Question 1

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Accepted Answer

A) price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported)would increase. 
B) prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota. 
C) price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell. 
D) total quantity of wristwatches (domestic and imported)purchased would decline as prices rose. 
A) price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported)would increase. 
B) prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota. 
C) price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell. 
D) total quantity of wristwatches (domestic and imported)purchased would decline as prices rose.

Question 2

Which of the following best describes economists' general assessment of the impacts of offshoring?

Accepted Answer

A) Offshoring has an overall negative impact on the U.S. economy because of the significant domestic job losses it causes. 
B) Offshoring benefits the U.S. economy by promoting greater specialization and exchange of goods and services based on comparative advantage. 
C) Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers. 
D) Job losses from offshoring are magnified by job losses in complementary industries. 
A) Offshoring has an overall negative impact on the U.S. economy because of the significant domestic job losses it causes. 
B) Offshoring benefits the U.S. economy by promoting greater specialization and exchange of goods and services based on comparative advantage. 
C) Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers. 
D) Job losses from offshoring are magnified by job losses in complementary industries.

Question 3

Trade adjustment assistance

Accepted Answer

A) provides financial assistance to all unemployed workers in the United States. 
B) guarantees jobs for all workers displaced by imports or plant relocations abroad. 
C) provides assistance to about 20 percent of unemployed U.S. workers each year. 
D) provides cash assistance for workers displaced by imports or plant relocations abroad. 
A) provides financial assistance to all unemployed workers in the United States. 
B) guarantees jobs for all workers displaced by imports or plant relocations abroad. 
C) provides assistance to about 20 percent of unemployed U.S. workers each year. 
D) provides cash assistance for workers displaced by imports or plant relocations abroad.

Question 4

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 5

Which is more effective in blocking imports, a tariff or a quota?

Accepted Answer

Import quotas are more effective than ta

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

Benefits from international trade are based on differences in the following areas, except

Accepted Answer

A) resource endowments. 
B) technological capabilities. 
C) product quality and other attributes. 
D) income levels. 
A) resource endowments. 
B) technological capabilities. 
C) product quality and other attributes. 
D) income levels.

Question 8

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

Accepted Answer

A) exporting products. 
B) importing products. 
C) import tariffs. 
D) import quotas. 
A) exporting products. 
B) importing products. 
C) import tariffs. 
D) import quotas.

Question 9

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. There is no basis for trade between Alpha and Beta, because Beta has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 10

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Accepted Answer

A) France has a comparative advantage in the production of chemicals. 
B) Germany has a comparative advantage in the production of chemicals. 
C) France has an absolute advantage in the production of chemicals. 
D) Germany has an absolute advantage in the production of chemicals. 
A) France has a comparative advantage in the production of chemicals. 
B) Germany has a comparative advantage in the production of chemicals. 
C) France has an absolute advantage in the production of chemicals. 
D) Germany has an absolute advantage in the production of chemicals.

Question 11

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

Accepted Answer

A) the exchange ratio of X for Y is fixed. 
B) the terms of trade increase in both nations. 
C) there is excess capacity in both economies. 
D) the exchange ratio for X and Y reflect their domestic opportunity costs. 
A) the exchange ratio of X for Y is fixed. 
B) the terms of trade increase in both nations. 
C) there is excess capacity in both economies. 
D) the exchange ratio for X and Y reflect their domestic opportunity costs.

Question 12

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 13

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.

Question 14

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Accepted Answer

A) tractors. 
B) DVD players. 
C) beef. 
D) chemicals. 
A) tractors. 
B) DVD players. 
C) beef. 
D) chemicals.

Question 15

Other things equal, economists would prefer

Accepted Answer

A) free trade to tariffs and tariffs to import quotas. 
B) free trade to import quotas and import quotas to tariffs. 
C) import quotas to tariffs and tariffs to voluntary export restrictions. 
D) import quotas to free trade and free trade to tariffs. 
A) free trade to tariffs and tariffs to import quotas. 
B) free trade to import quotas and import quotas to tariffs. 
C) import quotas to tariffs and tariffs to voluntary export restrictions. 
D) import quotas to free trade and free trade to tariffs.

Question 16

Specialization and trade between individuals or between nations leads to

Accepted Answer

A) greater self-sufficiency. 
B) higher product prices. 
C) higher utilization of resources. 
D) higher total output. 
A) greater self-sufficiency. 
B) higher product prices. 
C) higher utilization of resources. 
D) higher total output.

Question 17

When an export subsidy on a product is removed, this policy action

Accepted Answer

A) increases efficiency within the country. 
B) decreases production costs. 
C) benefits domestic exporters. 
D) none of these answers are correct. 
A) increases efficiency within the country. 
B) decreases production costs. 
C) benefits domestic exporters. 
D) none of these answers are correct.

Question 18

Import quotas on products will reduce the quantity of the imported products and

Accepted Answer

A) decrease the price to the consumers. 
B) increase the price to the consumers. 
C) will not affect the price to the consumers. 
D) increase the total quantity of the product consumed. 
A) decrease the price to the consumers. 
B) increase the price to the consumers. 
C) will not affect the price to the consumers. 
D) increase the total quantity of the product consumed.

Question 19

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities   Sigma's production possibilities
  What are the limits of the terms of trade between Gamma and Sigma?

Accepted Answer

A) 1 tea = 2 pots to 1 tea = 6 pots 
B) 1 tea = 3 pots to 1 tea = 6 pots 
C) 1 tea = 2 pots to 1 tea = 3.5 pots 
D) 1 tea = 1 pot to 1 tea = 3 pots 
A) 1 tea = 2 pots to 1 tea = 6 pots 
B) 1 tea = 3 pots to 1 tea = 6 pots 
C) 1 tea = 2 pots to 1 tea = 3.5 pots 
D) 1 tea = 1 pot to 1 tea = 3 pots

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 26: International Trade

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Which of the following best describes economists' general assessment of the impacts of offshoring?

Trade adjustment assistance

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

Which is more effective in blocking imports, a tariff or a quota?

Economists who criticize trade adjustment assistance argue that

Benefits from international trade are based on differences in the following areas, except

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

Dumping of goods abroad

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Other things equal, economists would prefer

Specialization and trade between individuals or between nations leads to

When an export subsidy on a product is removed, this policy action

Import quotas on products will reduce the quantity of the imported products and

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities What are the limits of the terms of trade between Gamma and Sigma?

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

Limits, Alternatives, and Choices

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

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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