Question 1

International trade based on the principle of comparative advantage creates a more eﬃcient
allocation of world economic resources.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Which organization meets regularly to establish rules and settle disputes related to international trade?

Accepted Answer

A)  the United Nations Commission on Trade Law 
B)  the United Nations Conference on Trade and Development 
C)  the World Trade Organization 
D)  the World Economic Forum 
A)  the United Nations Commission on Trade Law 
B)  the United Nations Conference on Trade and Development 
C)  the World Trade Organization 
D)  the World Economic Forum

Question 4

A major diﬃculty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

Accepted Answer

A)  labor costs and product prices are not related. 
B)  there is no discernible relationship between wage rates and labor productivity. 
C)  wage rates and labor productivity are directly related. 
D)  wage rates and labor productivity are inversely related. 
A)  labor costs and product prices are not related. 
B)  there is no discernible relationship between wage rates and labor productivity. 
C)  wage rates and labor productivity are directly related. 
D)  wage rates and labor productivity are inversely related.

Question 5

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of
Trade)

Accepted Answer

A)  is the absolute value of the slope of line AB. 
B)  is the absolute value of the slope of line AC. 
C)  could lie anywhere between the absolute value of the slopes of lines AB and AC. 
D)  cannot be determined on the basis of this information. 
A)  is the absolute value of the slope of line AB. 
B)  is the absolute value of the slope of line AC. 
C)  could lie anywhere between the absolute value of the slopes of lines AB and AC. 
D)  cannot be determined on the basis of this information.

Question 6

Economists who criticize trade adjustment assistance argue that

Accepted Answer

A)  it only beneﬁts a small fraction of all unemployed workers. 
B)  money spent on the program overstimulates aggregate demand and threatens to cause inﬂation. 
C)  beneﬁts are too low to provide unemployed workers with a livable wage. 
D)  it distorts patterns of foreign trade, reducing the gains from trade. 
A)  it only beneﬁts a small fraction of all unemployed workers. 
B)  money spent on the program overstimulates aggregate demand and threatens to cause inﬂation. 
C)  beneﬁts are too low to provide unemployed workers with a livable wage. 
D)  it distorts patterns of foreign trade, reducing the gains from trade.

Question 7

$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \
\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \
\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \
\hline
\end{array}
\end{array}$$ The data in the accompanying production possibilities tables (in millions of units) suggest that production in

Accepted Answer

A)  Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs. 
B)  the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs. 
C)  both Germany and the United States is subject to constant opportunity costs. 
D)  both Germany and the United States is subject to increasing opportunity costs. 
A)  Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs. 
B)  the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs. 
C)  both Germany and the United States is subject to constant opportunity costs. 
D)  both Germany and the United States is subject to increasing opportunity costs.

Question 8

The World Trade Organization (WTO) is an international organization designed to provide short-term
advances of foreign monies to those nations faced with trade deﬁcits.

Accepted Answer

A) True 
 B)False

Question 9

The United States' most important trading partner quantitatively is

Accepted Answer

A)  China. 
B)  Canada. 
C)  Mexico. 
D)  Japan. 
A)  China. 
B)  Canada. 
C)  Mexico. 
D)  Japan.

Question 10

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

Accepted Answer

A)  lower in price because import competition has risen. 
B)  higher in price because import competition has risen. 
C)  higher in price because import competition has declined. 
D)  lower in price because import competition has declined. 
A)  lower in price because import competition has risen. 
B)  higher in price because import competition has risen. 
C)  higher in price because import competition has declined. 
D)  lower in price because import competition has declined.

Question 11

Excise taxes on imported goods that help shield domestic producers of the good are called

Accepted Answer

A)  protective tariffs. 
B)  import quotas. 
C)  revenue tariffs. 
D)  voluntary export restrictions. 
A)  protective tariffs. 
B)  import quotas. 
C)  revenue tariffs. 
D)  voluntary export restrictions.

Question 12

Economists generally view offshoring as detrimental to the U.S. economy.

Accepted Answer

A) True 
 B)False

Question 13

$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \
\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \
\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \
\hline
\end{array}
\end{array}$$ Refer to the accompanying production possibilities tables. Data are in millions of units. If Germany and the United States engage in trade, the mutually bene?cial terms of trade will be between

Accepted Answer

A)  3 and 4 units of autos for 1 unit of chemicals. 
B)  2 and 4 units of autos for 1 unit of chemicals. 
C)  2 and 4 units of chemicals for 1 unit of autos. 
D)  0.33 and 0.5 units of autos for 1 unit of chemicals. 
A)  3 and 4 units of autos for 1 unit of chemicals. 
B)  2 and 4 units of autos for 1 unit of chemicals. 
C)  2 and 4 units of chemicals for 1 unit of autos. 
D)  0.33 and 0.5 units of autos for 1 unit of chemicals.

Question 14

The production possibilities curves suggest that rev: 09_17_2020_QC_CS-228777

Accepted Answer

A)  West Mudville should specialize in, and export, baseball bats. 
B)  West Mudville should specialize in, and export, both baseballs and baseball bats. 
C)  East Mudville should specialize in, and export, baseball bats. 
D)  workers will try to immigrate from West Mudville to East Mudville. 
A)  West Mudville should specialize in, and export, baseball bats. 
B)  West Mudville should specialize in, and export, both baseballs and baseball bats. 
C)  East Mudville should specialize in, and export, baseball bats. 
D)  workers will try to immigrate from West Mudville to East Mudville.

Question 15

One major factor that serves as an economic basis for world trade is the uneven distribution of
resources among nations.

Accepted Answer

A) True 
 B)False

Question 16

The so-called eurozone refers to

Accepted Answer

A)  all members of the European Union. 
B)  the EU nations that have adopted a common currency. 
C)  the combined Eastern and Western Europe. 
D)  nations in Europe where the U.S. has military bases. 
A)  all members of the European Union. 
B)  the EU nations that have adopted a common currency. 
C)  the combined Eastern and Western Europe. 
D)  nations in Europe where the U.S. has military bases.

Question 17

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2018?

Accepted Answer

A)  6 percent 
B)  12 percent 
C)  24 percent 
D)  42 percent 
A)  6 percent 
B)  12 percent 
C)  24 percent 
D)  42 percent

Question 18

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price of this product is $1, this nation will

Accepted Answer

A)  export all of the product. 
B)  import all of the product. 
C)  import some of the product and produce some of the product domestically. 
D)  neither export nor import the product. 
A)  export all of the product. 
B)  import all of the product. 
C)  import some of the product and produce some of the product domestically. 
D)  neither export nor import the product.

Question 19

Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of
Clothing.

Accepted Answer

A)  Nation Alpha has a comparative advantage in producing clothing. 
B)  Nation Beta has a comparative advantage in producing chemicals. 
C)  Nation Alpha has a comparative advantage in producing chemicals. 
D)  Nation Beta is the high-cost producer of clothing. 
A)  Nation Alpha has a comparative advantage in producing clothing. 
B)  Nation Beta has a comparative advantage in producing chemicals. 
C)  Nation Alpha has a comparative advantage in producing chemicals. 
D)  Nation Beta is the high-cost producer of clothing.

International trade based on the principle of comparative advantage creates a more eﬃcient allocation of world economic resources.

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

Which organization meets regularly to establish rules and settle disputes related to international trade?

A major diﬃculty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of Trade)

Economists who criticize trade adjustment assistance argue that

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deﬁcits.

The United States' most important trading partner quantitatively is

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

Excise taxes on imported goods that help shield domestic producers of the good are called

Economists generally view offshoring as detrimental to the U.S. economy.

The production possibilities curves suggest that rev: 09_17_2020_QC_CS-228777

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

The so-called eurozone refers to

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2018?

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price of this product is $1, this nation will

Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of Clothing.

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

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Exam 20: International Trade

International trade based on the principle of comparative advantage creates a more eﬃcient allocation of world economic resources.

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

Which organization meets regularly to establish rules and settle disputes related to international trade?

A major diﬃculty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of Trade)

Economists who criticize trade adjustment assistance argue that

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deﬁcits.

The United States' most important trading partner quantitatively is

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now

Excise taxes on imported goods that help shield domestic producers of the good are called

Economists generally view offshoring as detrimental to the U.S. economy.

The production possibilities curves suggest that rev: 09_17_2020_QC_CS-228777

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

The so-called eurozone refers to

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2018?

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price of this product is $1, this nation will

Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of Clothing.

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