Question 1

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

Accepted Answer

A)  an import quota. 
B)  a revenue tariff. 
C)  a protective tariff. 
D)  a voluntary export restriction. 
A)  an import quota. 
B)  a revenue tariff. 
C)  a protective tariff. 
D)  a voluntary export restriction.

Question 2

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves imply that

Accepted Answer

A)  both countries have a trade surplus that will result in economic growth. 
B)  the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources. 
C)  world resources will be allocated more eﬃciently if the two nations specialize and trade based on comparative advantage. 
D)  both nations will be worse off as a result of international specialization and trade. 
A)  both countries have a trade surplus that will result in economic growth. 
B)  the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources. 
C)  world resources will be allocated more eﬃciently if the two nations specialize and trade based on comparative advantage. 
D)  both nations will be worse off as a result of international specialization and trade.

Question 3

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)  12 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)  12 percent of U.S. GDP.

Question 4

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. If Italy and Greece open up trade with each other,
Which of the following terms of trade is mutually beneﬁcial?

Accepted Answer

A)  1 ton of chemicals = 1 ton of steel 
B)  2 tons of chemicals = 1 ton of steel 
C)  5 tons of chemicals = 2 tons of steel 
D)  9 tons of chemicals = 5 tons of steel 
A)  1 ton of chemicals = 1 ton of steel 
B)  2 tons of chemicals = 1 ton of steel 
C)  5 tons of chemicals = 2 tons of steel 
D)  9 tons of chemicals = 5 tons of steel

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

From an economic perspective, studies of the costs of trade barriers show that they

Accepted Answer

A)  are outweighed by the reduction in foreign competition provided by the barriers. 
B)  are much less than beneﬁts for domestic producers and workers. 
C)  are about equal to the beneﬁts from trade barriers. 
D)  far exceed their beneﬁts for society. 
A)  are outweighed by the reduction in foreign competition provided by the barriers. 
B)  are much less than beneﬁts for domestic producers and workers. 
C)  are about equal to the beneﬁts from trade barriers. 
D)  far exceed their beneﬁts for society.

Question 7

The World Trade Organization is the successor to the

Accepted Answer

A)  General Agreement on Tariffs and Trade (GATT). 
B)  United Nations Commission on Trade Law (UNCTL). 
C)  World Customs Organization. 
D)  United Nations Conference on Trade and Development (UNCTA
D) . 
A)  General Agreement on Tariffs and Trade (GATT). 
B)  United Nations Commission on Trade Law (UNCTL). 
C)  World Customs Organization. 
D)  United Nations Conference on Trade and Development (UNCTA
D) .

Question 8

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Accepted Answer

A)  only an outﬂow of jobs away from the U.S. 
B)  no possible expansion of jobs in the U.S. 
C)  huge losses to consumers in the U.S. 
D)  both an outﬂow as well as an inﬂow of jobs in the U.S. 
A)  only an outﬂow of jobs away from the U.S. 
B)  no possible expansion of jobs in the U.S. 
C)  huge losses to consumers in the U.S. 
D)  both an outﬂow as well as an inﬂow of jobs in the U.S.

Question 9

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A)  the government. 
B)  domestic consumers. 
C)  domestic producers. 
D)  foreign exporters. 
A)  the government. 
B)  domestic consumers. 
C)  domestic producers. 
D)  foreign exporters.

Question 10

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n)

Accepted Answer

A)  import quota. 
B)  export subsidy. 
C)  voluntary export restriction. 
D)  protective tariff. 
A)  import quota. 
B)  export subsidy. 
C)  voluntary export restriction. 
D)  protective tariff.

Question 11

In 2018, the United States

Accepted Answer

A)  imported more services than it exported. 
B)  imported more goods than it exported. 
C)  traded mainly with developing nations such as Mexico and India. 
D)  had a small trade surplus in goods and services. 
A)  imported more services than it exported. 
B)  imported more goods than it exported. 
C)  traded mainly with developing nations such as Mexico and India. 
D)  had a small trade surplus in goods and services.

Question 12

The terms of trade will favor a larger nation over a smaller nation.

Accepted Answer

A) True 
 B)False

Question 13

The "eurozone"

Accepted Answer

A)  is another name for the European Union. 
B)  refers to the common currency used by all European Union members. 
C)  is a geographic region in Europe with no national sovereignty, where free trade between European nations is allowed to occur. 
D)  is the subset of the EU that uses a common currency. 
A)  is another name for the European Union. 
B)  refers to the common currency used by all European Union members. 
C)  is a geographic region in Europe with no national sovereignty, where free trade between European nations is allowed to occur. 
D)  is the subset of the EU that uses a common currency.

Question 14

Accepted Answer

A)  $P _ { c } \text { and } P _ { a\cdot }$ 
B)  $P _ { a } \text { and } P _ { C }$ 
C)  $P _ { a } \text { and } P _ { t }$ 
D)  $P _ { t } \text { and } P _ { C }$ 
A)  $P _ { c } \text { and } P _ { a\cdot }$ 
B)  $P _ { a } \text { and } P _ { C }$ 
C)  $P _ { a } \text { and } P _ { t }$ 
D)  $P _ { t } \text { and } P _ { C }$

Question 15

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units
of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable ﬁgures for nation Beta
are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

Accepted Answer

A) True 
 B)False

Question 16

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Accepted Answer

A)  decrease in supply and an increase in the price of the product. 
B)  decrease in demand and a decrease in the price of the product. 
C)  decrease in supply of, and an increase in demand for, the product. 
D)  increase in supply of, and a decrease in demand for, the product. 
A)  decrease in supply and an increase in the price of the product. 
B)  decrease in demand and a decrease in the price of the product. 
C)  decrease in supply of, and an increase in demand for, the product. 
D)  increase in supply of, and a decrease in demand for, the product.

Question 17

If two nations have straight-line production possibilities curves,

Accepted Answer

A)  then their trading possibilities curves must lie inside the production possibilities curves. 
B)  there will be no basis for mutually advantageous trade. 
C)  there will be a basis for mutually advantageous trade whether the slopes are equal or not. 
D)  there will be a basis for mutually advantageous trade provided the slopes differ. 
A)  then their trading possibilities curves must lie inside the production possibilities curves. 
B)  there will be no basis for mutually advantageous trade. 
C)  there will be a basis for mutually advantageous trade whether the slopes are equal or not. 
D)  there will be a basis for mutually advantageous trade provided the slopes differ.

Question 18

In a two-nation model, the equilibrium world price will occur where

Accepted Answer

A)  one nation's export supply curve intersects the other nation's import demand curve. 
B)  exports are exactly twice the level of imports. 
C)  both nations' export supply curves are horizontal. 
D)  both nations' import demand curves are vertical. 
A)  one nation's export supply curve intersects the other nation's import demand curve. 
B)  exports are exactly twice the level of imports. 
C)  both nations' export supply curves are horizontal. 
D)  both nations' import demand curves are vertical.

Question 19

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000
Bushels of wheat. Which of the following is true?

Accepted Answer

A)  Country Y should specialize in the growing of soybeans according to the principle of comparative advantage. 
B)  Country X is the least-cost producer of wheat. 
C)  The domestic opportunity cost of wheat production is lower in country Y. 
D)  The high-cost producer of soybeans is country X. 
A)  Country Y should specialize in the growing of soybeans according to the principle of comparative advantage. 
B)  Country X is the least-cost producer of wheat. 
C)  The domestic opportunity cost of wheat production is lower in country Y. 
D)  The high-cost producer of soybeans is country X.

Question 20

Accepted Answer

A)  $6 and the quantity consumed 80 units. 
B)  $8 and the quantity consumed 70 units. 
C)  $10 and the quantity consumed 60 units. 
D)  $12 and the quantity consumed 50 units. 
A)  $6 and the quantity consumed 80 units. 
B)  $8 and the quantity consumed 70 units. 
C)  $10 and the quantity consumed 60 units. 
D)  $12 and the quantity consumed 50 units.

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves imply that

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

The use of tariffs and quotas for trade protection results in

From an economic perspective, studies of the costs of trade barriers show that they

The World Trade Organization is the successor to the

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n)

In 2018, the United States

The terms of trade will favor a larger nation over a smaller nation.

The "eurozone"

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

If two nations have straight-line production possibilities curves,

In a two-nation model, the equilibrium world price will occur where

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 Bushels of wheat. Which of the following is true?

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

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves imply that

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

The use of tariffs and quotas for trade protection results in

From an economic perspective, studies of the costs of trade barriers show that they

The World Trade Organization is the successor to the

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n)

In 2018, the United States

The terms of trade will favor a larger nation over a smaller nation.

The "eurozone"

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

If two nations have straight-line production possibilities curves,

In a two-nation model, the equilibrium world price will occur where

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 Bushels of wheat. Which of the following is true?

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