Question 1

Ideally, a free trade policy should be accompanied by

Accepted Answer

A) a public education program to make the benefits known. 
B) open borders and amnesty for all undocumented workers. 
C) programs to ensure no one loses a job as a result of foreign competition. 
D) programs to assist workers who lose their jobs to foreign competition. 
A) a public education program to make the benefits known. 
B) open borders and amnesty for all undocumented workers. 
C) programs to ensure no one loses a job as a result of foreign competition. 
D) programs to assist workers who lose their jobs to foreign competition.

Question 2

If a country's workers can produce 10 hamburgers per hour or 5 bags of French fries per hour.If there is no trade, the price of 1 bag of fries is 2 hamburgers.

Accepted Answer

A) True 
 B)False

Question 3

Exports are goods produced domestically and sold abroad.

Accepted Answer

A) True 
 B)False

Question 4

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Accepted Answer

National defense arguments can be made f

Question 5

Mercantilism is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Accepted Answer

A) True 
 B)False

Question 6

The United States is known worldwide as being a low-tariff nation.

Accepted Answer

A) True 
 B)False

Question 7

Is the call for protection on the basis of national defense valid?

Accepted Answer

A) No, because protection has no place in national defense. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused. 
A) No, because protection has no place in national defense. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused.

Question 8

The following table shows the units of output a worker can produce per month in country A and country B.   The opportunity cost of I unit of food in country A is

Accepted Answer

A) ¼ of a unit of electronics. 
B) ½ of a unit of electronics. 
C) 1/3 of a unit of electronics. 
D) All of these. 
A) ¼ of a unit of electronics. 
B) ½ of a unit of electronics. 
C) 1/3 of a unit of electronics. 
D) All of these.

Question 9

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

Accepted Answer

A) True 
 B)False

Question 10

The effect of an import quota is to

Accepted Answer

A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports. 
A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports.

Question 11

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused. 
A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused.

Question 12

Figure 34-7
​  
-In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

Accepted Answer

A) pasta because OA/OB  OC/OD. 
D) pesto because OA/OB > OC/OD. 
A) pasta because OA/OB  OC/OD. 
D) pesto because OA/OB > OC/OD.

Question 13

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Accepted Answer

A) True 
 B)False

Question 14

The Trade Adjustment Assistance program is intended to help

Accepted Answer

A) businesses that seek to expand exports into protected foreign markets. 
B) local governments that are harmed when businesses fail as imports increase. 
C) protected industries obtain improved technology in order to increase productivity. 
D) workers and businesses that lose markets because of increases in imports. 
A) businesses that seek to expand exports into protected foreign markets. 
B) local governments that are harmed when businesses fail as imports increase. 
C) protected industries obtain improved technology in order to increase productivity. 
D) workers and businesses that lose markets because of increases in imports.

Question 15

Figure 34-9
​  
-In Figure 34-9, at price OC

Accepted Answer

A) quantity supplied of pasta exceeds quantity demanded so price will fall. 
B) quantity demanded for pasta exceeds quantity supplied so price will rise. 
C) exports of pasta equal XY. 
D) imports of pasta equal XY. 
A) quantity supplied of pasta exceeds quantity demanded so price will fall. 
B) quantity demanded for pasta exceeds quantity supplied so price will rise. 
C) exports of pasta equal XY. 
D) imports of pasta equal XY.

Question 16

Which of the following is true?

Accepted Answer

A) A nation cannot have a comparative advantage in the production of every good. 
B) A nation cannot have an absolute advantage in the production of every good. 
C) A nation can have a comparative advantage in the production of every good, but not an absolute advantage. 
D) A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. 
E) A nation cannot have an absolute advantage in the production of a good unless it also has a comparative advantage. 
A) A nation cannot have a comparative advantage in the production of every good. 
B) A nation cannot have an absolute advantage in the production of every good. 
C) A nation can have a comparative advantage in the production of every good, but not an absolute advantage. 
D) A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. 
E) A nation cannot have an absolute advantage in the production of a good unless it also has a comparative advantage.

Question 17

When can a country gain a price advantage on imports by imposing a tariff?

Accepted Answer

A) When it is the largest country with absolute advantage in all goods 
B) When it has a comparative advantage in the production of all goods 
C) When it can do so without other countries retaliating with tariffs 
D) When trade agreements prohibit quotas but permit tariffs 
A) When it is the largest country with absolute advantage in all goods 
B) When it has a comparative advantage in the production of all goods 
C) When it can do so without other countries retaliating with tariffs 
D) When trade agreements prohibit quotas but permit tariffs

Question 18

Strategic trade policy relies on threats of protectionism to protect free trade.

Accepted Answer

A) True 
 B)False

Question 19

Trade between nations usually means that

Accepted Answer

A) one country is richer than another. 
B) one country becomes richer while the other becomes poorer. 
C) both trading nations show some gains. 
D) one trading country is trying to "beggar its neighbor." 
A) one country is richer than another. 
B) one country becomes richer while the other becomes poorer. 
C) both trading nations show some gains. 
D) one trading country is trying to "beggar its neighbor."

Question 20

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour.If there is no trade

Accepted Answer

A) the opportunity cost of 1 watch is 4 rings. 
B) the opportunity cost of 1 watch is 1/4th of a ring. 
C) the opportunity cost of 1 watch is 5 rings. 
D) the opportunity cost of 1 watch is 1/5th of a ring. 
A) the opportunity cost of 1 watch is 4 rings. 
B) the opportunity cost of 1 watch is 1/4th of a ring. 
C) the opportunity cost of 1 watch is 5 rings. 
D) the opportunity cost of 1 watch is 1/5th of a ring.

Exam 34: International Trade and Comparative Advantage

Ideally, a free trade policy should be accompanied by

If a country's workers can produce 10 hamburgers per hour or 5 bags of French fries per hour.If there is no trade, the price of 1 bag of fries is 2 hamburgers.

Exports are goods produced domestically and sold abroad.

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Mercantilism is a doctrine that holds that exports are good for a country, whereas imports are harmful.

The United States is known worldwide as being a low-tariff nation.

Is the call for protection on the basis of national defense valid?

The following table shows the units of output a worker can produce per month in country A and country B. The opportunity cost of I unit of food in country A is

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

The effect of an import quota is to

Is the call for protection on the basis of "infant industry" valid?

Figure 34-7 ​ -In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

The Trade Adjustment Assistance program is intended to help

Figure 34-9 ​ -In Figure 34-9, at price OC

Which of the following is true?

When can a country gain a price advantage on imports by imposing a tariff?

Strategic trade policy relies on threats of protectionism to protect free trade.

Trade between nations usually means that

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour.If there is no trade

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 34-7 -In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

Figure 34-9 -In Figure 34-9, at price OC