted Answer

A)  about equal to the average since 1930. 
B)  above the average since 1930. 
C)  positive, but below the average since 1930. 
D)  zero, as there are no longer any tariffs in the United States. 
A)  about equal to the average since 1930. 
B)  above the average since 1930. 
C)  positive, but below the average since 1930. 
D)  zero, as there are no longer any tariffs in the United States.

Question 16

The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, international trade ________ producer surplus in the United States by ________.

Accepted Answer

A)  decreases; $2.88 billion 
B)  decreases; $1.92 billion 
C)  increases; $4.8 billion 
D)  increases; $3.6 billion 
A)  decreases; $2.88 billion 
B)  decreases; $1.92 billion 
C)  increases; $4.8 billion 
D)  increases; $3.6 billion

Question 17

An import quota protects domestic producers by

Accepted Answer

A)  setting a limit on the amount of imports. 
B)  placing a prohibitive tax on imports. 
C)  encouraging competition among domestic producers. 
D)  increasing the total supply of the product. 
A)  setting a limit on the amount of imports. 
B)  placing a prohibitive tax on imports. 
C)  encouraging competition among domestic producers. 
D)  increasing the total supply of the product.

Question 18

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. Who gains from this trade?

Accepted Answer

A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade. 
A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade.

Question 19

The infant-industry argument is the only perfectly valid argument for protection.

Accepted Answer

A) True 
 B)False

Question 20

The reason that average labor costs are higher in the United States than in Haiti is that

Accepted Answer

A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation. 
A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation.

Which of the following is a TRUE statement?

Which of the following is a valid reason for protecting an industry?

If the United States imposes a tariff on imported cars, the

Compared to the situation before international trade, after the United States exports a good production in the United States and consumption in the United States .

Who benefits from imports?

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. This fact means that

The United States has a comparative advantage in producing airplanes if

Which of the following statements about U.S. international trade in 2016 is CORRECT?

An import quota specifies the

An import quota is

Average tariff levels in the United States in the last decade are

An import quota protects domestic producers by

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. Who gains from this trade?

The infant-industry argument is the only perfectly valid argument for protection.

The reason that average labor costs are higher in the United States than in Haiti is that

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 7: Global Markets in Action

Which of the following is a TRUE statement?

Which of the following is a valid reason for protecting an industry?

If the United States imposes a tariff on imported cars, the

Compared to the situation before international trade, after the United States exports a good production in the United States ________ and consumption in the United States ________.

Who benefits from imports?

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. This fact means that

The United States has a comparative advantage in producing airplanes if

Which of the following statements about U.S. international trade in 2016 is CORRECT?

An import quota specifies the

An import quota is

Average tariff levels in the United States in the last decade are

An import quota protects domestic producers by

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. Who gains from this trade?

The infant-industry argument is the only perfectly valid argument for protection.

The reason that average labor costs are higher in the United States than in Haiti is that

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Compared to the situation before international trade, after the United States exports a good production in the United States and consumption in the United States .