Question 1

Which of the following statements is true?

Accepted Answer

A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B)  Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C)  Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D)  Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product. 
A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B)  Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C)  Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D)  Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product. D

Question 2

Which of the following is not a major achievement of the European Union (EU)?

Accepted Answer

A)  It abolished tariffs and quotas among its member nations. 
B)  It liberalized the movement of capital and labor among its member nations. 
C)  It created common policies in agriculture, transportation, and business practices among its members. 
D)  It established a common ﬁscal policy among its member nations. 
A)  It abolished tariffs and quotas among its member nations. 
B)  It liberalized the movement of capital and labor among its member nations. 
C)  It created common policies in agriculture, transportation, and business practices among its members. 
D)  It established a common ﬁscal policy among its member nations. D

Question 3

Dumping of goods abroad

Accepted Answer

A)  constitutes a general case for permanent tariffs. 
B)  is simply comparative advantage at work. 
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)  is simply comparative advantage at work. 
C)  may be part of a nation's strategy to rectify its trade deﬁcit. 
D)  drives up prices of the dumped goods. B

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

Accepted Answer

A)  is vz. 
B)  is vy. 
C)  is wy. 
D)  cannot be determined. 
A)  is vz. 
B)  is vy. 
C)  is wy. 
D)  cannot be determined.

Question 6

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Accepted Answer

A)  has chosen to specialize in the production of cheese. 
B)  has chosen to specialize in the production of beef. 
C)  has decided to trade beef for cheese. 
D)  is relatively more eﬃcient than its trading partners in producing both cheese and beef. 
A)  has chosen to specialize in the production of cheese. 
B)  has chosen to specialize in the production of beef. 
C)  has decided to trade beef for cheese. 
D)  is relatively more eﬃcient than its trading partners in producing both cheese and beef.

Question 7

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

Accepted Answer

A)  should not trade with country B. 
B)  could have the comparative advantage in producing the other good, Y, as well. 
C)  must have the comparative disadvantage in producing the other good, Y. 
D)  can produce good X with fewer resources than country B. 
A)  should not trade with country B. 
B)  could have the comparative advantage in producing the other good, Y, as well. 
C)  must have the comparative disadvantage in producing the other good, Y. 
D)  can produce good X with fewer resources than country B.

Question 8

In recent years, the United States has

Accepted Answer

A)  exported more services abroad than it has imported. 
B)  had a small goods trade surplus with Japan. 
C)  had a large goods trade surplus with the rest of the world. 
D)  maintained an overall trade surplus (goods and services combined) with the rest of the world. 
A)  exported more services abroad than it has imported. 
B)  had a small goods trade surplus with Japan. 
C)  had a large goods trade surplus with the rest of the world. 
D)  maintained an overall trade surplus (goods and services combined) with the rest of the world.

Question 9

A nation's export supply curve for a speciﬁc product

Accepted Answer

A)  is upsloping. 
B)  shows the amount of the product it will export at prices below its domestic price. 
C)  lies below its import demand curve for the product. 
D)  depends on domestic supply of the product, but not on domestic demand. 
A)  is upsloping. 
B)  shows the amount of the product it will export at prices below its domestic price. 
C)  lies below its import demand curve for the product. 
D)  depends on domestic supply of the product, but not on domestic demand.

Question 10

Describe the economic reasons why businesses use offshoring.

Accepted Answer

Offshoring is the practice of shifting w

Question 11

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 12

A tariff can best be described as

Accepted Answer

A)  an excise tax on an imported good. 
B)  a government payment to domestic producers to enable them to sell competitively in world markets. 
C)  an excise tax on an exported good. 
D)  a law that sets a limit on the amount of a good that can be imported. 
A)  an excise tax on an imported good. 
B)  a government payment to domestic producers to enable them to sell competitively in world markets. 
C)  an excise tax on an exported good. 
D)  a law that sets a limit on the amount of a good that can be imported.

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. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

Accepted Answer

A) True 
 B)False

Question 14

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

Accepted Answer

A)  1.5 beers for 1 pizza. 
B)  1 beer for 2 pizzas. 
C)  2 beers for 1 pizza. 
D)  1 beer for 1.5 pizzas. 
A)  1.5 beers for 1 pizza. 
B)  1 beer for 2 pizzas. 
C)  2 beers for 1 pizza. 
D)  1 beer for 1.5 pizzas.

Question 15

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves
For the two countries are shown in the graphs. It can be deduced that

Accepted Answer

A)  Greece has a comparative advantage in chemicals. 
B)  Greece has the absolute advantage in both products. 
C)  Italy has a comparative advantage in chemicals. 
D)  it is more costly in terms of resources to produce steel in Italy. 
A)  Greece has a comparative advantage in chemicals. 
B)  Greece has the absolute advantage in both products. 
C)  Italy has a comparative advantage in chemicals. 
D)  it is more costly in terms of resources to produce steel in Italy.

Question 17

The ratio at which nations will exchange one product for another is known as the

Accepted Answer

A)  exchange rate. 
B)  discount rate. 
C)  terms of trade. 
D)  balance of trade. 
A)  exchange rate. 
B)  discount rate. 
C)  terms of trade. 
D)  balance of trade.

Question 18

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. Therefore, Alpha should specialize in Y and Beta in X.

Accepted Answer

A) True 
 B)False

Question 19

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity Demanded } \
\text { Domestically }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity Supplied } \
\text { Domestically }
\end{array} \
\hline 1,400 & \$ 10 & 2,200 \
\hline 1,600 & 9 & 2,000 \
\hline 1,800 & 8 & 1,800 \
\hline 2,000 & 7 & 1,600 \
\hline 2,200 & 6 & 1,400 \
\hline 2,400 & 5 & 1,200 \
\hline
\end{array}$$ Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the total
Revenue (after tariff) going to domestic producers would be

Accepted Answer

A)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,800. 
B)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,400. 
C)  $8,400, and the total revenue (after tariff) going to foreign producers would be $2,800. 
D)  $13,200, and the total revenue (after tariff) going to foreign producers would be $2,400. 
A)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,800. 
B)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,400. 
C)  $8,400, and the total revenue (after tariff) going to foreign producers would be $2,800. 
D)  $13,200, and the total revenue (after tariff) going to foreign producers would be $2,400.

Question 20

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global
competitiveness.

Accepted Answer

A) True 
 B)False

Which of the following statements is true?

Which of the following is not a major achievement of the European Union (EU)?

Dumping of goods abroad

"Offshoring" refers to

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

In recent years, the United States has

A nation's export supply curve for a speciﬁc product

Describe the economic reasons why businesses use offshoring.

A tariff is a

A tariff can best be described as

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. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves For the two countries are shown in the graphs. It can be deduced that

The ratio at which nations will exchange one product for another is known as the

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. Therefore, Alpha should specialize in Y and Beta in X.

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global competitiveness.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters

Exam 20: International Trade

Which of the following statements is true?

Which of the following is not a major achievement of the European Union (EU)?

Dumping of goods abroad

"Offshoring" refers to

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

In recent years, the United States has

A nation's export supply curve for a speciﬁc product

Describe the economic reasons why businesses use offshoring.

A tariff is a

A tariff can best be described as

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. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves For the two countries are shown in the graphs. It can be deduced that

The ratio at which nations will exchange one product for another is known as the

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. Therefore, Alpha should specialize in Y and Beta in X.

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global competitiveness.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Filters